Scotland’s plan to scrap air passenger taxes would create a “domino effect” of people avoiding English airports to seek cheaper flights north of the border, the chief executive of British Airways parent IAG SA said today.
Reacting to the recommendation by a U.K. cross-party commission to transfer tax-raising powers to Scotland, including control of air passenger duties, Willie Walsh estimated that a family of four could save 276 pounds ($435) by flying to the U.S. from a Scottish airport rather than an English one. The ruling Scottish National Party has promised to abolish the tax.
Walsh and other British airline executives have long campaigned for the U.K. as a whole to scrap the passenger duties, which IAG estimates would boost the country’s gross domestic product by 0.5 percent and help create 60,000 new jobs.
“APD must be axed across the U.K. -– not just in Scotland -– to avoid a domino effect across the country,” Walsh said. “It’s understandable why the SNP wants to cut APD -– it costs Scotland 200 million pounds each year in tourism alone.”
Walsh’s concerns about the impact on English airports of separate passenger tax regimes were echoed by the Confederation of British Industry, the business lobby group.
“We’re disappointed that Air Passenger Duty will be devolved, which risks creating an inefficient bidding war between the U.K.’s regions,” John Cridland, the CBI Director- General, said in an e-mailed statement. “We need to reform APD to ensure new routes are created, alongside the maintenance of existing routes. We must not let this internationally uncompetitive tax deter progress.”
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