Air Passenger Duty: Regional Airports

Debate between Julian Knight and David Simpson

Tuesday 20th October 2015 Westminster Hall

[Julian Knight]

My hon. Friend makes some valid points. I had no idea that we were second only to Chad when it came to air passenger duty; that is certainly new to me. I hope to address some of the issues he raised.

At a time when we are trying to clamber back from financial difficulty, revenue neutrality is something that we need to put, as much as we can, in our proposals. There is justifiable concern in the west midlands and other regions about their airports’ ability to compete with devolved areas. While devolution is a bottom-up process, the Treasury could heavily encourage the devolution of APD to combined authorities or devolved areas as soon as practicable.

What practical things can be done by the Government right now? I would suggest an APD holiday on new routes. Birmingham airport is in discussions with Hainan Airlines for a regular, scheduled service, following two summers of charter services. An APD holiday could aid that. That would provide a direct link for the UK’s second city to the powerhouse of China and further assist the west midlands’ current trade surplus with China. It would also help foreign direct investment just as with the new Gentling resort close to Birmingham airport.

Regional airports, the wider economy and future tax take would benefit from an APD holiday. While Birmingham airport and others want a general cut in APD, which is unlikely in the short term given the financial circumstances, it would accept any measures to reduce that tax. It estimates that a cut in APD on non-congested airports would boost passenger numbers by about 2.9 million in just a decade. All increases in passengers will bring goods, services and jobs.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining the debate. I am sure he agrees with the findings of the Select Committee on Transport, which said earlier this year that small, regional airports had been held back because of air passenger duty, which was affecting jobs and the skills base coming in. As the likes of Belfast City airport and the international airport in Northern Ireland are confident that passenger numbers would grow substantially if APD were removed, that should be an incentive to bring more people in.

[Julian Knight]

I thank the hon. Gentleman for that contribution. I note that the Transport Committee wanted to attach a report to the debate, which I was happy to agree to.

The hon. Gentleman made it clear that all increases in passengers will bring goods, services and jobs to an area, all of which will return money to the Exchequer through other taxes. These measures will go some way towards reversing the scandal under Labour that the UK did more trade with Ireland than with Brazil, Russia, India and China combined. The Prime Minister, through trade missions, and the Government, more generally assisting in trade with the emerging and fast-growing markets, are tackling that problem. However, there is still the issue of connecting our regions, and the country more generally, with the large and frankly now emerged, rather than emerging, economies of the world.