Wales is the only country in the UK with no rights over the Air Passenger Duty (APD) but Welsh authorities are pushing to obtain this tax from the UK Government.
The Air Passenger Duty (APD), is a tax that is paid by airlines every time that a passenger flies out of the UK. Photo by VanveenJF on Unsplash.People flying from Cardiff Airport could expect lower prices in tickets and better connections if the idea of returning air key tax to Wales from the UK Government prospers, according to Welsh authorities.
The Welsh Government is pushing to return the Air Passenger Duty (APD), a tax starting on 13 pounds, that is paid by airlines every time that a passenger flies out of the UK.
Scotland have the rights of the APD for short and long-haul flights and Northern Ireland has partial rights over long haul flights but APD generated in Wales is collected by the UK Government.
“It is the only tax that remains to be devolved in terms of the two independent reports on Welsh devolution – The 2010 Holtham Commission followed by the 2012 Silk Commission,” said Rebecca Evans AM, Minister for Finance and Trefnydd, last Thursday during the session of the Welsh Affairs Committee in the UK Parliament.
This meeting focused on the impact of the transferring control over this matter to the Welsh Assembly, as well as a possible reduction of the APD in Wales. The CEOs of the major UK airports, such as Cardiff, Bristol and Manchester, were also in attendance.
Rebecca Evans AM, Minister for Finance and Trefnydd, during the session of the Welsh Affairs Committee in the UK Parliament.The control and possible reduction of the APD by Welsh authorities could attract more airlines to Cardiff Airport, which could potentially offer better prices to passengers.
“If we look at the removal of the £13 APD on short haul, I think the lead-in prices for Flybe, for instance, are in the region of the mid-£20s, so we are talking—I appreciate that is the lead-in price—a 50% reduction in prices at the end of the day,” said Dave Lees, CEO of Bristol Airport during the meeting.
Lees pointed out that these price differences could mean those one million passengers would replace Bristol for Cardiff Airport.
CEO of Cardiff Airport, Debra Barber, doesn’t quite agree with Lees’ number, saying, “For us, the passenger numbers that we would gain, depending on the case that is used, we think, would initially be between 100,000 and 400,000, with a maximum of about 600,000 by 2025.”
Most of the APD produced in Wales (£14.5 million a year) comes from Cardiff Airport. Domestic flights represent £1.7 millions, short international flights £7.8 million and long-haul £4.8 million. These numbers are far from the money generated by the airports in England serving the Welsh community, such as Bristol and Manchester, that generate £500 million in taxes.
But according to the Welsh authorities, better connectivity from Cardiff Airport would be more important than the money collected for the area. “The impact it could have in terms of increasing throughout through our own airport here in Cardiff could obviously be outweighed by that,” said Rebecca Evans.
Welsh Government position on Air Passenger Duty (APD)
Why is the devolution of APD for Wales important?
Devolution would allow Welsh Government to drive forward our key Economic Action Plan goal of better connecting Wales with the rest of the UK and the world. APD is a significant financial constraint to the development of new routes and air connectivity across Wales. APD would be a vital tool by which the Welsh Government could address Wales’ connectivity issues, and to promote inward investment and growth, particularly as we look ahead to a future outside of the EU.
What is going to change for the passenger?
This would depend on the policy position adopted by Welsh Ministers once the power had been devolved – which would be informed by what was being devolved and the timeframe for devolution. If APD was to be devolved to Wales, the potential impact of policy choices and subsequent rate setting would be considered by Welsh Ministers in the usual way in order to meet relevant requirements of the Well-being of Future Generations Act (2015) and Environment (Wales) 2016 Act.
Why does Scotland and N. Ireland have this right but not Wales? Is this an unfair situation?
It cannot be fair that Wales remains the only devolved nation in the UK which does not have some control over APD. The Welsh Government has repeatedly pressed the UK Government for devolution of APD, and has argued that there is no justification for Wales being treated differently to Scotland and Northern Ireland in terms of the devolution of APD.
How is the devolution of APD supported in Wales?
APD devolution enjoys unprecedented support across Wales. There is cross-party consensus across the National Assembly for the devolution of APD to Wales, as well as unanimous support from aviation, tourism and business sectors in Wales.