UK Government blocks devolution of Air Passenger Duty to Wales

Cardiff Airport statement: UK Government’s decision to block the devolution of Air Passenger Duty (APD) to Wales


Deb Bowen Rees, CEO of Cardiff Airport, said: “We are hugely disappointed by today’s announcement.
“Cardiff Airport has always been in favour of the UK-wide abolition of Air Passenger Duty and in support of the ‘A Fair Tax on Flying’ campaign. It is a punitive tax on travel and a cost that hinders the ability for the United Kingdom to remain competitive in what is a very competitive, fast-paced global industry. Not to mention, the UK APD rate is one of the highest in the world.

“We presented compelling and robust evidence to the Welsh Affairs Committee to demonstrate how beneficial this would be to both Wales and the South West as a region. The WAC then went on to make their own impartial, confident recommendation to the UK Government that demonstrated complete, cross-party support for the devolution of Air Passenger Duty to Wales.

“It is difficult to understand the timing and the reasoning behind today’s decision. This would have been a real post-Brexit boost to the region, enhancing international connectivity and promoting competitiveness within the industry. Furthermore, it would lead to environmental benefits, enabling customers to fly locally and, in turn, drive significant economic benefit to Wales and the South West of England.”

 

They seem to be championing the cause of their members in one area of the UK which could have a negative effect on their members in another.

That is a bit surprising!

My fear is that airlines would not reduce fares, or at least not by much, but simply pocket the APD equivalent instead of having to hand it over to government in order to increase their own profits.

I suppose that's what the airport and Welsh government would hope to act as an incentive to attract airlines and to get current ones at the airport to expand. Without that the airport will be a lot less attractive to airlines now. I know many will say that's just business and the playing field is level but unfortunately small airport's like Cardiff just will never be able to compete with airport's like Bristol or Manchester or Southend or Inverness or airports abroad with no version of APD.

 

I suppose that's what the airport and Welsh government would hope to act as an incentive to attract airlines and to get current ones at the airport to expand. Without that the airport will be a lot less attractive to airlines now. I know many will say that's just business and the playing field is level but unfortunately small airport's like Cardiff just will never be able to compete with airport's like Bristol or Manchester or Southend or Inverness or airports abroad with no version of APD.

The same argument would say that Exeter will never be able to compete with Bristol, or Norwich with Stansted, but they have no chance of what some would see as a favourable taxation regime to help them, ergo why is CWL therefore a special case? There is also the aspect of the CWL owners being able to set their own APD rates which some would see as anti-competitive.

As I often do, I'm putting this argument partly as a devil's advocate to try to encourage debate.

I find the matter finely balanced and I can understand arguments on both sides of the issue. I'm not a football club-type airport follower; neither am I spotter and such things as airline liveries hold no interest for me. I do enjoy the sight of an aircraft in its natural environment because, although I understand the basic principles of flight, I still marvel at the spectacle.

To me airports are facilities, just like railway and bus stations. I don't look at them as vanity objects for a region or a country. I remember that in the 1970s I was empathetic towards those who were calling for the closure of Bristol Airport as it was such a drain on the purses of the city rate payers of the time of whom I was one, although the likely loss of jobs tempered my feeling.

APD devolution is largely symbolic because I don't believe that in itself it would be a huge boost for the Welsh economy were it to be abolished, although it would probably assist in CWL's growth to some degree but I'm not sure by how much. I think there are other external circumstances that would and perhaps will exert a greater influence on the airport's growth.

 

I believe the same TLY that the airlines will pocket the money themselves rather than pass it on to the customers however if that what it takes to get them at Cardiff then maybe that’s the price that has to be made.

Of course it is competition on routes that brings the prices down and that is hopefully where the consumer will benefit.

It’s all a dream anyway as haven’t got any faith that it will ever happen.

 

ergo why is CWL therefore a special case?

