Replacement to Air Passenger Duty (APD): consultation analysis

4. Scope and Structure of Duty

4.1. The consultation document set out a range of proposals relating to the scope and structure of the Scottish APD replacement tax. This included the following specific aspects of the replacement tax:

• The definitions of "chargeable passenger" and "chargeable aircraft" on which the replacement tax will be based, and whether the replacement tax retains the current UK APD per-passenger charging model.
• Whether the replacement tax retains the destination-based banding approach currently used by UK APD, and if so how journey distances should be measured.
• The extent to which the reduced/standard/higher rates system - and the definitions on which these rates are based - should be retained.
• How and when the proposed 50% reduction in APD in Scotland should be implemented.

4.2. This section considers respondents' views on the six consultation questions set out by the consultation document in relation to the scope and structure of the Scottish replacement tax.

4.3. It should be noted that respondents' views on the objectives set out by the consultation document, and the commitment to a 50% reduction in APD in particular, appear to have shaped some responses in relation to the proposed scope and structure of the Scottish replacement tax. This was evident in specific comments from a small number of respondents that made clear that views expressed on the proposed scope and structure were based on the replacement tax being abolished as soon as possible.

Scope of APD

Q3a: Should the UK APD definitions of 'chargeable passenger' and 'chargeable aircraft' be retained under a Scottish replacement tax? Please answer yes or no.

Q3b: If you answered no, please explain your answer.

4.4. The first question in this section asked whether the current UK APD definitions of 'chargeable passenger' and 'chargeable aircraft' should be retained by the Scottish replacement.

4.5. 97 respondents answered Question 3 (61% of all respondents). A large majority of these respondents agreed that the current UK APD definitions should be retained; 87 respondents, 90% of those answering the question. A further 10 respondents indicated that they disagreed (10% of those answering the question). All of those who disagreed with the proposal were individual respondents; all group respondents answering the question agreed with retaining current UK APD definitions.

Table 4.1: Q3 Should the UK APD definitions of 'chargeable passenger' and 'chargeable aircraft' be retained under a Scottish replacement tax?

	Yes	No	No response	TOTAL
Airlines and airline representatives	11		1	12
Airports and airport representatives	5		3	8
Other transport and travel organisations	8		5	13
Business, economic development and tourism organisations	20		5	25
Professional tax and accountancy organisations			2	2
Environmental organisations			6	6
Other organisations	2		8	10
Group respondents (Total)	46	0	30	76
Individual	41	10	33	84
TOTAL	87	10	63	160
Percentage of all respondents	54%	6%	39%	100%
Percentage of those answering question	90%	10%	-	100%

4.6. A total of 39 respondents provided further written comment in support of their answer at Question 3a. This included 29 of the 87 respondents in favour of retaining UK APD definitions of 'chargeable passenger' and 'chargeable aircraft', and 9 of the 10 respondents who disagreed with this proposal. One respondent (a professional tax and accountancy organisation) who had not provided a "yes" or "no" answer at Question 3a also provided written comment.

4.7. The great majority of respondents providing further comment in favour of retaining UK APD definitions, indicated that this support was based on these definitions having proven a relatively simple structure in terms of administration and compliance. It was suggested that current definitions should therefore be applicable to the Scottish replacement tax, if this is not expected to radically change the current UK APD structure. A number of airline/airline representative respondents in particular made reference to airlines who will be subject to the Scottish replacement tax being familiar with these definitions, and minimising the administrative burden of having to modify established systems for reporting APD (which are based on UK APD definitions). This was highlighted as particularly significant for airlines who will continue to be subject to UK APD alongside the Scottish replacement tax.

4.8. As noted earlier in this section, a small number of those commenting made reference to the application of UK APD definitions being on an "interim" basis, and re-stated their support for the abolition of the replacement tax as soon as possible. This included a specific suggestion from a professional tax and accountancy respondent that retention of existing UK APD definitions would be the practical approach if the replacement tax is likely to be relatively short-lived (i.e. prior to the tax being abolished).

4.9. Nine of the ten individuals opposed to the retention of existing UK APD definitions provided further written comment at Question 3b. Comments indicate that this objection was most commonly based on a preference for the removal of all APD charges immediately once powers over APD are transferred to the Scottish Parliament.

4.10. A small number of respondents also disagreed with the retention of UK APD definitions on the basis of a fundamental objection to the proposal to reduce current UK APD charges. This included some individuals suggesting that current UK APD definitions, and the structure of UK APD more widely, should be re-thought to link charges to carbon emissions. This included a suggestion that the Scottish replacement tax is based on aircraft size, rather than the number and type of passengers. A professional tax and accountancy organisation also noted that an alternative approach to UK APD definitions may be appropriate, if the Scottish Government wished to use the replacement tax to contribute towards meeting environmental targets.

4.11. In addition to these comments linked to views on the fundamental purpose of and approach to the Scottish replacement tax, a small number of individual respondents wished to see amendment to current UK APD definitions. This included a broad suggestion that these are modified to reflect the specific profile of air travel to and from Scotland, and a more specific proposal that the definition of 'chargeable passenger' is expanded to include all transit passengers and those on connecting flights, and that 'chargeable aircraft' is extended to include all aircraft.

Q4a: Do you think that the current UK APD per-passenger charging model should be retained under a Scottish replacement tax?

Q4b: If you answered no, please explain your answer. Subject to compliance with State Aid rules and current aviation agreements, what alternative charging model(s) should be considered?

4.12. Question 4a asked whether the current UK APD per-passenger charging model should be retained under the Scottish replacement tax.

4.13. 103 respondents answered Question 4a (64% of all respondents). The majority of these respondents agreed that the current UK APD per-passenger charging model should be retained; 83 respondents, 81% of those answering the question. A further 20 respondents indicated that they disagreed with the proposal, 19% of those answering the question.

4.14. There was some variation in this profile of views across respondent types. Group respondents were more likely than individuals to agree with the per-passenger charging model; more than 9 in 10 group respondents agreed with this, compared to 7 in 10 individuals. Individual respondents accounted for the majority of those opposed to the proposal.

Table 4.2: Q4a Do you think that the current UK APD per-passenger charging model should be retained under a Scottish replacement tax?

	Yes	No	No response	TOTAL
Airlines and airline representatives	11	1		12
Airports and airport representatives	5	1	2	8
Other transport and travel organisations	8		5	13
Business, economic development and tourism organisations	20		5	25
Professional tax and accountancy organisations			2	2
Environmental organisations			6	6
Other organisations	1	2	7	10
Group respondents (Total)	45	4	27	76
Individual	38	16	30	84
TOTAL	83	20	57	160
Percentage of all respondents	52%	13%	36%	100%
Percentage of those answering question	81%	19%	-	100%

4.15. The consultation document invited further written comments at Question 4b, from those who objected to the current per-passenger charging model being retained under a Scottish replacement tax. A total of 37 respondents provided further written comment, including 17 who supported retention of the per-passenger model, and 18 of the 20 respondents who objected to the proposal.

4.16. Consistent with views on the retention of UK APD passenger and aircraft definitions, most of those providing comment in support of the per-passenger model indicated that this was based on the model being understood by airlines (and travel professionals and passengers). These respondents suggested that the model had proven a relatively simple structure in terms of administration and compliance, and its retention would minimise disruption and cost to taxpayers. An airport respondent and other transport/travel organisation also made reference to the extent to which an alternative per-aircraft model would disadvantage airports servicing lower population density areas, where passenger loads are generally lower.

4.17. Most of the 20 respondents opposed to the retention of the per-passenger model provided further written comment at Question 4b. This included a small number indicating that this objection was based on a preference for the removal of all APD charges immediately once powers over APD are transferred to the Scottish Parliament.

4.18. However, around half of those making comment in objection to Question 4a suggested that it may be appropriate to consider alternative models, dependent on the Scottish Government's objectives and for example if the Government wishes to reconsider how tax on air travel may contribute to environmental targets. This included a number of 'other' organisations and individuals opposed to the per-passenger charging model, the latter group including a small number of individuals who wished to see taxation of air travel seeking to reduce carbon emissions. In addition, a professional tax and accountancy respondent and an 'other' organisation respondent made reference to the potential value of considering an alternative model. Respondents referred to the potential for a per-plane charging model to encourage more efficient use of aircraft, although it was noted that the prior experience of the UK Government in proposing such a model cast some uncertainty on whether an alternative to the per-passenger model is possible.

4.19. A small number of those opposed to the per-passenger charging model also indicated that they agreed with the principle of a per-passenger model, but raised concerns or suggested alternative approaches to how the model is applied. This included references to how charges are scaled across the lower, standard and higher rates; a proposal that APD should not apply at airports below a threshold for volume of passengers per annum, and a proposal for the replacement tax to be banded against passenger's frequency of air travel.

Tax bands

Q5a: Do you think that the current UK APD destination based banding system should be retained under a Scottish replacement tax?

Q5b: If you answered yes, should destination bands be defined by distance to capital cities or what alternative measures could be considered? What would be the optimum number and definition of bands to support the achievement of the Scottish Government's strategic objectives for a Scottish replacement tax?

Q5c: If you answered no, please explain your answer. What system do you think should be used instead?

4.20. Question 5a asked whether the current UK APD destination-based banding system should be retained under the Scottish replacement tax.

4.21. 100 respondents answered Question 5a (63% of all respondents). The majority of these respondents agreed that the current UK APD destination-based banding should be retained; 72 respondents, 72% of those answering the question. A further 28 respondents indicated that they disagreed with this proposal, 28% of those answering the question.

4.22. There was some variation in this profile of views across respondent types. Group respondents were more likely than individuals to agree with the retention of the current UK APD destination banding system; 9 in 10 group respondents agreed, compared to a little more than half of individuals. Individual respondents accounted for the majority of those opposed to the proposal.

Table 4.3: Q5a Do you think that the current UK APD destination based banding system should be retained under a Scottish replacement tax?

	Yes	No	No response	TOTAL
Airlines and airline representatives	9	1	2	12
Airports and airport representatives	4	1	3	8
Other transport and travel organisations	8	1	4	13
Business, economic development and tourism organisations	20		5	25
Professional tax and accountancy organisations			2	2
Environmental organisations			6	6
Other organisations	2	2	6	10
Group respondents (Total)	43	5	28	76
Individual	29	23	32	84
TOTAL	72	28	60	160
Percentage of all respondents	45%	18%	38%	100%
Percentage of those answering question	72%	28%	-	100%

4.23. The consultation document invited further written comments at Questions 5b and 5c, asking those who agreed with destination-based banding how these bands should be defined, and those who disagreed which banding approach should be used. A total of 87 respondents provided further written comment, including 60 of the 72 respondents who supported retention of destination-based banding, and 24 of the 28 who disagreed.

4.24. As was evident in relation to definitions around the scope of APD (at Questions 3 and 4), most of those providing comment in support of destination-based banding indicated that this was based on the system being familiar to and well understood by airlines and others. These respondents suggested that this has been proven to be relatively simple and effective, and its retention would minimise disruption to taxpayers' systems - and also recognise that any such disruption would be disproportionate if the replacement tax is to be abolished when finances allow. It was also noted that, as was suggested in relation to other aspects of the scope and structure of the replacement tax, consistency with UK APD would be beneficial for taxpayers who will continue to be subject to both taxes.

4.25. Most of those providing comment here suggested that destination-based banding should be based on the distance between capital cities. Several of these respondents suggested that this approach would involve less of an administrative burden for airlines, compared to for example bandings based on distance between airports. Nearly all of those making specific reference to the basis on which distance to capital cities is measured suggested that the this should be based on distance from Edinburgh. However, a business and economic development respondent questioned whether the change to an Edinburgh-based measure would be worthwhile if the replacement tax is to be relatively short-lived.

4.26. In addition to suggestions for capital to capital distance bandings, an 'other' organisation respondent was in favour of devolving responsibility for APD to local authorities, with distance-based tax bands then based on the airport within the local authority.

4.27. In contrast to these suggestions, a small number of respondents suggested a move away from banding based on specific distance thresholds, to bands based on a specific set of destinations. This was most commonly based on all destinations currently within band A for UK APD being retained within this band for the Scottish replacement tax (and all other destinations are classified as band B). However, a small number of respondents (including some who supported a distance-based criteria) also specifically suggested that band A is extended to bring Egypt and Israel within the lower band.

4.28. The great majority of those who wished to see destination banding based on distance from Edinburgh suggested that the band A threshold is revised upwards to 2500 miles to take account of this change, and to avoid Scotland's connectivity being negatively impacted. However, a professional tax and accountancy respondent noted that such an increase may add complexity to the tax system, without a corresponding change in UK APD thresholds.

4.29. The majority of those providing comment specifically suggested retaining two tax bands. This was recommended on the basis of maintaining consistency with UK APD for taxpayers subject to both taxes, and also ensuring clarity and efficiency in line with the principles of taxation highlighted in the consultation document. Several respondents also suggested that the use of two bands would minimise the complexity and administrative burden for taxpayers, including an airline/airline representative respondent who suggested that the previous multi-band system under UK APD had resulted in a number of anomalies.

4.30. However, a small number of group respondents - including other transport/travel business/economic development and other organisations - suggested that an additional band could be added which distinguished between short-haul (current band A) flights where a viable surface-based alternative is available, and short-haul flights where no such alternative is available. These respondents suggested that reducing APD specifically for flights where no viable alternative is available would encourage use of lower carbon surface travel options for shorter domestic journeys, and would also help to address the disadvantages facing airports in the north of Scotland where there is often no viable surface-based alternative to domestic air travel. In terms of a practical definition for this banding structure, respondents suggested that this is based on a minimum distance (e.g. circa 350 miles) and/or where the surface-based travel time would exceed 3-4 hours. A small number of individual respondents also made broader suggestions that tax bands are defined so as to discourage air travel for shorter journeys, and to take greater account of the environmental impact of flights.

4.31. A small number of respondents, including airlines and other transport and travel organisations indicated that while they agreed with the retention of two distance-based tax bands, they wished to see a reduction in the charges levied on band B.

4.32. A large majority of the 28 respondents who disagreed with the retention of distance-based tax banding provided further comment. Relatively few of these respondents made reference to a specific rationale for their objection to distance-based tax banding. Comments from some of these respondents make clear that their objection to distance-based tax banding was based on a desire to see APD abolished in Scotland, or an objection to the proposed 50% reduction in ASD. Other respondents made clear that their objection was based on distance-based bands providing a "crude and inaccurate proxy for environmental impacts". This included a small number of respondents who specifically suggested that tax bands should be structured to incentivise modal shift from air to rail on routes where rail provides a viable alternative.

4.33. Respondents made a range of specific suggestions for how an alternative tax banding might be structured. These suggestions included:

• An airport respondent and a small number of individuals proposed banding based on the distance from departure to destination.
• Fine-grained distance bands or the introduction of a discounted "intermediate" banding for flights where there is no viable rail alternative, in order to take better account of environmental impacts and to encourage a modal shift to rail where this is a viable alternative. This was suggested by an other transport/travel organisation, 'other' group respondent, and a small number of individuals.
• A "frequent flyer levy" where tax bands would be based on the number of flights taken by the passenger during the year (and where this banding would not apply to business travel) was suggested by an 'other' organisation.
• An other transport and travel respondent suggested moving away from a destination or distance based banding, suggesting that distance should only be one factor taken into account when determining tax bands. It was suggested that a set of tariffs could be published annually, allowing for incremental changes in banding as the impact of the reduction in APD is assessed.
• A reduced rate banding for developing countries where GDP is below a defined threshold was suggested by an individual.
• An airline/airline representative respondent suggested the removal of tax bands, such that there is a single charge across both reduced and standard tax rates, and a separate charge for higher rated passengers (although it was suggested that the current differential in charge for higher rate passengers should be reduced).

Tax rates

Q6a: Do you think that the reduced, standard and higher rates system used for UK APD should be retained under a Scottish replacement tax?

Q6b: If you answered yes, do the UK definitions remain appropriate for practices in the aviation industry in Scotland?

Q6c: If you answered no, please explain your answer. What system do you think should be used instead?

4.34. Question 6a asked whether the rates system used for UK APD (based on reduced, standard and higher rates) should be retained under the Scottish replacement.

4.35. 92 respondents answered Question 6a (58% of all respondents). The majority of these respondents agreed that the current UK APD rates system should be retained; 69 respondents, 75% of those answering the question. A further 23 respondents indicated that they disagreed with this proposal, 25% of those answering the question.

4.36. There was some variation in this profile of views across respondent types. Group respondents were more likely than individuals to agree with retaining current UK APD rates; more than 9 in 10 group respondents agreed with this, compared to less than 6 in 10 individuals. Individual respondents accounted for the large majority of those opposed to the retention of UK APD rates.

Table 4.4: Q6 Do you think that the reduced, standard and higher rates system used for UK APD should be retained under a Scottish replacement tax?

	Yes	No	No response	TOTAL
Airlines and airline representatives	10	1	1	12
Airports and airport representatives	4	1	3	8
Other transport and travel organisations	7		6	13
Business, economic development and tourism organisations	19		6	25
Professional tax and accountancy organisations			2	2
Environmental organisations			6	6
Other organisations	2	1	7	10
Group respondents (Total)	42	3	31	76
Individual	27	20	37	84
TOTAL	69	23	68	160
Percentage of all respondents	43%	14%	43%	100%
Percentage of those answering question	75%	25%	-	100%

4.37. The consultation document invited further written comments at Questions 6b and 6c, asking those who wished to retain the current tax rates system whether the UK APD tax rate definitions should be applied to Scotland, and those who disagreed which alternative approach should be used. A total of 78 respondents provided further written comment, including 57 of the 69 respondents who supported the retention of destination-based banding, and 19 of the 23 who disagreed.

4.38. Again, most of those providing comment in support of retaining current tax rates indicated that this was based on the rate structure being familiar to and well understood by airlines and others. This included references to the extent to which the rate structure has been proven relevant to passengers, and a reasonable reflection of differences of experience (and ability to pay) across flight classes. Several respondents, particularly aviation industry and business/economic development respondents, also referred to the administration of APD, suggesting that the current rate structure has supported an efficient approach to tax collection, and that changes to this would require disruption to taxpayers' systems. Maintaining consistency with the current UK APD structure was also seen as important for future administration of the two taxes. In this context, a professional tax and accountancy respondent also noted that any disruption to systems would be disproportionate if the intention is for the replacement tax was to be abolished within a relatively short timeframe.

4.39. The majority of those in favour of the current rate structure felt that the rate definitions are broadly appropriate to the Scottish market, and relatively few of these respondents suggested a need for change to these definitions.

4.40. The most common issue raised in relation to the current rate definitions related to what was seen as a disproportionate treatment of economy and enhanced/premium economy classes within the current definitions. Several airline/airline representatives, airport and other transport/travel respondents suggested that the significant differential in charge between the "reduced" and "standard" APD rates does not reflect the relatively small difference in service and ticket cost between these classes, and wished to see the rates redefined to better reflect current classes of air travel. A small number of these respondents also supported a specific suggestion from an airline/airline representative, with the aim of making the definitions more relevant to and more easily understood by passengers:

• The Reduced rate to be redefined as "Standard", incorporating economy and enhanced/premium economy;
• Standard rate to be redefined as "Premium", to incorporate first and business class; and
• Higher rate to be renamed as "Private", using the existing higher rate definition.

4.41. Reflecting views provided at Question 5, a business/economic development respondent suggested that the rate structure could be amended to distinguish short-haul flights where a viable surface-based alternative is not available. This respondent suggested that a discounted rate is introduced for these flights.

4.42. Consistent with views expressed in relation to other aspects of the scope and structure of APD, a small number of those opposed to the current rate structure indicated that this was based on a wish to see APD abolished. An airport respondent also expressed concern that the current tax rates could dis-incentivise carriers from delivering the new international connections that are prioritised by the strategic and policy objectives.

4.43. However, comments from those who disagreed with retaining the current rate structure suggest that the most common reason for this is a preference for a replacement tax which addresses the environmental impact of air travel and/or takes greater account of passengers' ability to pay:

• Several respondents, including an 'other' organisation and several individuals, suggested that current rates should be replaced with a structure that reflects the environmental impact of air travel. This reflected a wider view (considered in relation to the strategic and policy objectives for APD at section 3 of this report) that the replacement tax should be used to minimise the negative environmental impacts of air travel. In terms of the basis of an alternative rate structure, these respondents made reference to factors such as distance travelled, size of aircraft and volume of fuel used.
• Reforming the rate structure to take greater account of passengers' ability to pay was also suggested by a small number of respondents, including some of those in favour of a more environmentally focused tax. This included a specific suggestion of a flat percentage tax rate, proposed as an easy to administer approach which would reflect the difference in fares across the main classes of seat and, in setting that flat rate, would take some account of passengers' ability to pay.

Q7: Can you provide any evidence on the impact of the introduction of the higher rate which came into effect from 1 April 2013?

4.44. In addition to Question 6 which sought views on the suitability of the three current UK APD categories of rates for a Scottish replacement tax, Question 7 specifically asked respondents for any insight on the impact of the introduction of the higher rate of APD in April 2013. This rate applies only to passengers on aircraft with an authorised weight of greater than or equal to 20 tonnes and which carry no more than 18 passengers, and in practice primarily applies to private aircraft and charter flights.

4.45. A total of 68 respondents provided some written comment at Question 7. However, the great majority of these responses indicated that they could not offer any insight into the specific impact of the higher rate. This included a number of airline/airline representative and airports respondents noting that the private aircraft to which the higher rate applies account for a very small proportion of air travel in Scotland; one airport respondent indicated that higher rate flights accounted for only 0.1-0.2% of flights from Glasgow and Aberdeen airports in 2015. Some of these respondents suggested that the small size of this sector means that it is likely to have a negligible effect in terms of the overall air passenger profile across Scotland, and indeed for revenues generated by APD.

4.46. Only one respondent - an airline/airline representative - made any substantive comment on the impact of the introduction of the higher rate. This respondent reported having received negative feedback from corporate jet operators affected by the higher rate, suggesting that some of these operators have reduced numbers of flights to the UK.

4.47. A small number of other transport and travel respondents were of the view that the lack of evidence available on the impact of the higher rate of APD illustrated the need for independent analysis and effective monitoring of the impact of tax changes. This included a suggestion that this evidence should be secured before further taxation changes are proposed.

Reducing the tax burden

Q8: Do you have any views on how and when the planned 50% reduction in the burden of APD should be implemented?

4.48. The consultation document notes that the Scottish Government has plans to "reduce the burden of APD in Scotland" by 50%, by the end of the next Scottish Parliament (expected to be in 2021). The final consultation question in relation to the scope and structure of APD sought respondents' views on how and when the proposed 50% reduction in APD is implemented.

4.49. A total of 95 respondents provided written comment at Question 8, 59% of all respondents. Analysis work makes clear that many of the comments on how a reduction in APD should be introduced, reflected respondents' wider views on the principle of a reduction in APD. For example, those in favour of the 50% reduction typically focused on how its implementation could best achieve the anticipated benefits to Scotland's connectivity and economic growth. Conversely, those opposed to the 50% reduction focused on how its implementation could best mitigate environmental impacts, and ensure that economic benefits are shared.

4.50. In terms of the timing of the 50% reduction in APD, nearly half of those providing comment wished to see this as soon as possible, and ideally immediately at the point that the power is transferred. This view was held primarily by business/economic development and aviation industry respondents. Most of these respondents suggested that an incremental introduction would be less effective than a "big bang" approach in delivering the anticipated benefits, for example in terms of the media and industry interest generated. The additional administrative burden associated with a phased introduction of the 50% reduction was also highlighted.

4.51. A substantial number of those favouring an immediate introduction of the 50% reduction in APD reiterated their desire to see the full removal of APD in Scotland as soon as possible. Some business and economic development respondents also wished to see greater clarity on how the Scottish Government will determine that "resources allow" the full removal of the replacement tax, including requests that a timetable for abolition is published.

4.52. Other respondents suggested that there may be benefit in an incremental introduction of the 50% cut in APD - this included other transport/travel, professional tax/accountancy, environmental and 'other' organisations. These respondents suggested a need for further work to assess and plan for the impacts of the reduction on travel behaviours, tax revenues, economic benefits and environmental impacts, before a full 50% reduction is introduced. Careful monitoring of the impact of the reduction in APD was also recommended to ensure the anticipated benefits are being realised.

4.53. A substantial proportion of those providing comment at Question 8 - primarily individuals and other transport/travel respondents - reiterated their view that the reduction in APD should not be introduced. This included reference to a need for a clear plan on how the shortfall in tax revenue will be compensated, and quantification of associated economic benefit and environmental impacts.

4.54. A substantial number of respondents highlighted the importance of ensuring the aviation industry receives clarity on the Scottish Government's intended approach with sufficient lead in time to inform route and schedule planning. This was cited as important in ensuring the planned APD reduction can stimulate new direct routes for Scotland, and also in enabling taxpayers to make any necessary changes to their systems. These respondents also noted that tickets are sold up to a year in advance of travel, and the lead in period required was most commonly suggested as 12-18 months with 12 months suggested as the minimum required.

4.55. Respondents made a range of comments around how the 50% reduction in APD should be introduced. The single most common suggestion was for a consistent reduction across all tax bands and rates. This was recommended by most business/economic development respondents and a small number of aviation industry respondents as the clearest and simplest approach. Respondents also described this as an approach which "send[s] a clear message to airlines that Scotland is serious about cutting air taxes and attracting more air services to Scotland".

4.56. Amongst respondents commenting on the potential for an incremental introduction of the reduction in APD, a number of specific areas were identified as priorities for implementation:

• A small number of respondents suggested targeting the reduction on specific tax bands, with a mix of views expressed. A small number of business/economic development and aviation industry respondents suggested that the 50% reduction is targeted initially on long haul band B flights. This was recommended as consistent with the focus on increasing direct international connectivity, and also recognising the substantial contribution that long-haul visitors make to local economies. In contrast, an airline respondent recommended that the full 50% reduction should be applied immediately for band A (and the reduction for band B applied over time) on the basis that a staged reduction in band A rates would be costly for both carriers and tax collectors.
• A small number of respondents suggested that the reduction in APD is targeted on specific sectors or routes. This included an airport respondent suggesting that the reduction is achieved through a 100% removal of APD for flights from airports where total annual passenger numbers are less than 3 million. Another airport respondent recommended extending the current exemption on flights departing from the Highlands and Islands to include flights into the region. A further airport respondent wished to see a 100% removal of APD for intra-Scotland routes, as a means of incentivising services between Glasgow/Edinburgh and airports in the north of Scotland and recognising the benefits to regional economies of reducing travel times.
• A small number of respondents suggested an approach to the 50% reduction which sought to minimise environmental impacts and/or to support an appropriate modal shift to surface travel options. This included for example suggestions that the reduction is prioritised for domestic flights where there is no viable surface travel alternative.

4.57. A small number of respondents made specific reference to the importance of careful planning and effective engagement with taxpayers during the period of transition to the replacement tax. This included a suggestion from an airline representative respondent that transitional rules may be required to provide clear guidance to airlines on the remittance of APD, for example where tickets are sold prior to the implementation of the replacement tax for travel when the replacement will be active. An environmental organisation recommended that the Scottish Government develop a long-term plan setting out a planned approach to achieve emission reductions to offset increases in aviation emissions as a result of the change in APD policy.