The upcoming September 18th referendum on Scottish independence is likely to have significant impact on airlines that operate services to and from the country if a “Yes” vote is carried.
The Scottish National Party (SNP) has pledged to halve the “Air Passenger Duty” (APD) taxation that is levied on airlines operating services out of the UK, and later to scrap the tax altogether. Airlines are unanimous in their hatred of the tax as it makes a significant impact on their costs.
The SNP has also stated its belief that the tax deters up to 2 million visitors per year to Scotland.
British Airways has led calls to reduce APD, which cost parent IAG €723 million ($934 million) in 2013 according to its annual report. IAG’s CEO Willie Walsh told the BBC in February that if the SNP honoured its pledge to abolish APD, then Scottish independence “might be marginally positive” for BA, which offers as many as 55 flights to Scotland per day.
“Willie’s focus is to see APD abolished,” Laura Goodes, a spokeswoman for London-based IAG, said in response to questions this week, while adding: “Our line is that the referendum is a matter for Scottish voters.”
IAG’s annual report stated that the UK has the highest aviation tax in the world, with APD jumping 260% on short-haul flights, and as much as 360% on long-haul since 2007, compared with an inflation rate of 20%. A family of four flying economy-class to Australia pays £376 in tax, against the equivalent of £160 in Germany, £15 in France and nothing in 25 other EU countries, it said.
“The cutting and eventual abolition of air passenger duty is a vital way of helping to boost tourism and investment and create jobs -- and demonstrates perfectly just how economically powerful and successful an independent Scotland will be,” the SNP said in a June 10th statement on the tax.
LCC easyJet has also said it is opposed to the level of aviation tax. The company put its name to a joint statement in 2013 that also included British Airways, Virgin Atlantic and Ryanair, condemning the most recent APD increase.
“We believe it is for the Scottish people to decide and our view on APD remains the same,” Anna Knowles, a spokeswoman for the Luton, England-based carrier said.
Ryanair CEO Michael O’Leary has said most airlines would back the SNP’s stance on APD. O’Leary said the independence issue itself “is a matter for the Scots, and everyone else should stay out of it. Whether they vote for independence or don’t vote for independence people will still travel to Scotland, they will still fly from Scotland to the UK. I think it will be difficult for the UK economy and there would be certain adjustments to be made, but like everything else, business will just get over it and move on.”
While the SNP has said that its Conservative, Labour and Liberal Democrat opponents “are all over the place” on APD, its pledges this week concerning the transfer of more powers to Scotland (“devo max”) following polls that indicated a victory for the secessionists, may mean that the country gains influence over APD whatever the outcome of the referendum.