Publication - Consultation analysis

Replacement to Air Passenger Duty (APD): consultation analysis

Published: 29 Jul 2016
Economic Development Directorate
Part of:

An analysis of the responses to the consultation on a tax to replace Air Passenger Duty (APD).

94 page PDF

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94 page PDF

803.8 kB

Replacement to Air Passenger Duty (APD): consultation analysis
2. The Principle of APD Reduction

94 page PDF

803.8 kB

2. The Principle of APD Reduction

2.1. As noted in the previous section, the consultation was focused on gathering views on the proposed approach to a Scottish APD replacement tax. As such, the consultation document did not ask specifically for views on the plan for a 50% reduction (and subsequent abolition of) APD in Scotland - although Question 8 did ask for views on how and when the proposed 50% reduction should be implemented.

2.2. The majority of respondents used their written submissions to make some comment on the reduction in APD. Moreover, it was clear that for a substantial number of respondents, their views on this policy commitment had a significant impact on their response to the main body of the consultation. Below we provide a summary of the key points raised by respondents commenting on the principle of a 50% reduction and subsequent abolition of APD.

2.3. A total of 94 respondents commented specifically on the proposed reduction in APD, 59% of all respondents. This included 35 group respondents and 59 individuals. A large majority of those commenting on the policy expressed an objection to or raised concerns around the potential impact of the reduction in APD; 78 of the 94 respondents commenting on the reduction.

Table 2.1: Profile of respondents raising concerns about the principle of a reduction in APD.

Concerns or objections to the reduction in APD

All respondents

Airlines and airline representatives



Airports and airport representatives



Other transport and travel organisations



Business, economic development and tourism organisations



Professional tax and accountancy organisations



Environmental organisations



Other organisations



Group respondents (Total)









Percentage of all respondents



Percentage of respondents commenting on proposed reduction in APD


2.4. Individual respondents accounted for the majority of those raising concerns (57 of 78), although a total of 21 group respondents expressed similar concerns. Non-aviation transport and travel organisations, environmental organisations and "other" organisations accounted for most of these group respondents, although a small number of airport and business/economic development respondents also raised potential issues for the proposed reduction in APD.

2.5. The 78 respondents raising concerns in relation to the proposed reduction and subsequent abolition of APD included some who strongly objected to any reduction in taxation of air travel. It was clear from these respondents in particular that this fundamental objection to the policy of APD reduction framed much of their subsequent response to the proposals for the Scottish replacement tax; for example, some objected to specific aspects of the proposed approach to the replacement tax primarily on the basis of their being used to deliver a reduction in APD. Other respondents were notable for including a caveat alongside their support for aspects of the proposed replacement tax, making clear that this support was dependent on current levels of APD being maintained or increased. This included some who suggested modifications to the proposed approach to deliver what was perceived to be a "fairer" approach to taxation of air travel.

2.6. In terms of the concerns and issues raised in relation to the proposed reduction in APD, the negative environmental impact of an increase in air travel was by far the most commonly mentioned by respondents. Nearly all of those raising issues for the policy made reference to the environmental impacts associated with aviation. These respondents noted the significant increase in carbon emissions predicted by Transport Scotland's assessment of the emissions impact of a reduction in APD in Scotland [4] , and cited a range of other evidence on the environmental impact of a growth in air travel as a result of the APD reduction. A substantial proportion of these suggested that the strategic and policy objectives set out in the consultation document are inconsistent with the Scottish Government's environmental policy, and indeed with wider transport objectives such as supporting more sustainable modes of transport.

2.7. The full range of environmental issues raised by consultation respondents is explored in further detail within the SEA Screening and Scoping Report consultation analysis which can be found at:

2.8. Respondents highlighted a range of other potential negative impacts associated with the reduction in APD. These included:

  • Concern around the loss of funding available to public services as a result of a cut in APD (described as a relatively efficient tax) was also cited by a range of respondents. This was seen as a particular issue at a time of ongoing constraints on public spending, and some felt that the reduction proposed a significant risk: "it is the Scottish economy - and Scottish taxpayers - who would have to make up any shortfall".
  • The balance between air connectivity and other transport modes, and in particular lower carbon transport modes. Several respondents suggested that growth in air connectivity, and particularly domestic air travel, is likely to be at the expense of other transport modes. This included concerns that the reduction in APD could have a significant negative impact on growth in cross-border rail travel for example, including specifically the proposed high-speed rail link.
  • The "fairness" of the reduction in APD was questioned by some respondents. Several respondents described the policy as "socially regressive" in that the more prosperous parts of the population who are able to afford air travel are likely to see the greatest benefit. Some also suggested that the aviation industry is subject to a relatively low overall tax burden (not being subject to VAT or fuel duty for example) and questioned the fairness of a further "subsidy" for the industry: "With no tax on fuel, no VAT on airline tickets, removing APD would result in aviation being an effectively untaxed industry".
  • The potential risks of market distortion if Scottish and UK government policy on APD is not consistent, and the extent to which the success of the policy may be dependent on actions by the UK Government. This included suggestions that any advantage gained for Scotland as result of a reduction in APD is likely to be lost if the rest of the UK adopt a similar policy - referred to as a "race to the bottom".

2.9. In addition to the potential negative impacts of the reduction in APD, a substantial proportion of those raising concerns questioned the extent to which a reduction in APD will achieve the stated objectives. This included reference to the complexity of factors influencing passenger behaviour and airlines' decisions on the introduction of new routes, the risks that tourism growth as a result of a cut in APD will benefit outbound (rather than inbound) tourism, and respondents citing evidence that questions the nature of the causal link between air connectivity and economic growth.

2.10. In the context of this scepticism around the anticipated benefits of a reduction in APD, a range of respondents suggested that there is a need for a more robust evidence base on the likely outcomes of the policy, including detailed modelling of specific impacts. This included questioning of the evidence cited in the consultation document (some suggesting that this over-stated benefits and under-estimated risks) and reference to other relevant evidence sources.


Email: Mike Stewart,