Plan to cut APD
FlyBe crisis renews pressure on Scottish government’s air tax
Air taxes back on agenda
The Scottish Government may face renewed pressure to cut aviation taxes after it emerged that Westminster is to consider cutting air passenger duty on all domestic flights as part of a plan to save regional airline Flybe from collapse.
A cut in APD would allow Flybe to defer a £100m tax bill due over three years and would apply to all airlines in order to avoid breaching EU state aid rules.
More immediately, it would give the Devon-based company time to pull together a rescue plan just months after it was acquired by a consortium led by Virgin Atlantic.
The UK government is also anxious to secure more than 2,000 jobs at Flybe and retain valuable transport links.
However, any scrapping or reduction of air passenger duty would have implications for the Scottish aviation industry.
APD is charged on all passenger flights from UK airports, excluding Northern Ireland and the Scottish Highlands and Islands region.
APD will become a devolved power and be known as air departure tax in Scotland. The Scottish government last year reversed a plan to cut it as it did not consider the move to be compatible with its commitment to reduce greenhouse gases.