Cardiff: Could we see APD devolved to Wales under Labour?

[Jerry]

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Anyone who follows me on social media will know that I’m an aviation geek and that I’m very supportive of Wales only international airport - Cardiff Airport – as well as being a pro Welsh independence supporter and someone who is supportive of devolution, which to leads me wonder if we might see APD finally devolved to Wales post 4th July if UK Labour win the election.

What is APD?

Air Passenger Duty is an excise duty that the UK government levies on every flight departing the UK on aircraft that can seat 20 or more passengers. In Scotland it is called Air Departure Tax.

From April 2024 it will have 4 bands with each having 3 different rates (reduced rate, standard rate and higher rate). The bands are Domestic Band (£7, £14 & £78), Band A 0-2000 miles (£13, £26 & £78), Band B 2001-5500 miles (£88, £194 & £581) and Band C 5500 miles & over (£92, £202 & £607).

The battle for devolution up to now

In 2012 the Silk Commission recommended the devolution of long haul APD to Wales to bring Wales in line with Northern Ireland, APD was fully devolved to Scotland in 2018. The Welsh government has consistently lobbied for the devolution of APD with the UK government refusing due to concerns about how it would effect other UK airports especially Bristol citing that Wales and England are part of the same aviation market despite the Welsh government producing a report in 2017 challenging that and in 2019 the Welsh Affairs Committee at the UK Parliament recommending APD be devolved and for the UK government to set out its plans to do so by 2021. The Conservative UK government has consistently refused to devolve any form of Air Passenger Duty to Wales.

Levelling the playing field for Cardiff Airport

The main reason for seeking the devolution of APD is to help make Cardiff Airport more competitive and more attractive to airlines to base at and to operate routes into and out of Wales. Attracting more routes and based aircraft from airlines like Ryanair and TUI is one of the airport’s main goals along with better hub connections through airlines like KLM.

The challenge is that it is very easy to get from Cardiff’s catchment area to England (its estimated that 20% of Bristol Airports passengers originate from Wales) and airlines know that they can base in England and attract passengers to them rather than having to operate their flights directly from Wales and even if they are minded to operate routes to Cardiff there is massive competition from other airports around Europe.

Any potential change to APD whether that is reducing it, scrapping it or changing it so it’s more an incentive to the airlines to operate more environmentally friendly into Wales can only be considered to benefit Wales only airport and Wales economy. Every passenger that doesn’t or can’t fly into and out of Wales is a passenger that isn’t spending money in Wales and contributing towards Wales economy. There’s no denying that since the pandemic the airport has been struggling, with passenger levels below 1 million for 2023. APD devolved to Wales could help alleviate that and there is a political aspect to this as well. The Welsh government own Cardiff Airport and the airport doing well reflects on it even if they don’t run the airport on a day-to-day basis. Having a successful and connected airport can only be good for Wales as a country and politically the party that forms the government which will be seeking re-election in 2026.

Is devolution likely?

The Welsh government has been pretty consistent in wanting APD devolved to Wales so even with a new First Minister I’d expect that it is something that they would seek out from UK Labour, though UK Labour hasn’t yet said whether they are willing to devolve it or not. The current Keir Starmer government in waiting doesn’t seem to potentially be that keen on devolving more powers to Wales especially in big areas like justice, transport and energy but APD might be something they could consider, almost as a token gesture to the Welsh government itself to make it look like a two-way partnership and that Wales is benefitting from a UK Labour government. In my opinion though if they do devolve APD then I suspect it will be long haul APD. This would have the least effect on English airports especially Bristol which doesn’t have a long-haul operation now and could be used as a carrot to get airlines like Qatar Airways and Play Airlines (Play will operate a limited schedule to Iceland between October and December 2024) to return and would also help with the airports goal of boosting freight through it and the Welsh governments goal of connecting Wales to places like North America and the Far East for business and inbound tourism. It would put into effect the Silk commission’s recommendations and part of the Welsh Affairs Committee recommendations. Devolving short haul will probably be a step to far for a government that will be prioritising England and may be concerned about keeping its northern Wales MPs happy as well.



Devolution of APD in the grand scheme of devolution will always be a minor granting of powers whether it’s all of it or just long haul but even just devolution of long haul puts Wales devolution settlement more on a par with Northern Irelands settlement and for a Welsh government that is currently embattled by the Vaughan Gething corruption scandal and Vote of No Confidence could be trumpeted as a win. The goal for Wales must be a successful and thriving airport and devolution of Air Passenger Duty can play a part in achieving that.

This article will be also be featured in BylinesCymru

 

[KARFA]

well, interesting framing. a level playing field means everyone is the same - i.e. the current situation. an unlevel playing field is when one place has an advantage over the other, i.e. no APD for Cardiff departures when APD is payable for departures from BRS/MAN/BHX.

obviously if it is devolved, then Wales can decide to do that. Where would they decide to get revenue to replace what they would have received from APD, or would something else be cut to match the cost?

