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The UK Government’s response to the Silk Commission published today has ruled out devolving Air Passenger Duty (APD) to Wales for direct long haul flights. The decision has been made on the grounds that different rates of APD on either side of the Wales / England border would be likely to redistribute passengers between airports rather than significantly increasing the overall demand within the UK. Commenting on this decision, Robert Sinclair, Chief Executive Officer at Bristol Airport, said:
“We are very pleased and relieved that the UK Government has decided to reject the Silk Commission’s recommendation on APD and not devolve this particular tax to Wales.
“Air travel is an open and competitive market across the UK where passengers seek out the best deal, wherever that might be. Bristol and Cardiff Airports are about an hour’s drive apart and we both compete for passengers in the South Wales market. If devolved, the intention was to scrap or zero rate APD, which is the highest aviation tax in the world. Such a move would have distorted a highly competitive market, causing a tax-payer funded re-distribution of passengers from airports in England to Cardiff Airport, with no net benefits.
“At Bristol Airport, existing services to major European hub airports, which provide onward connections around the world, would have been impacted and the case for future long-haul services to the US and the Middle East undermined. This could have jeopardised jobs, connectivity and the Airport’s £150 million expansion programme over the next decade and beyond.
“The Welsh Government’s purchase of Cardiff Airport would have exacerbated this issue, creating a clear conflict of interest between the Welsh Government’s role as the owner of Cardiff Airport, the only international airport in Wales, and its role as a taxing authority.
“Today’s announcement should now end the uncertainty in the aviation industry created by the Silk Commission’s report, providing reassurance to airlines and passengers that all airports serving the Welsh market can continue to operate on a level playing field.
“We are disappointed, therefore, that despite today’s announcement the Welsh Government’s Finance Minister has confirmed that the Welsh Government ‘will continue to put forward a strong case to devolve long haul Air Passenger Duty to Wales’.
“We ask the Welsh Government to cease its calls for devolution of APD and operate Cardiff Airport on an arm’s length, commercial basis, with no subsidies being offered to the airport or to airlines.
“For our part, we will continue to work hard to enhance the route network available from Bristol Airport for the benefit of all passengers in the South West and South Wales. We will also strengthen public transport links with South Wales, building on the success of the Greyhound service launched earlier this year. Demand for this service provides further demonstration that air passengers’ travel decisions are based on factors such as destination choice, air fares, accessibility, convenience and customer service, rather than dividing lines on a map.”
A copy of Bristol Airport’s written evidence to the Silk Commission can be downloaded here
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