British Airways to Reap SNP Tax Benefit From Scottish ‘Yes’ VoteChris Jasper and Kari Lundgren
British Airways and EasyJet Plc may be among corporate beneficiaries of a vote to break up the United Kingdom, with the Scottish National Party pledging to cut a tax that carriers say makes a major dent in earnings.
The SNP has said the so-called air passenger duty would be cut in half and later scrapped should the party form an independent Scottish government after a “Yes” vote in a referendum next week, estimating the levy deters 2 million visitors a year.
British Airways has led calls to pare APD, which cost parent International Consolidated Airlines Group SA 723 million euros ($934 million) in 2013, according to its annual report. IAG Chief Executive Officer Willie Walsh told the BBC in February that independence “might be marginally positive” for BA, which offers as many as 55 flights to Scotland per day out of about 800 worldwide, were the SNP to honor its pledge.
“Willie’s focus is to see APD abolished,” Laura Goodes, a spokeswoman for London-based IAG, said in response to questions this week, while adding: “Our line is that the referendum is a matter for Scottish voters.”
The U.K. has the highest aviation tax in the world, IAG said in its annual report, with APD jumping 260 percent on short-haul flights and as much as 360 percent on long-haul since 2007, compared with an inflation rate of 20 percent. A family of four flying economy-class to Australia pays 376 pounds in tax, versus the equivalent of 160 pounds in Germany, 15 pounds in France and nothing in 25 other EU countries, it said.
British Airways flights link Edinburgh and Glasgow with London’s Heathrow, City and Gatwick airports, and the oil town of Aberdeen with Heathrow and City alone. The carrier, which famously bears the union flag on the tails of its aircraft, employs about 1,300 people in the country.
“The cutting and eventual abolition of air passenger duty is a vital way of helping to boost tourism and investment and create jobs -- and demonstrates perfectly just how economically powerful and successful an independent Scotland will be,” the SNP said in a June 10 statement on the tax.
EasyJet, Europe’s second-biggest low-cost carrier, said it’s also opposed to the levels of aviation tax. The company put its name to a joint statement in 2013 that also included British Airways, Virgin Atlantic Airways Ltd. and Ryanair Holdings Plc and condemned the most recent APD increase.
“We believe it is for the Scottish people to decide and our view on APD remains the same,” Anna Knowles, a spokeswoman for the Luton, England-based carrier said.
‘Get Over It’
At Ireland’s Ryanair, the European low-cost No. 1, CEO Michael O’Leary has said most airlines would back the SNP’s stance on APD. The independence issue itself “is a matter for the Scots, and everyone else should stay out of it,” he said Sept. 8 in a Bloomberg Television interview in New York.
“Whether they vote for independence or don’t vote for independence people will still travel to Scotland, they will still fly from Scotland to the U.K.,” O’Leary said. “I think it will be difficult for the U.K. economy and there would be certain adjustments to be made, but like everything else, business will just get over it and move on.”
While the SNP has said that its Conservative, Labour and Liberal Democrat opponents “are all over the place” on APD, pledges this week on the transfer of more powers to Scotland following a poll pointing to victory for the secessionists may mean the country gains sway over the tax whatever the vote.
Control over the levying of APD wasn’t included in the Conservatives’ June report on increased devolution, though Ruth Davidson, leader of the party in Scotland, favors the move.