Revealed: how Scottish airports lobbied for £300m tax cut

Scottish airports have pushed for a £300 million tax cut in at least 14 meetings with ministers and MSPs over the last nine months, according to the latest register of lobbying released by the Scottish Parliament.

Senior executives have met with the First Minister, Nicola Sturgeon, and three other ministers to try and persuade them to cut air passenger taxes to help business at Edinburgh, Glasgow and Aberdeen airports. One meeting with the finance secretary, Derek Mackay, took place in an up-market restaurant in Edinburgh.

Since 12 March 2018 a total of 22 meetings between ministers, MSPs and Scottish airport officials have been officially registered. Discussions about air passenger tax were recorded at 14 meetings, but not at the other eight.

No meetings with environmental groups about air passenger tax have been registered since March 2018. In the same period there have been three meetings recorded with Scotland’s seaport operators, and four with major employers such as the supermarket chain, Tesco, and Lloyds Banking Group, which includes Bank of Scotland and Scottish Widows.

The revelations have prompted campaigners to criticise the airport industry and the Scottish Government for trying to aid the wealthy and boost climate pollution. Ministers were accused by one environmental group of “caving in to the greedy demands for tax cuts from airports”.

The industry, however, insisted that there was nothing wrong with its lobbying, and argued that air passenger taxes were causing economic damage. The Scottish Government said that cutting the tax was compatible with combating climate change.

The main target of the lobbying has been the senior minister in charge of the budget, Derek Mackay. Senior executives from Edinburgh Airport have met him three times since March to ask him to implement his promise to halve and then abolish Air Departure Tax (ADT), which is due to replace the Air Passenger Duty currently paid by passengers leaving UK airports.

One of the meetings was a “round-table dinner” organised by Edinburgh Chamber of Commerce on 15 November with the airport’s chief executive, Gordon Dewar, in the Michelin-starred restaurant in Leith, The Kitchin. It is run by celebrity chef Tom Kitchin, and offers a three-course á la carte meal for £75.

Other ministers lobbied by Edinburgh Airport on ADT were the public finance minister, Kate Forbes, on 11 September and the transport secretary, Michael Matheson on 23 August. These meetings with Dewar and other senior airport officials were held at the Scottish Parliament and the airport.

AGS Airports, which runs Glasgow and Aberdeen airports, met Sturgeon at the Scottish Parliament on 23 May. According to the lobbying register the purpose of the meeting was to introduce the First Minister to the company’s new chief executive, Derek Provan, and shareholders to “discuss some of the challenges facing the wider aviation industry, namely Brexit and Air Passenger Duty.”

The transport campaign group, Transform Scotland, argued that aviation was already “massively under-taxed” as it paid no fuel taxes or VAT on tickets and benefitted from duty-free sales. “There is no case for further tax cuts to be doled out to the aviation industry given the already strong growth in passenger numbers through Scottish airports,” said director, Colin Howden.

“Scottish ministers’ aspiration to hand a £300 million annual tax cut to the aviation industry, the most polluting form of transport, is utterly incompatible with tackling the climate crisis that we face. Ministers should be taking action to reverse rapidly falling bus patronage rather than caving in to the greedy demands for tax cuts from airports.”

Friends of the Earth Scotland called on ministers not to give in to the airport lobby. “The scale of the air industry’s lobbying efforts demonstrates their real interest – the pursuit of ever more profit at the expense of the planet,” the environmental group’s director, Dr Richard Dixon, told The Ferret.

“Cutting tax on flying is of most benefit to well-off, frequent flyers, completely at odds with the SNP’s approach in all other areas of tax policy where they aim to create a more equitable system.”

Dixon quoted the government’s own figures saying that halving the tax would increase Scotland’s emissions by 60,000 tonnes of carbon dioxide a year. The airport industry was “a powerful lobby of mainly offshore interests whose contribution to our economy should be subject to careful scrutiny,” he said.

The air passenger tax argument began when powers to levy tax on air travel were devolved to the Scottish Parliament in 2016. The SNP promised in its manifesto that year to replace Air Passenger Duty with an Air Departure Tax 50 per cent less – and to scrap the tax “when resources allow”.

The Scottish Government argued that would boost Scotland’s air connectivity, increase economic competitiveness and encourage the establishment of new routes to bring in tourists. But a majority of those responding to a 2016 government consultation opposed cutting the tax, mainly for environmental reasons.

Trade union, Unison Scotland, was among those opposing the cut. “This policy proposal would benefit the wealthiest, while increasing aviation emissions – a lose-lose proposal for Scottish public services and for protecting our world for future generations,” it said.

