Inside Transport

The failure to cut air taxes is a handy excuse for airlines, writes Alastair Dalton

Before the worst snowfall for 20 years appeared to smother debate over the announcement, Ryanair’s shock decision to close its Glasgow base had some in the industry shaking their heads.

Their disbelief was not from the unexpected decision, but rather the reason the airline gave for axing most of its Glasgow routes – air passenger duty (APD).

It is true Ryanair is not the first to blame APD, and more specifically the Scottish Government’s plans to halve it being shelved.

Norwegian, which launched the first budget transatlantic flights from Edinburgh last year, has also blamed the lack of the promised reduction for cutting back flights.

However, while such airlines bleat loudly about the impact of APD, it doesn’t seem nearly as big a deal for others.

Is Ryanair using APD as a smokescreen for underperformance on its Glasgow routes?

Some are arguably to destinations with low demand, while some of the rest are routes which rival airlines have failed to make work.

Among other routes, Ryanair competed with Easyjet to Berlin, and three others on the most popular Spanish routes, such as Lanzarote and Malaga – and there’s no sign of them pulling out.

In fact, days after Ryanair’s announcement, Loganair stepped in to take over the Derry route. Others may follow suit.

It doesn’t help that Ryanair is keeping most of its more popular Mediterranean holiday routes at Prestwick while axing them at Glasgow – prompting claims that the Scottish Government is effectively subsidising them through its ownership of the loss-making airport.

Some industry observers reckon this even distorts the market, although Ryanair has argued that operating at both airports ensures it is not overcharged at either. Cold comfort now.

Ryanair have claimed that APD “is a burden Glasgow cannot bear”. But it believes the opposite about Edinburgh, where routes will be increased at Glasgow’s expense.

This, the airline says, is because the capital attracts more inbound passengers than Glasgow, particularly tourists.

However, chief executive Michael O’leary must have known this when he announced new routes from Edinburgh a year ago, explicitly saying they were conditional on APD being halved.

So why didn’t Ryanair carry out its threat, I asked its chief commercial officer David O’brien when he revealed Glasgow’s fate instead? “Because we’ve withdrawn from Glasgow,” was all he said in reply.

The wider question is why airlines have issued threats about what they would do if the tax was not cut, or how much they would expand if it was.

The policy has been pursued by a minority SNP government in the face of opposition of varying kinds from all the other parties, so did the aviation industry really think there was a realistic prospect of getting it through?

In the event, not only has the SNP done a Budget deal with the Greens – the fiercest opponent of cutting air taxes – but ministers have, perhaps conveniently, also found themselves unable to proceed anyway.

This is because of the apparent need to get European Commission approval to continue an APD exemption for Inverness Airport.

With no likelihood of rapid progress, it’s time they laid off on APD. If they’ll only fly a route if passengers pay £6.50 less, it doesn’t sound that viable in the first place.