Publication - minutes

ADT Highlands and Islands Working Group papers: October 2018

Published: 29 Nov 2018
Date of meeting: 10 Oct 2018
Location: HIE Boardroom at An Lòchran, Inverness
Minutes and papers from the second meeting of the Air Departure Tax (ADT) Highlands and Islands Working Group, which took place on 10 October 2018.
Published:
29 Nov 2018
ADT Highlands and Islands Working Group papers: October 2018

Attendees and apologies

Attendees

  • Nicholas Sobey, Highlands and Islands Enterprise (replaces Robin Clarke)
  • Neil MacRae, Hitrans
  • Sarah Skerratt, Scotland’s Rural University College
  • David Richardson, Federation of Small Businesses (FSB), H&I Region
  • Emmanuel Moine, FSB member; General Manager of The Glen Mhor Hotel, Inverness; Chair of the Inverness Hotels Association
  • Greg Maxwell, Edinburgh Airport (substitute for Gordon Robertson)
  • Fraser Grieve, Scottish Council for Development and Industry, Inverness
  • Fiona Thompson, Scottish Rural Action
  • Roy Bogle, Loganair
  • Inglis Lyon, Highlands and Islands Airports Ltd
  • Richard Gerring, Highland Council
  • James McLellan, SG Tax Division
  • Sacha Rawlence, SG Tax Division
  • Zoe Hollywood, SG State Aid Unit
  • Ian Anderson, SG State Aid Unit
  • Debbie Provan, SG State Aid Unit
  • Michael Bratcher, Transport Scotland

By phone

  • Shane Taylor, Chambers of Commerce (substitute for Stewart Nicol and Trudy Morris)
  • Tim Cade, Airlines UK

Apologies

  • Philomena De Lima, University of the Highlands and Islands – withdrawn from group
  • Willie Cameron, FSB member, Cobbs Bakery, Drumnadrochit; National Council of Rural Advisers
  • Moya Ingram, Argyll & Bute
  • Gavin Barr, Orkney
  • Brian McClean, AGS Airports

Items and actions

Find meeting papers at the bottom of this page

Welcome and introductions

James McLellan welcomed all attendees, thanked HIE for hosting the second meeting, explained that State Aid colleagues were attending to clarify rules and not in an advisory capacity, and thanked members for contributions of papers and presentations.

Policy update

An update was provided on progress made since the last working group. It was noted that there had been a range of helpful discussions facilitated by members on developing the evidence base and new material provided.  JM put on record the SG’s thanks to members for this work, and noted that this would provide a shared baseline of evidence to support future engagement. In addition to this there had been ongoing discussions with HMT around potential solutions.

Minutes and actions from the previous meeting

The minutes of the previous meeting were agreed.

SG reported back on three requests for further information in the area of State Aid, and what could be learnt from them in terms of the H&I exemption. These were: the EC’s consideration of Germany’s air transport tax, the UKG’s Rural Fuel Duty Relief Scheme, and the scope of the SG’s Air Discount Scheme (ADS).

The key points of each were summarised, similarities with the H&I set out, and contrasts highlighted (such as the particular regulations governing each scheme) that limit their comparability to the H&I exemption. The following points were made in discussion:

  • comparison of journey times from Bremen to the North Sea islands with those from Inverness, and whether it could be argued that Inverness is remote 
  • discussion around other mechanisms in the Transport Scotland portfolio that could help deprived areas e.g. bus service operators’ grant, ADT, road equivalent tariff (RET, for ferries)
  • the background of the EC’s definition of ‘rural’, with regard to the status of Inverness

Action: SG to develop a map to illustrate the geographic coverage of the various schemes – H&I exemption, ADS, PSO flights.

HITRANS presentation

Neil MacRae gave a presentation illustrating the key points of the report, which had been prepared in response to the Group’s call for evidence.