 

[geoff]

Well done Jerry, I think a new incoming Labour Government, will have to think carefully, and certainly look at Wales in a more favourably light. The Welsh Labour Government, has blamed the Conservative Westminster Government for most of its ills over the past years, but now that Labour in Wales is having a torrid time a small gesture like abolishing APD at CWL might help get them out of the mess they are in, or come the next Senedd Election Labour could find themselves as no longer the largest party in the Senedd.

 

[Jerry]

a level playing field means everyone is the same -

Well I suppose it depends whether you think the field is level in the first place. Bigger airports do have a pretty big advantage already over the smaller airports.
And in the Liberal Democrats manifesto they state it like this:
Devolving Air Passenger Duty to put Wales on a fair playing field with Scotland and Northern Ireland and put Cardiff Airport on a fair playing field with regional airports in England
So they must think there's some imbalance.

Where would they decide to get revenue to replace what they would have received from APD, or would something else be cut to match the cost?

Well that would be up to the government and it would completely depend on how they approach it. Whether it's cut completely or changed. From what I remember I think the revenue was estimated about £5 million a year from the airport but that was with potentially double the passenger numbers. But as with any sort of tax change the idea would be that you get the money back through other means. In this instance more travellers spending more money in Wales itself by being able to fly directly to Wales rather than via England and also potentially attracting tourists who might not have travelled to Wales without a route to in place.

 

[Jerry]

Well done Jerry, I think a new incoming Labour Government, will have to think carefully, and certainly look at Wales in a more favourably light. The Welsh Labour Government, has blamed the Conservative Westminster Government for most of its ills over the past years, but now that Labour in Wales is having a torrid time a small gesture like abolishing APD at CWL might help get them out of the mess they are in, or come the next Senedd Election Labour could find themselves as no longer the largest party in the Senedd.

I think they're going to have a shock once Labour get in and they realise not much is going to change.

 

[gulftraveller]

Be careful what you wish for. I doubt abolishing APD is on anybody’s cards. Parties, particularly the Lib Dems, are obsessed with the environment. The Welsh government would also have to find a way of replacing the tax income.

 

[Jerry]

Be careful what you wish for. I doubt abolishing APD is on anybody’s cards. Parties, particularly the Lib Dems, are obsessed with the environment. The Welsh government would also have to find a way of replacing the tax income.

Whether it's abolished or not or whether its reduced or changed would be a decision for the Welsh government. At least with it being devolved it would be up to them not London.
As for the tax income itself the amount of APD produced by Cardiff Airport isn't great especially at the moment and is a drop in the ocean for a government whose budget is £20 odd billion a year.

Be careful what you wish for. I doubt abolishing APD is on anybody’s cards. Parties, particularly the Lib Dems, are obsessed with the environment. The Welsh government would also have to find a way of replacing the tax income.

APD generated by Cardiff Airport was £10 million. That was at at a time when passenger numbers was 1.5 million not under 1 million and there was a long haul route.

UK Government rejects air passenger duty being devolved to Wales

The Welsh Government described the decision as totally unreasonable

www.business-live.co.uk

 

[Jarvo]

If Labour were to devolve APD in its entirety to Wales, the Welsh Gov would be in a dammed if you do dammed if you don't scenario. Economy V Environment again.
As per Jerry's very interesting post, domestic, band A and band B would be of interest to CWL. Replacing them with a 'carrier bag charge' style tax may be an alternative?
As per the national trust, it costs roughly £5 to plant a tree. From the same source, in a tree's lifetime it will absorb about a tonne of CO2.. Roughly equivalent to a return flight from London to New York.
Domestic and band A - £5, one tree per passenger planted. Band B - £15, three trees planted per passenger.
A lower tax rate and a scheme where by the Welsh Gov sign and certify the amount of trees and carbon offsetting paid for by each airline to use in their own statistics and marketing etc. Using the airport to create new Welsh woodland, or even as 'eco diplomacy', funding tree planting in other nations.

 

[Jerry]

Using the airport to create new Welsh woodland, or even as 'eco diplomacy', funding tree planting in other nations.

Well i believe one of the Welsh governments plans is to plant more trees, i think its part of a controversial farming subsidy scheme. It doesn't have to be trees either, maintaining grasslands and using it to subsidise eco friendly farming can be options. But unless Wales gets the powers it can't do anything with them.

 

[Sherburnflyer92]

Well i believe one of the Welsh governments plans is to plant more trees, i think its part of a controversial farming subsidy scheme. It doesn't have to be trees either, maintaining grasslands and using it to subsidise eco friendly farming can be options. But unless Wales gets the powers it can't do anything with them.

That seems very good plan - as we've all learnt the natural carbon removers are Trees. Basic science..

Just hope they don't do what the demented unintelligent Scots did and chop down trees in exchange for wind farms - because somehow that is Greener.

