The Scottish National Party (SNP) may not have won the recent referendum on Scottish independence but it doesn't require victory in every battle to win a war.
The Smith Commission, which was formed after the referendum to look at ways in which more power could be devolved to Scotland, has recommended that the Scots have the ability to set their own level of airport tax or, indeed, if they wish, abolish it altogether.
The SNP is on the record as opposing this tax because it is money going to the UK. It also is on the record as saying that the tax must be reduced and ultimately abolished to help the Scottish tourism industry. Any reduction or abolition of this tax would automatically make flights from Scottish airports cheaper than those from northern UK regional airports such as Manchester, Leeds and Newcastle.
The British Prime Minister David Cameron this week pledged support for Newcastle Airport should the tax be lowered in Scotland.
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©iStock.com/Pietro BallardiniBritish Airways responded by saying: "Adjustments at Newcastle airport will lead to a domino effect across England with Leeds and Manchester airports demanding similar concessions to remain competitive."
Willie Walsh, chief executive of BA's parent company IAG, continued: "The Prime Minister's words speak volumes. He has finally conceded that APD damages growth and stifles job creation. If APD is on the way out in Scotland, it needs to be scrapped UK wide."
Great Britain is an island but if its different components start having different fiscal systems it would be well advised to look at the Continent's experience where people have long crossed national borders (the Swiss driving to German supermarkets after the recent sharp upwards movement in the Swiss franc being a recent example) in search of cheaper options.
And it is not just the Dutch that have recognised the negative impact that a passenger tax can have. Yesterday (1 April) the French government announced a 50% reduction in the civil aviation tax (TAC) for transfer passengers. The tax will be abolished altogether from the 1 January 2016.
In 2008-2009 the Dutch government imposed a tax on Dutch airport passengers. Passenger numbers at Dutch airports immediately dropped as passengers chose to fly from airports in neighbouring countries such as Düsseldorf and Brussels rather than pay the extra. After it was dropped in 2009, passengers returned to Maastricht and Eindhoven. In fact Germans began crossing the border to use Maastricht rather than, say, Cologne Bonn, which became a more expensive option.
Since Adam Smith's Wealth of Nations it has been accepted that effective taxes are ones that are clear and certain and perceived to be fair. Experience shows that travellers will move airports if there is a cost advantage and indeed one UK Government study is said to predict that 10% of Newcastle's passengers would disappear across the border in the event of APD being reduced.
Both the Scot Nats and British Airways believe that an airports tax inhibits growth and, as was the experience of the Dutch, reduces overall tax revenues. That's something to think about.