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).

Replacement to Air Passenger Duty (APD): consultation analysis
6. Connected Flights

6. Connected Flights

6.1. The consultation document included an overview of current UK APD connected flight rules, and suggested that there is potential for these rules to form the basis of connected flight rules for the Scottish replacement tax. Current UK rules state that a passenger is not a chargeable passenger on subsequent flight(s) of a journey, if the flights are connected (specific criteria are set for when two flights are considered to be connected). This approach ensures that passengers transiting through UK airports are not subject to "double taxation". Moreover, the exemption for subsequent parts of connected flights helps to protect the hub status of UK airports relative to other non- UK airports.

6.2. This section considers respondents' views on the extent to which current UK APD connected flight rules could be used for a Scottish replacement tax, and the risks of passengers being subject to double taxation.

Q13a: Do you think that the current UK APD rules relating to connected flights should form a baseline position for a Scottish replacement tax?

Q13b: If you answered no, please explain your answer. What rules do you think should be considered instead?

6.3. Question 13a asked whether the current UK APD rules on connected flights should form the basis for the Scottish replacement tax.

6.4. 81 respondents answered Question 13a, 51% of all respondents. The majority of these respondents agreed that the current UK APD connected flight rules should be retained; 59 respondents, 73% of those answering the question. A further 22 respondents indicated that they disagreed with this proposal (27% of those answering the question).

6.5. There was some variation in the profile of views across respondent types. Group respondents were more likely than individuals to agree with the proposal; more than 9 in 10 group respondents agreed, compared to around half of individuals. Individual respondents accounted for a large majority of those opposed to retaining current connected flights rules.

Table 6.1: Q13a Do you think that the current UK APD rules relating to connected flights should form a baseline position for a Scottish replacement tax?



No response


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 those answering question





6.6. The consultation document invited further written comments at Question 13b, asking those who did not think that current UK APD connected flight rules should form a baseline for the replacement tax, which rules should be considered instead. A total of 41 respondents provided further written comment, including 22 of the 59 respondents who supported the UK APD connected flight rules, and 18 of the 22 who disagreed.

6.7. Most of those supporting use of UK APD connected flight rules who provided further comment re-stated some of the benefits set out in the consultation document. This included for example in protecting the status of UK hub airports, although an airport respondent noted that changes in the range and profile of operators in the domestic market have resulted in a significant reduction in opportunities for connected flights from Scotland since UK APD was first introduced.

6.8. Some of these respondents also emphasised the importance of maximising consistency with UK APD, in terms of minimising confusion for passengers and for administrative simplicity for operators and other travel organisations. This was similar to views expressed by these respondents in relation to other aspects of the scope/structure and exemptions for the Scottish replacement tax.

6.9. A professional tax/accountancy organisation suggested that development of the Scottish replacement tax would have to consider whether the rest of the UK is treated as an 'international' destination, given two different administrations will be involved. An airport and a business/economic development respondent also noted that there will be a need to secure agreement with the UK Government around the application of connected flight rules in the event that a lower charge Scottish APD replacement tax is in place alongside unchanged UK APD charges.

6.10. Most of those who did not support retention of UK APD connected flight rules saw this exemption as inequitable. Several of these respondents made specific reference to examples of an APD exemption on the first part of a journey applying across the journey as a whole, and which were seen as unfair. This was most commonly in relation to flights from the Highlands & Islands to Scottish or other UK airports, which subsequently connect with international flights. An airline respondent also suggested that connected flight rules dis-incentivise direct flights and subsidise point to point operations of those airlines which also offer a connecting service - and in this way discriminates against airlines which operate only point to point flights.

6.11. A substantial proportion of those who did not support retention of UK APD connected flight rules wished to see the removal of any exemption for subsequent parts of a connected flight. This included an airline, an other transport/travel respondent, an 'other' organisation respondent, and several individuals. These respondents suggested that passengers should be treated as chargeable passengers across all parts of a journey, such that all passengers travelling to the same destination are equally subject to APD. This included a specific interest in ensuring that exemptions for APD only apply to the initial non-chargeable part of a connected flight.

6.12. For several of the individual respondents advocating a removal of connected flight rules, this was in the context of a desire to see wider changes in approach to the Scottish APD replacement tax. This included for example those seeking an overall increase in taxation of air travel, and those who wished to see a closer link between taxation and environmental impact (e.g. based on total journey distance).