Nevertheless, the government maintained its commitment to cutting the tax. In June 2017 the Scottish Parliament passed a law allowing ADT to be collected but without setting its level.

Scottish Labour, the Greens and the Liberal Democrats have pressed the SNP not to cut the tax. The extent of airport lobbying was described as “deeply troubling” by Labour’s finance spokesperson, James Kelly MSP.

“The public will rightly be concerned as to why SNP ministers are having such regular discussions with big business about their plans to introduce a tax cut for first-class fliers,” he said.

“Rather than holding meetings behind closed doors to discuss possible tax cuts, the SNP government should be focusing on getting the richest to pay their fair share in tax so we can start investing in our economy.”

The Scottish Green Party has argued that cutting ADT in half would undermine Scotland’s climate commitments. “Climate change is one of the most serious threats facing the world, which governments and corporations are not addressing effectively – our future and our children’s future is at stake, so let’s do things better in Scotland,” it said.

Scottish Conservatives, however, have attacked the SNP for delaying the air passenger tax cut. Tory transport spokesperson, Jamie Greene MSP, has also been lobbied by Edinburgh Airport, meeting its boss Dewar in May and June to discuss the tax.

Edinburgh Airport’s chairman, Sir John Elvidge, was Scotland’s top civil servant between 2003 and 2010 before joining the airport in 2012. The airport’s corporate affairs manager, Greg Maxwell, spent four years with the Scottish Government as a media manager working with ministers including Nicola Sturgeon and former First Minister, Alex Salmond, on “reputational management”.

On 4 April, Maxwell met up with Derek Mackay to “reiterate Edinburgh Airport’s desire to see the cut in ADT delivered”. He has also lobbied Michael Matheson and Jamie Greene.

Edinburgh Airport Watch, a community group representing people who live near the airport, argued that the airport industry was under-taxed. “It is high time that aviation was made to follow the same rules as everyone else, ie that the polluter should pay,” said the group’s chair, Helena Paul.

The Scottish Government stressed that it had consulted widely and remained committed to cutting and then abolishing air passenger tax. “Our climate change plan accommodates projected changes in aviation emissions,” said a spokesperson.

“This is part of a balanced approach to meeting Scotland’s world-leading climate targets by driving down overall emissions. Scotland has already shown global leadership by including a fair share of international aviation and shipping emissions in its statutory climate targets. Our new climate change bill retains this approach.”

Claim Scotland’s climate targets are toughest in the world is False

Edinburgh Airport defended its lobbying, saying that tourism was a major driver of the Scottish economy. “We have discussions with a wide range of organisations, including the Scottish Government and politicians of all parties, to make the case for a cut in aviation tax,” an airport spokesperson told The Ferret.

“We’ve made this case for many years now, based on what our airlines and our passengers tell us. It is up to the government, as well as other politicians and stakeholders, whether to listen or not.”

The airport argued that reducing the tax would help “hard-working families” go on holiday. “This is a tax on aspiration that business people on company expenses are less likely to be impacted by,” continued the spokesperson.

“Those that think that flying is reserved for the rich can come and sit in our check-in hall on any day. We don’t believe their view will stand up to the many kinds of people arriving and departing Scotland by air. Any cut in aviation tax will benefit the many, not the few.”

AGS Airports claimed that air passenger tax was damaging business. “Together with the wider aviation industry we have made representations to all parties, including Scottish Labour, on the detrimental impact airport passenger duty is having on Scotland’s connectivity and jobs,” said a company spokesperson.

“So far this year, Glasgow Airport alone has lost over 20 routes from airlines who cited airport passenger duty. Not only will this result in a loss of one million passengers it has resulted in the loss of 150 jobs so it’s important we share this with our politicians and we will continue to do so.”

The company dismissed suggestions a tax cut would only benefit the wealthy as “simply wrong and ill-informed”. Families in Scotland pay 11 times more in tax to fly off on holiday than families in France, it claimed.

Carbon dioxide emissions from aircraft were “rightly an area of concern” but the right balance had to be struck, a company spokesperson said.

“If every UK flight were grounded tomorrow, global man-made carbon dioxide emissions would be reduced by 0.1 per cent. The UK aviation industry has set stretching targets and is working towards a reduction in net aviation emissions of 50 per cent by 2050.”

This story was published in tandem with the Sunday National. Photo of Edinburgh airport thanks to morebyless.

This story was updated at 16.35 on 16 December 2018 to clarify that the round-table dinner in The Kitchin restaurant on 15 November was organised by Edinburgh Chamber of Commerce.

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