AIR PASSENGER DUTY (APD)

Air Passenger Duty (APD)

Contents

Introduction3

Background3

Barriers to Devolving APD4

Competitive Advantages to Cardiff Airport5

Cardiff Airport; Strategic Asset6

Cardiff Airport's Potential6

Serving Capacity6

Socio-Economic Characteristics6

Large Scale Operations7

Financial Support7

Significant Opportunity7

Connectivity and Growth8

Support by Welsh Government9

Role of Business Community9

Analysis of the Air Travel Market in Wales10

Consideration of the Wider Issues11

Cost and Benefit Analysis11

Four Pillars to Support12

Methodology13

Key Sources of Information14

Cost14

Time Table/Milestone14

Changes to the Specifications15

Conditions of Contract for Research Services15

References17

Air Passenger Duty (APD)

Introduction

Airports are essential elements of economic development policy national, regional and local level as they represent an important competitive advantage for the promotion of an area; an airport is definitely a growth engine for the economy of the surrounding area, not only in terms closely related to transport activities, but especially for the entire economic system. Although the economic importance of an airport is widely recognized, it is sometimes difficult to accurately assess the benefits and be able to give participants the surrounding communities, especially when need to compare them with the negative externalities that involve immediate vicinity of the airport.

A study that is able to estimate the economic impact is therefore useful not only to highlight the profitability of the investment in the management company takes care, but also to increase the involvement the local community to support the development of the airport and economy to it, directly and indirectly connected. The development of an airport involves the occurrence of two types of benefits: one hand, it provides a transport service to companies and individuals, providing the opportunity for rapid movements, on the other produces wealth as "production facility", which focuses a strong labor demand and large amounts of investment. We must not forget that the presence of an airport and its Land accessibility, more and more selection criteria for the choices localization of business, industry and services, particularly enterprises multinationals in the service industry. One call can thus play an important economic role as a center of development for the whole area in which this is localized.

Background

In 2010 the Holtham Commissionrecommended that the Welsh Government should undertake an assessment of the usefulness of some minor taxes, including air passenger duty. Following that recommendation, the aim of this research is to consider whether APD would provide Welsh Ministers with a useful economic policy lever.

APD is levied on the carriage of chargeable passengers on chargeable aircraft from a UK airport. It is payable by the operator of the aircraft and is due when the passenger aircraft first takes off. The amount due is dependent on the final destination and class of travel of the chargeable passenger (HMRC 2012).

APD is currently non-devolved but the UK Government is on record as continuing “to explore the feasibility and likely effects of devolution to Scotland and Wales". This is likely to be considered by the Commission on Devolution in Wales ('Silk Commission'), launched on 11 October 2011. The independent Commission has been established to review the present financial and constitutional arrangements in Wales. The first part will review the case for the devolution of fiscal powers to the National Assembly for Wales and recommend a package of powers that would improve the financial accountability of the Assembly consistent with the United Kingdom's ...