Air passenger duty (APD) should be abolished to support the recovery of regional airports in the 海角视频, says former chairman of Cardiff Airport Roger Lewis.
In giving evidence to a Welsh Affairs Select Committee probe into the aviation tax, Mr Lewis said that while the biggest airports in the 海角视频 such as the three in London, Birmingham and Manchester should continue to be covered by the tax airports with annual passengers below two million (pre-Covid) should be exempted to boost not only their trading prospects but in helping to improve connectivity between the four nations of the 海角视频. He said the abolition should not only cover domestic flights, but on short haul and long haul flights too.
Mr Lewis said the Welsh Government’s ownership of the airport, following its £52m acquisition in 2013 from Spanish conglomerate Abertis, needed to be seen in a global context where public sector ownership, or in partnership with the private sector, is commonplace.
An interim report from the Union Connectivity review, from Sir Peter Hendy, highlighted concerns that APD, with its imposition on both legs of domestic flights, is seen as an economic barrier.
All forms of APD tax raised £3.6bn in 2019-20 for the 海角视频 Treasury, the bulk of which was secured from long-haul flights.
The 海角视频 Government in March launched a consultation on the future of APD. It is understood that Boris Johnson is keen to see domestic APD abolished, although airlines with more efficient fuels, as well as those developing biofuel alternatives, could benefit if a tiered regime is introduced.
The 海角视频 Government has resisted numerous calls for the tax to be devolved to the Welsh Government, using the argument that lower rates could give Cardiff Airport an unfair advantage against its nearest rival in Bristol.
Mr Lewis, who stood down as chair of the airport last year, told the committee of cross-party MPs: “The 40 largest airports in the 海角视频 in 2019, pre-pandemic, had total passenger numbers of over 300 million, with London Heathrow, in the number one position, with almost 81 million passengers. The top 13 海角视频 airports all had passenger numbers in excess of five million. However 22 of the top 40 海角视频 airports had less than two million passengers.
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“At the heart of a levelling up agenda is, I believe, the implication that you need to proactively assist and support those parts of the 海角视频 which need the most help. Therefore the same APD tax rates for the top three London airports, which accounted for 156 million passengers in total pre-Covid should not possibly be the same APD tax rates for say the three airports of Teesside, Southampton, and Cardiff which accounted for 3.6 million passengers in total. I would suggest APD be abolished for all domestic, short and long haul flights for all 海角视频 airports that have two million passengers or less.”
He said this would immediately kick start regional 海角视频 airports as they emerge out of Covid, protect jobs and safeguard vital 海角视频 regional aviation infrastructure. He said the impact on the Treasury’s finances would be very modest, but with the resulting 海角视频 regional economic benefits being considerable.
On how such a move would sit with the objectives of the 海角视频 and Welsh governments by 2050 becoming net carbon neutral, he said: “It also truly compliments our climate objectives as it will help create new routes closer to where people live and so reduce the number of people who drive millions of miles to airports far from their homes. In the Cardiff Airport catchment area pre-pandemic well over a million people drove out of Wales to other airports.
“Moreover it would strengthen the union by bringing the people of our nations closer together. The airports benefiting from this would include Southampton, Jersey, Cardiff, Exeter, Doncaster, Guernsey, Bournemouth, Isle of Man, Norwich, Prestwick, Derry, Newquay, Humberside, Teesside, the Sicily Isles, Alderney and even Land’s End. All of these airports would have the opportunity to develop or enhance their airlinks across the 海角视频.
"All in all we have to ensure the future of Cardiff Airport for the 海角视频, and abolishing APD for Cardiff alongside its sister 海角视频 regional airports, would be a big step in the right direction of creating a sustainable enterprise.”
However, in its submission to the 海角视频 Government’s consultation on APD the Chartered Institute of Taxation (CIoT) said moves to reduce or abolish the rate to boost connectivity within the 海角视频 would be inconsistent with the Westminster government’s wider climate change objectives. It said there may be better ways to boost domestic connectivity without sacrificing climate targets.
Jason Collins, chair of the CIOT’s climate change working group said: “The government has set itself ambitious and welcome net zero targets, but the proposals in this consultation fail to fully grasp the scale and depth of change required to achieve these. Cutting taxes on flying would appear to run counter to those aims.
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“APD needs to be set at a level that ensures the aviation sector contributes its fair share to the achievement of the net zero targets, and that people and businesses make economic decisions consistent with that, such as the development of greener flying fuels and support for lower carbon forms of transport like rail.
“In this way, the tax system can be used to send signals to businesses and consumers about the scale of change required. This may be harder to achieve, but it is essential to the challenge of achieving the government’s 10-point plan for a green industrial revolution.”
In March the Welsh Government provided up to £42.6m in grant support to Cardiff Airport, while writing off the same amount of debt funding it had previously provided. It also wrote down the value of the airport, which is run by an arm’s length company on commercial lines.
However, the acid test on valuation will come at any future point when the Welsh Government looks to sell its stake, or a element of, to private investors. Based on a return to pre-Covid passenger numbers, where Cardiff has been experiencing year-on-year growth, an exit or partial exit for the Welsh Government would help finance long-term infrastructure at the airport, including a new terminal which will be required when passengers exceed three million. The Rhoose-based airport’s long-term masterplan also has plans for hotels, as well as logistics and industrial developments to drive freight levels.
Mr Lewis said there were 10 airports in the 海角视频 that were wholly-publicly owned, with the largest being Luton Airport, owned by the Luton Borough Council but operated under a concession by Aena.
He also pointed to the fact that Manchester Airport, Group, which owns Manchester, East Midlands and London Stansted airports, was majority own by Manchester Council and other local authorities in Great Manchester.
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He added: “In the context of global aviation ownership, the majority of airports have a public (ownership) relationship, because it is of such strategic connectivity importance, This model (Welsh Government ownership) I don’t think we should be uncomfortable with as government has to have confidence in national assets in a globally connected world.”
He said long-term Cardiff Airport should adopted a blended public-private ownership model.
Mr Lewis said: “I don’t think we should always look to a public purse for expansion plans. As we emerge out of Covid I think that discussion will be returned to.”