I think for CWL it depends how you see the airport. Many will just see it as a small and not very important regional airport while others see it as the national airport for Wales connecting the country to the world and i partly wonder if that is it's dilemna as an airport in where to focus it's efforts especially now it's government owned.

APD devolution is largely symbolic because I don't believe that in itself it would be a huge boost for the Welsh economy were it to be abolished, although it would probably assist in CWL's growth to some degree but I'm not sure by how much.

It would have to be a part of encouraging airlines like Qatar and KLM and Flybe who offer the day today connections to offer more and attract new airlines that are similar but if that was the only effect i think joe public would question why someone like Ryanair wasn't offering 10 weekly flights to PMI!

Whether it gets devolved or not in the future is anyones guess, if Labour do win the election it will be interesting to see if it happened or not.

 

I think for CWL it depends how you see the airport. Many will just see it as a small and not very important regional airport while others see it as the national airport for Wales connecting the country to the world and i partly wonder if that is it's dilemna as an airport in where to focus it's efforts especially now it's government owned.

It would have to be a part of encouraging airlines like Qatar and KLM and Flybe who offer the day today connections to offer more and attract new airlines that are similar but if that was the only effect i think joe public would question why someone like Ryanair wasn't offering 10 weekly flights to PMI!

Whether it gets devolved or not in the future is anyones guess, if Labour do win the election it will be interesting to see if it happened or not.

All reasonable and fair points in the argument for devolution of APD.

My gut feeling is that Labour might be more willing to devolve more powers to Wales than the Conservatives - after all, it was the Blair government that was determined to bring about a Welsh government (initially an assembly) when it came to power in 1997.

If Labour needs the likes of Plaid Cymru and the SNP to help it form a government, Plaid's price will undoubtedly be a demand for more powers for Wales and APD would be one of them. The SNP would want a commitment to an early independence referendum and it would be fascinating to see how Corbyn reacted to that. He seems to have softened his original stance but is still saying such a referendum would not be at the front of the queue for government business.

When power is tantalisingly close though many politicians will do almost anything to secure it, so I take Corbyn's utterances on that with a pinch of salt.

 

For what my opinion is worth ..... I think that it was OK to make Northern Ireland a special case because it wasn't competing with another British airport (Dublin is in a different country).
With Cardiff, local airports eg Bristol could say that is unfair competition and will affect their business.

Having said all that, I think that if APD was devolved to Wales the airlines would keep 80% and pass 20% to the customer.

 

If Labour needs the likes of Plaid Cymru and the SNP to help it form a government,

I haven't read the Labour manifesto but I've seen it commented that the pledge to devolve policing and justice isn't there this time though I think Welsh labour will produce its own manifesto so it'll be curious to see if APD is mentioned. It might be for Labour useful as a bargaining chip just in case but even if they it isn't used as one there would be a better chance of getting it under Labour.
As for the SNP I've heard a few political commentators say that if they got a majority in Edinburgh in 2021 then Corbyn would be too much of a democrat to stop them having a referendum.

 

For what my opinion is worth ..... I think that it was OK to make Northern Ireland a special case because it wasn't competing with another British airport (Dublin is in a different country).
With Cardiff, local airports eg Bristol could say that is unfair competition and will affect their business.

Except Belfast does compete with other UK airports. Belfast has an advantage over Cardiff now, they could be both vying for Virgin Atlantic flights to Orlando and Cardiff might lose out because it's essentially punished because of it's proximity to England. I think APD is a tax that needs to be devolved to all devolved administrations or not at all.

 

As we've said before, APD was one of the powers devolved to Scotland, which they renamed ADT (air departure tax), in the run-up to the Scottish independence referendum as an inducement to vote to remain in the UK when it looked that the electorate there might vote to leave.

