Air Passenger Duty stifling North East business growth

NORTH East exporters will suffer if the Government does not rethink Air Passenger Duty (APD), according to the region’s leading membership organisation.

 The North East Chamber of Commerce (NECC) is calling for the Government to overhaul its current system, which it claims is having a disproportionate impact on the region’s businesses.  NECC believes that differential rates for regional airports, in place of the current ‘blanket’ duty, will ensure that the North East economy does not suffer and that its export businesses can continue to grow.

 James Ramsbotham, chief executive of NECC, said: “The North East has a strong track record in exporting and we believe that growing this through a reform of APD could hold the key to the region’s long-term economic prosperity.

 “The Government has spoken of a commitment to rebalance the economy and NECC believes that in order to do this, there must be a conscious effort to bolster the North East’s international trading capacity through policy that supports exporters.  North East businesses already face heavier costs than their counterparts in other regions in order to access common markets due to high fuel prices, so addressing the anomalies that APD gives rise to will ensure that our exporting businesses have a much better chance of realising their potential.”

 In a letter to Transport Secretary, Phillip Hammond MP, NECC outlines the affect that the current system is having on the region’s businesses.  It claims that APD has a greater impact on connections to regional airports because these flights carry fewer passengers and have less elastic demand than major hubs.  It is thought that the duty is putting airlines off introducing new connections to key international markets from the North East, making it more difficult for regional businesses to trade overseas.

  Mr Ramsbotham said: “Connections, such as those provided by Emirates from Newcastle International Airport, give our businesses easy access to key international markets.  APD is placing increased pressure on these services, and is stifling the growth of new routes – which in turn would stimulate the growth of the North East export market.”

 NECC adds that a reform of APD, with a lower rate for regional airports, could have the added benefit of reducing pressure on crowded South East airports, while helping to unlock valuable economic capacity in regions such as the North East.  The North East, it claims, has the capacity to cope with increased air traffic demands, unlike the South East, and the Government should take steps to ensure that the region achieves the growth it is capable of.

 Mr Ramsbotham added: “Newcastle International Airport in particular has the capacity to serve the needs of thousands more passengers every year and provide added capacity for North East exporters.  We would urge the Government to do what it can to help this region take full advantage of its assets and further grow the crucial export market, which we believe will be the key to growing the region’s economy.”

 Graeme Mason, planning and corporate affairs director at Newcastle International Airport, said: “We welcome this timely intervention from the North East Chamber of Commerce.  We await with interest what the Chancellor has to say about APD in the March 23 Budget. If, as we expect, he announces a consultation on the reform of APD, we call upon the region to follow the lead of NECC, and encourage the government to act decisively on APD.

 “By freezing or reducing the rate of APD out of regional airports, the government could, at a stroke, rebalance the economy, reduce the north-south divide, and take the pressure off the South East.”

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