A new group charged with considering how the air passenger duty (APD) levy could be replaced in Scotland has been set up by ministers.
Deputy First Minister John Swinney and Infrastructure Secretary Keith Brown are to jointly chair the first meeting of the new Scottish APD stakeholder forum this afternoon – hailing it as a new milestone in the reform of the charge.
Meanwhile, the Scottish Government has also revealed it will launch a consultation on a Scottish APD in the autumn.
Powers over APD are to be devolved to Holyrood as part of the new Scotland Bill, which has been brought in at Westminster after the Smith Commission on further powers recommended the change.
The Scottish Government is committed to halving the levy paid by air passengers within the first term of the next parliament, with a view to abolishing it completely when “public finances permit”.
Research for Edinburgh Airport has already suggested that cutting APD in half would result in 700,000 more passengers going through Scotland’s airports in the first year alone.
Mr Swinney said: “Scotland’s airports are busier than ever and the Scottish Government wants to see that success grow further to the benefit of passengers, business, tourism and our wider economy.
“The APD stakeholder forum brings together interested parties – from those in the aviation industry to environmental groups and tax practitioners – to provide expert input into how a replacement tax could work.
“The forum and this autumn’s policy consultation allow us to take the next step and begin the process of designing and developing a Scottish APD to help deliver our objective of sustainable economic growth.”
Mr Swinney made the comments as he and Mr Brown visited Edinburgh Airport, where they met chairman Sir John Elvidge.
Sir John said: “Our report earlier in the year showed very clearly that APD is placing a drag on Scotland’s economic growth, costing jobs and millions of pounds in lost revenue.
“We’ve long supported its devolution and are keen to work with the Scottish Government to ensure that the process is as smooth and as quick as possible.”
Mr Brown said: “Scotland is already an attractive destination for business and inbound tourism, and we want to open up Scotland to key and emerging markets to capitalise on the opportunities that exist.
“Devolution of APD to the Scottish Parliament will provide the opportunity to put in place new arrangements which better support the Scottish Government’s objective to help generate new direct routes and increase inbound tourism.”
Airline chiefs welcomed the plans to first reducing, then scrapping APD.
Sophie Dekkers, easyJet’s UK director, said they had “long-campaigned for the removal of air passenger duty”.
She added: “When APD is halved passengers in Scotland will quickly feel the benefit, with easyJet and other airlines adding more services to existing destinations and launching flights to new destinations from Scotland.”
Paul Simmons, chief commercial officer of flybe, said: “We believe that the abolition of or the reduction of APD in Scotland will have two key impacts, firstly, some international routes which are currently marginal when we assess them and therefore not flown are likely to become viable.
“Secondly, there is likely to be a price reduction for the consumer on domestic flying and the real possibility of additional frequencies.”
Kate Sherry, Ryanair’s deputy director of route development, said: “One need only look to Ireland to see the effect scrapping APD has had, with tourist traffic rising by almost 10% since APD was abolished in April 2014 and the VAT received from the additional tourist spend far exceeding the loss of APD.”