 

[Jerry]

That seems very good plan - as we've all learnt the natural carbon removers are Trees. Basic science..

Just hope they don't do what the demented unintelligent Scots did and chop down trees in exchange for wind farms - because somehow that is Greener.

Wind farms are being built in mid Wales, also there is more offshore wind farms being built.

 

[Aviador]

In principle I'm not against handing the APD tax made from Welsh aviation over to the Welsh government to spend on whatever it chooses. If a devolved government then used its powers of devolution to lower the APD at CWL to make it more attractive to English customers across the Severn, then I can't agree. It would put BRS at a huge and unfair disadvantage to its neighbour to the West.
#AirPassengerDuty #WalesAirPassengerDuty

 

[Jerry]

In principle I'm not against handing the APD tax made from Welsh aviation over to the Welsh government to spend on whatever it chooses. If a devolved government then used its powers of devolution to lower the APD at CWL to make it more attractive to English customers across the Severn, then I can't agree. It would put BRS at a huge and unfair disadvantage to its neighbour to the West.
#AirPassengerDuty #WalesAirPassengerDuty

Well i'd expect that any Welsh government would be focusing on getting Welsh passengers flying from Wales. As for English passengers, CWL was attracting them for its long haul Qatar route but would English people really travel to Cardiff for short haul flights? Personally i'd be sceptical about that.

 

[geoff]

WITH BRS now at 10 million passengers, and CWL below 1 million, It would hardly be a disadvantage to BRS.

 

[Aviador]

Well i'd expect that any Welsh government would be focusing on getting Welsh passengers flying from Wales. As for English passengers, CWL was attracting them for its long haul Qatar route but would English people really travel to Cardiff for short haul flights? Personally i'd be sceptical about that.

WITH BRS now at 10 million passengers, and CWL below 1 million, It would hardly be a disadvantage to BRS.

OK then, let's swing this discussion around the other way. APD is handed to the Welsh government and they decide to leave the charge as it is, or even increase it where as the English government decide to scrap or reduce the charges. Clearly you wouldn't be happy with that scenario either. That is why is isn't a good idea as it allows an unfair disadvantage to one side of the Severn or the other. The same could be said for Scotland and the Scottish airports in competition with say Newcastle airport.

 

[Sherburnflyer92]

The real argument is that APD strangles economic growth. There is much fairer way if the government wants to collect tax which is to tax based on frequency of flights taken - but again that will, like majority of UK taxes, mean the minority are paying the majority.

So if it is devolved to Wales it's in the welsh interest to lower it to attract more passengers through Cardiff - pack it high sell it cheap sort of tactic.

Personally I wouldn't mind if the tax was ring fenced by governments to assist with changing aviation into a more sustainable industry - not that it'll ever be totally sustainable. Instead the tax collected is just wasted on bureaucracy and corruption.

 

[Jerry]

OK then, let's swing this discussion around the other way. APD is handed to the Welsh government and they decide to leave the charge as it is, or even increase it where as the English government decide to scrap or reduce the charges. Clearly you wouldn't be happy with that scenario either. That is why is isn't a good idea as it allows an unfair disadvantage to one side of the Severn or the other. The same could be said for Scotland and the Scottish airports in competition with say Newcastle airport.

As a supporter of Cardiff Airport no i wouldn't be happy but also as someone who supports Welsh self government I'd respect that is the decision made by the Welsh government and would hope that it would change its mind further down the road. If England's government made decisions for England that would be up to the English government.

 

[geoff]

I think that the Welsh nation is going to be very disappointed with a labour government in Westminster, two years ago whilst in opposition they promised that all Brexit money due to Wales, would be passed to the Welsh Government, in their manifesto they now state that the money would be distributed by Westminster, after talks on the subject with the Welsh Government.

 

[Aviador]

I think that the Welsh nation is going to be very disappointed with a labour government in Westminster, two years ago whilst in opposition they promised that all Brexit money due to Wales, would be passed to the Welsh Government, in their manifesto they now state that the money would be distributed by Westminster, after talks on the subject with the Welsh Government.

There was never going to be any Brexit money. Not for Wales, not for anyone. Those who thought that were nieve. Brexit cost money, it didn't make money. Remember, we're all still waiting on the NHS money from the big Brexit bus. It ain't coming, not now not ever.

Anyway, as an Englishman, a man who is believes in fairness. I belive APD can only be best kept with the UK government as distributing it as I described in my earlier post isn't fair, whichever side of the border you are on.

 

[Jerry]

There was never going to be any Brexit money.

Its not Brexit money. Its the levelling up fund that replaced EU money. The Tories refused to let the Welsh government administrating it like they previously did with EU funds. Starmer previously stated that he'd let the Welsh government administer it but has now gone back on that and intends for the UK government to do it. He doesn't seem to be giving much to Wales in his manifesto.