As for Northern Ireland, Belfast was struggling to compete with Dublin on the NYC route as the Republic's aviation taxes were much lower than the UK's. The UK government stepped in and initially reduced the long haul rate to short haul to try to assist Belfast. Direct long haul from N Ireland is now APD-free, but not via hubs within the short haul band range, whilst short haul remains under the control of the UK government and rates are the same as in Wales and England. Reducing long haul rates hasn't worked though because BFS lost its TATL United (Continental) route to Newark despite the APD reduction.

Just before United pulled out the N Ireland government offered the airline a £9 million subsidy to retain the route. Quite obviously that was quickly deemed to be illegal state aid.

So there were political imperatives for giving Scotland the power and NI a reduction in long haul.

It's never going to be an equitable system because if Wales and Northern Ireland were given full APD powers in the way that Scotland has them (but can't afford to reduce the rates), that would still leave the English airports under the control of Westminster where MPs from all four Home Countries would have a say on English APD whereas there is no English elected voice in the devolved governments.

If there is an argument that says that CWL is punished because of its proximity to England there would be an equally valid argument that said that, in the event of Wales and N Ireland being given full APD powers, English airports were being punished for having no devolved government to which such powers could be devolved. As I said, whatever outcome eventuates there will always be an element of unfairness unless England has its own government - English regional assemblies would not have the budgets or powers that the devolved governments possess. If they did we should have a federal England within the quasi federal UK that exists at the moment.

 

This is from the Welsh Labour manifesto that was launched today. Obviously Labour actually have to be in power first to deliver it and whether they deliver it if they were only time will tell.
"Wales is the only devolved nation to
not have any power over Air Passenger
Duty. A UK Labour government will
act on the cross party consensus and
strong evidence base presented by
the Welsh Labour government and the
Welsh Affairs Committee to devolve
power over APD so that Wales is no
longer treated less favourably than
other nations."

 

Had a look through the other parties manifestos for mentions of Cardiff or APD devolution and could only find mentions in the Liberals and Plaid cymru manifestos. I'll post the screenshots below.

 

Is the first screen shot that of the Liberals (the national party or Welsh Liberals)? I mean the one with the three orange bullet points. The green one seems to be Plaid Cymru's.

 

Is the first screen shot that of the Liberals (the national party or Welsh Liberals)? I mean the one with the three orange bullet points. The green one seems to be Plaid Cymru's.

The first is the Liberal Democrats second Plaid cymru.

 

Thanks, Jerry.

No surprise that Labour would devolve APD, given the WG is a Labour-led administration.

The WG have said that if granted APD powers they would institute an environmental survey to assess the effect of a reduction or abolition, but that's just for show because there is no way they won't use the power having fought so long and hard to get it and they are desperate for CWL to make progress.

The Lib-Dems would also raise APD for frequent international passengers but reduce it for low-use holidaymakers who only take on or two international return flights per year. If the devolved governments were all given full APD powers that policy would only relate to England yet the Lib-Dem leader represents a Scottish constituency. How they would manage to administer it I'd love to know.

The Lib-Dem manifesto is really academic as they won't be forming the next Westminster government but Plaid Cymru might have a say. They would if they and the SNP had to support a minority Labour government to allow it to function.

I question some of the Lib-Dem manifesto assertions though.

Devolving all APD to Wales would certainly put it on a 'fair playing field' with Scotland, but not with Northern Ireland where only direct long-haul APD has been devolved.

And how would devolution of APD to Wales put CWL on a 'level playing field' with regional airports in England? CWL is already playing on that particular level playing field as it is subject to the same APD regime as English airports. If the WG reduces or abolishes APD, regional airports in England will be at a disadvantage compared with CWL if they continue to be subject to the UK government's APD charges.

 

No surprise that Labour would devolve APD, given the WG is a Labour-led administration.

I am surprised though that it is stated so specifically, personally i'd have thought that any UK Labour government would want some room in the issue but it may well be that Welsh Labour may have got a specific guarentee.

And how would devolution of APD to Wales put CWL on a 'level playing field' with regional airports in England?

