Fears over threat to air tax exemption in Highlands and Islands

© DC ThomsonInverness Airport
Inverness Airport

Fears are being voiced that the exemption of air passenger tax in the Highlands and Islands could be axed following a recent Scottish Government decision regarding climate change.

The SNP had originally committed to replacing the controversial air passenger duty (APD) – which currently affects all airports other than those under the umbrella of Highlands and Islands Airports Ltd (Hial) – with a devolved air departure tax (ADT).

The plan had been to allow Scottish ministers to eventually abolish the levy to improve transport links and stimulate business.

Nicola Sturgeon U-turns on flagship plans for airline industry tax cut

But ministers performed a U-turn last week, claiming the plan was “no longer compatible with Scotland’s new emissions reduction targets”.

This has raised serious concern over the future of the tax exemption in the Highlands and Islands, introduced by Labour two decades ago, given the climate change stance.

A government spokesman admitted to the Press and Journal: “A solution has to be found to the Highlands and Islands exemption.”

Stewart Nicol, chief executive of Inverness Chamber of Commerce, said: “The APD exemption that applies to Inverness flights is critical to the economy of the city and the wider Highlands and Islands region.

© Stewart Nicol
Stewart Nicol, chief executive of Inverness Chamber of Commerce

“The fundamental reason for this is the lack of appropriate surface transport alternatives that other cities enjoy across the rest of Scotland and the UK.

“The road and rail transport infrastructure between Inverness and the rest of Scotland and within the Highlands is completely inadequate.”

Highlands and Islands Labour MSP David Stewart said: “Discontinuing the exemption for the region would bring an unacceptable cost to the fragile economies of the Highlands and Islands.

“I still see this exemption as supporting the economy of the region, a region which has suffered due to centralisation of services and the pull of richer and more urbanised areas of Scotland.”

© Labour MSP David Stewart
David Stewart MSP

Conservative MSP Edward Mountain said: “I do not believe people in the Highlands and Islands, who are already hindered by various connectivity issues, should have to pay more to travel by air.”

A Scottish Government spokesman said: “The Scottish Government has taken the difficult decision that reducing ADT is no longer compatible with Scotland’s new emissions reduction targets.

Flagship SNP policy to cut Air Passenger Duty is delayed again

“To protect rural communities a solution has to be found to the Highlands and Islands exemption before the tax can be taken on.

“The Scottish Government will continue to work with the UK Government and the H&I Working Group to find a solution. The UK Government will maintain the application of Air Passenger Duty in Scotland, and the current Highlands and Islands exemption, in the interim.

A Hial spokesman said: “Our aim is to decarbonise all our operations as much as possible and we are already working towards that goal.”