The Scottish government has axed its plans to replace Air Passenger Duty (APD) with a new, reduced Air Departure Tax (ADT).
Ministers in Holyrood previously committed to reducing APD, which is devolved from Westminster, by 50% and eventually abolishing it.
However, plans to reduce or abolish the tax were scrapped on Tuesday (7 May) amid fresh concerns over the environmental impact.
The Scottish Labour Party said the move would be contrary to the government’s efforts to reduce greenhouse gas emissions while finance secretary Derek Mackey said reducing APD was “no longer compatible” with the government’s climate change targets.
The decision comes just a fortnight after the government confirmed its plans to replace APD with ADT had been put back “beyond April 2020”.
Airports say reducing or scrapping APD would encourage more airlines to pursue operations in Scotland, boosting the country’s economy and tourism industry.
Edinburgh airport chief executive Gordon Dewar branded the decision “reactionary” and accused the government of leading airports and airlines “down a path of failed promises for three years”.
"It also raises questions about continued support for our tourism sector when airlines have already walked away from Scotland due to this failure to deliver,” he added.
A 2015 report by the airport suggested cutting APD or ADT by 50% would create nearly 4,000 jobs, add £1 billion to the Scottish economy by 2020 and prevent a loss in tourism of £68 million a year to the country.
Halving the tax and eventually abolishing it was an SNP manifesto pledge in 2016. However, the country has since declared a climate emergency and brought forward its plans to reduce greenhouse gas emissions to a net zero by 2045, five years before the rest of the UK.
Ken McLeod, president of the Scottish Passenger Agents Association (SPAA), said: “We are deeply disappointed by this U-turn on what was a flagship policy within the SNP’s election manifesto. Not only has the Scottish government failed to deliver on this key pledge to provide tax breaks to the aviation industry, its position on issues affecting its roll-out has completely altered.
“We were told the significant delays to the introduction of a devolved Air Passenger Duty were as a result of EU state aid rules, and today Nicola Sturgeon cites the need to cut carbon emissions as part of the effort to tackle climate change. Studies have shown that direct emissions from aviation account for about 2% of global greenhouse gas emissions: there are many other polluters which account for far greater levels of emissions.
“This is bad news for Scottish travellers and the nation’s tourism industry: we are already seeing evidence of airlines moving routes elsewhere and the net result of this decision will be reduced flights and reduced connectivity. SPAA will continue to lobby the UK government as members of Fair Tax on Flying, and we will be pressing for the Scottish Government to reconsider its position.”
Airlines UK, the trade body for UK registered airlines, said scrapping the policy “would do nothing to reduce global CO2 emissions”.
A joint statement from chief executive Tim Alderslade, chief executive of Glasgow and Aberdeen airports owner AGS Airports Ltd Derek Provan, and Dewar, said the current “sky-high” rate of tax was “damaging connectivity in Scotland” and penalising people wishing to travel.
They cited Norwegian pulling its Edinburgh operations and reduction in Ryanair capacity north of the border as demonstrable examples of the failure to reduce or cut the tax.