The only thing i can think of is in relation to it's attractiveness to airlines compared to say Bristol, Birmingham and Manchester. APD would make CWL more competitive against those airports in attracting airlines and new routes though those would still have an advantage due to their size. I don't think when APD is mentioned airports like Exeter, Norwich or Leeds are thought of.
I am surprised by the Lib Dems as i'd have thought they would be more like the Greens in their outlook to APD devolution.

 

I am surprised though that it is stated so specifically, personally i'd have thought that any UK Labour government would want some room in the issue but it may well be that Welsh Labour may have got a specific guarentee.

The only thing i can think of is in relation to it's attractiveness to airlines compared to say Bristol, Birmingham and Manchester. APD would make CWL more competitive against those airports in attracting airlines and new routes though those would still have an advantage due to their size. I don't think when APD is mentioned airports like Exeter, Norwich or Leeds are thought of.
I am surprised by the Lib Dems as i'd have thought they would be more like the Greens in their outlook to APD devolution.

I know that we focus on APD because this is an aviation forum but there are lot of other powers (other taxation, borrowing and law-making powers to name but three) that would be part of a transfer of powers to the WG. The Lib Dems want many of these powers transferred as can be seen from their manifesto. Blair's Labour government was the driving force for the establishment of the Assembly - it was a pre-1997 general election commitment - and although a Corbyn government might be more to the left than Blair's the commitment might be no less even if not spelt out so obviously.

The critical point might be reached if Labour needs SNP and Plaid support to become a government. The SNP will demand an early Scottish independence referendum and if Corbyn submits that could be a major step along the path of the break-up of the UK. Wales would then have an interesting choice if Scotland became independent: seek independence themselves or stick with England and probably N Ireland in a scaled-down UK. It's actually already scaled down from historical levels because it used to be the United Kingdom of Great Britain and Ireland.

I think that devolution of APD (and other powers) is inevitable. The only question mark is when. The so-called West Lothian Question will continue to resonate though.

 

Wales would then have an interesting choice if Scotland became independent: seek independence themselves or stick with England and probably N Ireland in a scaled-down UK. I

It's highly probable that there could be Irish unification referendum as well in the future. That would leave Wales with England which many nationalists fear might be the end of Wales as we know it especially under a conservative government as its feared that they would just abolish devolution and Wales would essentially be an English region. Whether those fears are unfounded is anyone's guess.
The big problem with devolution is that their is no set plan in what will be devolved and no timetable.
Hopefully APD will get devolved sooner rather than later.

 

Well the general election has most likely put paid to any hope that the WG has of getting APD devolved at least for another 5 years. Will be interesting to see if there's a new Welsh secretary.

 

Well the general election has most likely put paid to any hope that the WG has of getting APD devolved at least for another 5 years. Will be interesting to see if there's a new Welsh secretary.

I wonder if the additional Conservative MPs in Wales will make a difference.

Some people say that the barrier to APD devolution to Wales is the perceived (by some) disadvantage to Bristol Airport that such a course would bring. Furthermore, the supposed influence of Conservative MPs in the Bristol region, including a couple of high-profile members (read this word how you will ) in Rees-Mogg and Fox, is also said to play a part in the minds of some.

I'm not convinced the West Country Conservative pressure is all that some would believe. Rees-Mogg to my knowledge has never been particularly vocal about the airport, and a few years ago Fox said BRS should not be further expanded until its surface access problems had been sorted out. They still haven't.

Bristol itself has four Labour MPs and a Labour elected mayor. The one local politiican who often speaks out in favour of BRS is Karin Smyth, Labour MP for Bristol South the nearest Bristol constituency to BRS. The elected Bristol Labour mayor is also far more open in his support for BRS than any of the local Conservative MPs.

 

Well the general election has most likely put paid to any hope that the WG has of getting APD devolved at least for another 5 years. Will be interesting to see if there's a new Welsh secretary.

Jerry with what happened today its going to be at least 10 years before labour get into power,,unless the tories have a complete melt down and cant see that happening.