Regarding Inverness Airport in particular:

  • comparison of journey times between other remote areas and their airports e.g. Newquay to Exeter
  • travel times from H&I to illustrate anticipated costs to productivity in the absence of Inverness Airport
  • projected impacts of a loss of the exemption, including increases to fares, reduced passenger numbers, and reduced frequencies

Further impacts anticipated by group members included:

  • increased cost of flights could be a disincentive to young people remaining in remote areas, and impact upon efforts to improve the demographic structure
  • the impact of higher fares on the value of airports to the business base, in terms of routes to market
  • price-sensitivity of leisure passengers, and the impact this could have on social exclusion

See the full report by HITRANS on the importance of the Highlands and Islands APD Exemption

Actions:

  • airlines UK to forward a new report on the wider impacts of ADT on route economics; action complete
  • SG and HITRANS to discuss possible areas for further analysis e.g. benchmarking of journey-times for further destinations, and plans for publication of HITRANS’ report
  • HITRANS to check what underlying data can be shared, from the modelling of the impact on routes, and to check for availability of other comparators (beyond Inverness) for connectivity

Highlands and islands survey

Sarah Skerratt and Fiona Thompson presented the very early findings of their work, based on a partial analysis of the responses, as the survey had only closed two days before the meeting. They will be providing a report to the Group in due course.

SS observed that many of the initial findings resonate with, and reinforce what was reported in, the HITRANS presentation.

1,460 responses received: this is the highest-ever response to an SRA survey. Responses concentrated in Caithness, Sutherland and Ross, then Western Isles – links to Wick as being the most common closest airport.

Summary of closed questions included: the dominance of leisure use over business use by respondents; price as the biggest barrier, also route numbers and frequency; less important was distance to airport.

The only open question to have been (partly) analysed so far was, ‘What single message would you like to send to the SG?’, with eight themes identified from the first 80% of the responses. These include the importance placed on air transport in addition to concerns about affordability and alternatives.

Group members felt that these findings resonated with other evidence, including:

  • potential for air transport to counter isolation, support sustainable communities, psychological importance of air links
  • the CAA’s latest consumer tracker survey shows costs as a consistent barrier to travel
  • chimes with a study for Skye air service, where lack of flights was a barrier. Also Donegal where fare increases coincided with growth of the oil sector

It was noted that the greater representation in responses in Caithness than the islands contrasted with the greater uptake of ADS in the islands. This might reflect local success in promoting the survey, and may contribute to relative prominence of themes such as reliability an oil industry.

JM concluded that the Group would look forward to commenting on the report. This preview suggests it will contribute to our aims in calling for evidence, which were to draw on the group’s expertise to develop a shared understanding of the issues, and to build and validate our evidence base.

Actions:

  • SS and FT will provide a report, and seek a response from the Group
  • following this, SG to consider areas where further analysis would be helpful
  • group to consider whether it wants to follow up on the findings of the report at the next meeting of the Rural Parliament on 14-16 November, Stranraer
  • SG, SS and FT to discuss feedback to respondents and plan for publication

Approach to the assessment of options

A list of criteria were presented, to illustrate SG’s starting point and to ask for suggestions as to points that might be missing. These were based on the Cabinet Secretary’s five criteria:

  1. Deliver the best possible outcome for H&Is
  2. Consistent with no detriment principle and existing framework for devolving the tax
  3. Compatible with EU law
  4. Deliverable and efficient – both for legislation and tax collection (Revenue Scotland and aviation sector)
  5. Affordable within budget allocations

Group members’ observations included:

  • that the final position should leave the Highlands and Islands no worse off
  • the need to clarify the intent behind the first criterion and what was meant by “outcome”, before assessing options
  • defining these criteria will take time and a follow up via correspondence was needed on the criteria in advance of a further discussion about these in the next meeting
  • consider borrowing from the approach of the transport appraisal guidance

Actions:

  • SG to resend ADT Background paper and ToR to clarify aims and scope of Group
  • SG to send a summary of options previously explored in advance of next meeting
  • ahead of the next meeting, SG to circulate a paper expanding on the criteria for discussion by correspondence

Any other business

A group member requested a bibliography of references the Group uses.

Action: SG to circulate slides from presentations of HITRANS report and initial findings of the survey, the Chambers of Commerce report, and link to SG’s ADT publications.

Planning for next meeting

It was agreed that the third meeting would be planned for January 2019.

Group members were thanked for their participation.

Action: SG to circulate possible dates for January meeting.

 

Paper 1 - German case

4 page PDF
308.8 kB

Contact

Email: adt@gov.scot