No Real Benefit to Cutting Passenger Duty

Halving passenger duty would cost £1.7m a year and is unlikely to lead to a big increase in travel to the island, according to the Treasury Minister.

Dr Alex Allinson was asked whether he has evaluated the potential benefit to the economy of halving Air Passenger Duty by John Wannenburgh (Douglas North).

Passenger Duty was introduced in 1949 and is equivalent to the same as charged in the UK, but it isn’t shared under the Customs and Excise Agreement, so there is no requirement to keep our level at the same as the UK.

Despite this, historically the gov has ensured the rates of APD mostly mirror the UK rates charged on flights from the UK to the Isle of Man, making it streamlined for airlines and in turn passengers.

Dr Allinson said: ‘Reducing the Isle of Man rate of APD would therefore only provide a reduction in one leg of the journey. APD on a standard seat, for an adult on a flight from the Isle of Man to the UK is £13. To halve this rate would potentially reduce the flight cost by £6.50, should the airline pass the saving on to the customer.

‘As the UK apply APD on the return leg of the journey, the saving on a return trip between the UK and Isle of Man would still only be £6.50. From discussions with the Department for Enterprise it is understood that this level of saving is unlikely to encourage any significant increase in travel to or from the island.’

APD is forecast to generate £3.6m in 2023/24, therefore reducing it would cost £1.7m at, what the Treasury Minister called, ‘a time of increasing pressure on government finance’.