George Osborne confirms NI air passenger duty cut

Continental airlines runs a daily service between Belfast and New York

Chancellor George Osborne has announced air passenger duty (APD) will be cut for direct long-haul routes from Northern Ireland airports.

The direct long-haul rate of APD will fall to the lower short-haul rate - £12 per passenger in economy and £24 for business and first class passengers.

It currently adds £60 to an economy fare and £120 to a business ticket.

The cost of the tax has been threatening to kill off the daily service between Belfast and New York.

'Proactive measures'

The flight is operated by Continental Airlines which also operates a daily service from Dublin.

However, the tax out of Dublin airport is just three euros and Continental said it had been absorbing the cost in Belfast in order to avoid passengers simply opting for Dublin.

This, the company told MPs recently, would cost them £3.2m this year and meant the route was no longer viable.

The route is seen as vital for promoting trade and inward investment.

"The government has taken proactive measures to protect the only direct long-haul service operating from Northern Ireland and with it the jobs of those who serve the Belfast route," Mr Osborne said.

"Northern Ireland faces a unique challenge in attracting traffic - including very valuable business customers - into its airports."

The government will launch a parallel process to devolve aspects of APD to the Northern Ireland Assembly.

The precise scope of devolution will be agreed in cooperation with the Northern Ireland Executive.

'Crucial for business'

The Northern Ireland Finance Minister Sammy Wilson welcomed the decision, which he described as "crucial for business and for tourism".

Secretary of State Owen Paterson said the air link between Belfast and the United States was vital.

He added that Tuesday's decision would make it easier for the executive to develop other long haul routes from Northern Ireland's airports.

However, Friends of the Earth has criticised the decision, claiming the aviation industry was actually a drain on the economy.

Its spokesperson, Declan Allison, said that for every £1 spent in Northern Ireland by tourists, Northern Ireland residents spent £4 abroad.

He added: "This air passenger deficit means the economy loses over £114m every year."