The Scottish parliament is set to be given the power to set its own aviation taxes which could lead to the cutting or abolition of APD north of the border.
The Smith Commission is recommending that the Scottish Parliament should have more freedom to set its own taxes as part of the increased devolution of powers and this will include air duties such as APD.
The Scottish National Party-led government in Edinburgh has already said that it plans to cut APD and eventually abolish it.
The commission was set up by UK Prime Minster David Cameron on the day after the Scottish electorate voted “no” in the independence referendum in September.
“The power to charge tax on air passengers leaving Scottish airports will be devolved to the Scottish parliament,” said the commission report.
“The Scottish government will be free to make its own arrangements with regard to the design and collection of any replacement tax, including consideration of the environmental impact.”
Those campaigning against the high level of aviation taxes in the UK used the recommendation to call for APD to be cut or abolished across the whole of the UK.
Dale Keller, chief executive of BAR UK, said: “The Scottish government has already indicated it would slash or scrap the world’s highest air passenger tax to stimulate the local economy.
“The right time is now for the whole of the UK to share equally in the benefits a phasing out of APD would deliver.”
Mark Tanzer, CEO of ABTA, which is one of the leaders of the Fair Tax on Flying alliance, added that the move could have “a significant impact across the whole of the UK”.
“Any inconsistencies between what a passenger pays flying from Scotland compared to elsewhere in the UK could create an uncompetitive and damaging situation for travel businesses,” said Tanzer.
“In light of today's announcement, ABTA is urging the UK government to review the level and impact of this damaging tax with a view to reducing it across the whole country.”
Flybe’s chief executive Saad Hammad welcomed the commission’s proposal and added that he hoped the Scottish government “will maintain its pledge to cut the tax and remove it completely in the longer term”.
“The move would not only encourage airlines to provide new routes and enhance travel for Scotland’s passengers, but it would also significantly boost economic activity and connectivity for Scotland,” added Hammad.
Alistair Carmichael, Scottish secretary for the UK government, said that a “stakeholder group” would be formed to take forward the Smith Commission’s recommendations.