Wednesday, 5 February 2014

APD and how to get new transatlantic routes to Newcastle?

All taxes have an effect on businesses and their growth potential. Yet without taxes we have no money for schools, hospitals and other government services. Thus we try to impose the minimum taxes to get the maximum return.
Yet it still remains the case that we need to generate more revenue for the state and stop spending as much - the impacts of the recession, the massive debts built up under the last government, and the need to live within our means requires the state to put a tax on flights. This is Air Passenger Duty or APD for short. We all pay it, when we fly, and the Treasury see it as a good income stream.
Into this argument comes the problem of new entrants to the market, and the desire to secure long haul major flights to key destinations like Beijing and America from regional airports. Clearly I am interested in standing up for Newcastle Airport, part of which is in the Hexham constituency, and for whom many of my constituents work, in some shape or form. It is a great airport, well run, and clever at diversifying its base. I know it pretty well having seen it from every which way these last few years. Recently I met once again with the airport team, and some of their commercial clients.

For many years Newcastle Airport has been looking to attract a transatlantic flight. This would cost an airline a lot of money. But the APD is a genuine hurdle and barrier to entry. Consequently we have looked at reductions in APD, but the treasury are understandably reluctant, until the economy really picks up. A lower tax for the regions and a higher one for London and the south east was shown to be unworkable in the grand scheme of things. So now we are looking at a regional APD tax holiday - just as we give tax breaks to new businesses and start ups. The principle is the same - you get hypothetically a 2 year tax holiday to establish your business - in this case a new route: the details are fairly complicated.
I am keen to put the case to Treasury, and as a result I have asked for a debate in the House of Commons.
I shall be addressing the business case, the radius of what constitutes a regional airport, the case for the entry criteria to be a proper long haul flight (not a 2 hour hop to Majorca) and what constitutes a new route. I will also be address the comments of the Davies report on Heathrow and the south east airport issue.

I hope to get the debate next week, before the house rises for half term on February 15, but as always we are in the hands of the speaker. For more details see the Journals recent report here: