Should Wales be allowed to set Air Passenger Duty rates for flights from Welsh airports?

These were the main arguments for devolving APD presented to us

• Recommendations made by two respected commissions, the Silk Commission and the Holtham Commission, suggested that APD should be devolved to Wales.

• APD is being devolved to Scotland and has been partially devolved to Northern Ireland, making Wales the only devolved administration with no power over any aspect of APD.

• The devolution of APD, and subsequent reduction or abolition of the duty, could unlock the potential of Cardiff Airport to attract new airlines and increase passenger numbers to Wales.

• Cardiff Airport could potentially complement busier airports in England, some of which have plans for expansion because they are nearly at capacity.

• A reduction in APD could boost the Welsh brand and promote economic growth across the whole of Wales.

This was the evidence we heard against devolving APD

• Devolution of APD could take business away from English airports serving Wales.

• Those living in South Wales could see more benefits than those living in Mid and North Wales as it is Cardiff Airport that will be primarily affected.

• Cardiff Airport already has a competitive advantage because it is under the ownership of the Welsh Government.

• The aviation industry is relatively under-taxed as airline fuel is not subject to tax and airline tickets are not subject to VAT, domestically or internationally.

• If APD were devolved to Wales, and subsequently abolished or reduced, there would be an increase in air traffic which in turn could increase carbon emissions and cause damage to the environment.

• Wales would see a reduction in the amount of funding it receives from the UK Government through the block grant.

After carefully considering all these arguments, we have come to the view that APD should be devolved to Wales and we call on the UK Government to set out plans to so by 2021.

However, we note the environmental concerns about reductions in APD, which could incentivise increased air travel.

Therefore, we call on the Welsh Government to carefully consider the environmental implications of any reduction or abolition of APD.

We have made these recommendations to the Government

The Government has two months to respond to our report. To read more depth and detail about our recommendations, read our report on Devolution of Air Passenger Duty to Wales, or see more on our website.

If you're interested in the work of our committee, find out more about our other inquiries.