My Column

Airports hit turbulence in tax spat

  • Date: Monday 1st July 2019
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I’m all for Scotland’s regional economies taking off thanks to a bit of help from the taxman - but there has to be a level playing field.

After all, tax exemptions are too readily seen as an unfair advantage in a highly competitive market, allowing one business to take flight, while another remains grounded. It’s a tricky balancing act.

I wasn’t at all surprised then to see Aberdeen International Airport (AIA) declaring its displeasure that one of its major rivals in the north will continue to enjoy what it calls “tax haven” status while its own passengers pay between £13 and £172 extra for flights.

At the heart of the spat is Air Passenger Duty (APD) which has long been a massive bugbear for airlines and airports operating in Scotland.

When the Scottish Government announced in May that it had done a U-turn on getting rid of the hated tax, the existing animosity only intensified.

Holyrood’s decision in May to scrap plans that it had said would eventually lead to the abolition of APD saw Edinburgh Airport’s chief executive Gordon Dewar furiously insisting that “airports and airlines have been led down a path of failed promises”.

The economic result, he said, was that airlines had “already walked away from Scotland due to this failure to deliver”. 

The airport had previously predicted that just halving APD would create almost 4,000 jobs and add £1bn to the Scottish economy, so no wonder it was put out by the sudden U-turn amid declaration of a climate emergency.

However, while this tax has continued to impact the aviation industry across the country, Inverness Airport – and this is the crux of the issue – has remained exempt since 1994. The stated aim has been to protect remote and rural communities that have come to rely on its “lifeline services”.

Essentially, Holyrood believes that services to and from the likes of Orkney, Shetland and Lewis could be vulnerable to commercial pressures without a little extra support to keep them operating.

Shifting passenger figures point squarely to why Aberdeen Airport is a bit miffed by the situation.

Civil Aviation Authority data indicates that Inverness Airport received 893,000 terminal passengers in 2018, up from 607,000 in 2013.

Meanwhile, 92 miles away, Aberdeen International Airport saw a decrease from 3.4 million to three million passengers across the same period – and some have argued that the likes of British Airways and easyJet have even moved their services from Aberdeen to Inverness as a result of the exemption.

AIA says that the exemption may have been appropriate when Inverness Airport’s passenger numbers were below half a million, but it should no longer be in place now that they’ve swelled considerably.

How to remedy things? AIA’s independent consultative committee reckons that either Aberdeen should also get an exemption, or Inverness should lose its exemption for non-island flights.

But the Scottish Government has refused to budge. It says that “air connectivity is critical for the Highlands and Islands” and the exemption “must remain in place to protect remote and rural communities”.

Clearly frustrated, AIA insists that it’s just not a black and white situation. Indeed, it agrees fully that island services should remain exempt from APD, but believes that as long as an exemption is in place for ALL flights from Inverness, it will continue to act as an incentive to airlines to operate services there instead of Aberdeen.

In other words, Inverness will continue to enjoy a significant competitive advantage over it.

I suspect this isn’t the last we’ve heard of the argument. Buckle up folks – there could be some major turbulence ahead.

 

SIDE

Scotland’s housing crisis is still very much alive and well throughout our nation today.

Despite the Scottish Government’s pledge to build new homes, we are still looking at a housing market with huge pressures. People continue to face long waiting lists for social housing, private rental agreements are still outside of the financial realms of many, and the homelessness rate is up three per cent on the previous year.

I was therefore fascinated to read this week about Blackwood, a Scottish specialist housing and care provider, which took its ‘home of the future’ to Europe’s largest housing festival – the Chartered Institute of Housing in Manchester.

The team behind the design came up with the innovative idea of using shipping containers to get around the logistical issues of transporting the house, and it’s something that needs to be seen to be believed.

The pioneering home, titled the ‘Blackwood House’, can transform the day-to-day lives of people who want to live independently, using cutting-edge technology and design that reimagines living spaces and redesigns it both physically and technologically to increase accessibility.

Every aspect of the house has been carefully considered to remove obstacles or issues that can disrupt daily life.

It features electric doors that slide open and shut at the touch of a tablet. Lights, blinds, doors, entry systems and heating can all be controlled via Blackwood’s bespoke digital care system, CleverCogs, with most of the technology having the added benefit of being voice controlled.

Whether this is the solution to the nation’s housing crisis is still to be seen but any provision of affordable new housing with the added attraction of ‘smart’ technology is certainly a welcome prospect. It is only through these innovative concepts and through policy changes relating to housing that we will see a home for all.

 

LAUGH

One glowing skin smoothie, two fruit-infused waters, and a detox juice please. Could this soon be the bar orders you hear at your local boozer?

Potentially yes, if your local pub is part of the Greene King group, which is aiming to turn around a dip in its profits by targeting clean living millennials and the vegan market.

The group’s new chief executive, Nick Mackenzie has said that they’ve seen a shift in customer demands, with punters looking for healthier options and sales of non or low-alcohol drinks up 50 per cent compared to a year ago.

Green King predicted this year will be more challenging than last, especially with no large football tournaments taking place, hence the renewed focus on experiential offers. With the vegan and health trends looking set to continue, I’ll certainly be keeping my ears peeled next time I’m in the pub.  

 

WEEP

I was disappointed to read of yet another struggling household name going into administration.

Bathstore, Britain’s biggest bathroom retailer, has gone bust, making 89 head office staff redundant while putting another 450 store jobs at risk.

While it has promised that all stores will continue trading and is confident of completing the majority of existing orders, it has called quits on the installation side of the business completely.

The collapse has left a trail of unhappy customers, some of whom have been without washing and toilet facilities and facing weeks without bathroom facilities while they hunt for alternative installers.

Bathstore is the latest high street retailers to go down the drain, and sadly, it certainly won’t be the last.

 

 

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