Q14: What situations do you think could result in double taxation after a Scottish replacement to APD is introduced, and how might double taxation in such situations be avoided?

6.13. The consultation document makes clear that the Scottish Government intends to work with the UK Government to ensure that passengers on connected flights are not considered chargeable passengers under both UK APD and the Scottish replacement tax, where that is not the policy intention. Question 14 asked respondents about the circumstances where this "double taxation" might apply, and the approaches that might avoid these circumstances.

6.14. A total of 53 respondents provided written comment at Question 14, 33% of all respondents. This group of respondents comprised 16 individuals and 37 group respondents, the latter primarily comprising aviation and other transport/travel, and business/economic development respondents.

6.15. In terms of the circumstances where double taxation might arise, a substantial proportion of those providing written comment suggested that these circumstances would be minimised if the same connected flight rules are adopted for the Scottish APD replacement tax. This was mentioned by a range of respondents including airlines, airports, business and economic development, and professional tax/accountancy respondents.

6.16. However, respondents referred to a range of specific examples where double taxation is currently an issue and/or where the introduction of a Scottish replacement tax could exacerbate the issue of double taxation.

6.17. The circumstance most commonly mentioned by respondents related to the impact of connected flight rules for passengers purchasing separate tickets for unconnected flights. It was noted that these passengers are currently subject to APD on three legs of the journey, while those able to purchase a single through ticket are only charged for one leg. This was raised as a specific issue in the context of changes to the air travel market in Scotland since the introduction of UK APD, including the significant role played by low cost operators reliant on point-to-point tickets and where connected flights are not available. A small number of respondents noted that this was a particular issue for Scotland's regional airports, and thus could have a significant impact on regional economies.

6.18. Several respondents referred to the impact of EU regulations which do not allow differential treatment of domestic UK flights and flights to other band A locations. These respondents noted that these regulations mean that return flights within the UK are subject to APD on both legs of the journey, while for return flights to other band A destinations APD is due only on the outward leg.

6.19. A small number of airline and other transport/travel respondents expressed concerns around cases where a flight from Scotland to an airport elsewhere in the UK continues on to an international destination. It was noted that airlines must not be required to pay for the final number of passengers departing the UK to the Scottish Government, and then again to the UK Government.

6.20. As was noted in relation to Question 13, a small number of respondents noted the risk of the UK Government choosing to charge APD on outward flights from UK airports for connecting passengers originating from Scotland. It was suggested that an agreement will be required with the UK Government around the application of connected flight rules in the event of the lower Scottish replacement tax is in place alongside unchanged UK APD charges.

6.21. While most of those providing comment at Question 14 highlighted potential double taxation circumstances as requiring action, it should be noted that some did not see double taxation as a significant negative. This was particularly the case for those who objected to the proposed reduction in APD. Others also noted that these and other concerns would not apply if a decision is taken not to devolve APD to Scotland.

6.22. In relation to addressing the risks of double taxation, respondents again noted that ensuring consistency in approach to connected flights with UK APD would minimise the risks of double taxation. However, a professional tax/accountancy organisation noted that the extent of any double taxation is also dependent on decisions taken by the UK Government - for example if the application of UK APD to use of hub airports is amended. It was suggested that close working between the Scottish and UK Governments will be required on an ongoing basis.

6.23. Respondents also made a number of other suggestions of measures that could be introduced to minimise double taxation:

  • In relation to double taxation on unconnected flights originating in Scotland where a through ticket is not available, a small number of business/economic development and other group respondents suggested that an agreement is made with the UK Government on circumstances where the principle of connected flight rules could be applied to unconnected flights.
  • A business respondent suggested that APD (or the Scottish replacement tax) is not charged on any domestic UK flight connecting to an international flight.
  • A small number of respondents suggested that consideration is given to the time periods allowed for connected flights to ensure that these are sufficient to cover all cases. This included specific reference to the frequency of flights to remote and rural locations (such as the Highlands & Islands region) as potentially requiring an extension of the current permitted time between connected flights.
  • An other transport and travel respondent suggested that a different approach which taxes all flights from Scotland whether or not they are connected flights might be "simpler, greener and better for Scotland's economy". This respondent suggested that all flights should attract some level of APD, and that larger reductions in APD could be targeted on some direct flights such that the overall 50% reduction is achieved. However, it was noted that further analysis and planning would be required to inform such an approach.


Email: Mike Stewart,