Subsidy for non-existent flights costs Stormont £2.3m a year

Regular transatlantic flights from Northern Ireland to the United States ended with Norwegian in October 2018

Stormont is returning more than £2m to the Treasury every year to cover the cost of subsidising an air route that no longer exists.

The deduction was part of the deal which allowed long-haul air passenger duty (APD) to be devolved in 2012.

APD was then cut to zero to support a service between Belfast and New York.

As that meant less revenue was being collected in Northern Ireland, £2.3m had to be returned to the Treasury from Stormont's budget.

There have been no regular transatlantic flights from Northern Ireland since October 2018 when Norwegian ended its service, although there have been a small number of seasonal holiday flights to Florida and Las Vegas.

'Bear the financial consequences'

However, the £2.3m continues to be deducted from Stormont's budget.

The details were uncovered by the SDLP Assembly Member Matthew O'Toole.

The Department of Finance spokesman said the money was "required under state aid rules which dictate that the Assembly must bear the financial consequences of devolving any tax".

Matthew O'Toole described the situation as "absurd"

The Department of Finance had told Mr O'Toole: "The mechanism for applying that reduction to our budget was set at the time devolution was agreed in 2012 and has been applied every year since then".

Mr O'Toole said the situation was "absurd".

"We are paying for the privilege of having theoretically zero taxes on long haul travel despite not having had a single route since 2018 - and there being precious little prospect of any routes for the foreseeable future.

"This is all the more shocking when one considers the dire prospects for our much more critical short-haul connectivity to Great Britain."

He is calling for the Treasury to waive the annual deduction and suggested the chance of a successful state aid case against the UK "would be zero" given the current turmoil in global aviation.

In their statement on Thursday, the Department of Finance added: "The cost relates to the amount that was payable on devolving the power to set the rate and not the Duty that would be payable in respect of current flights," he said.

"The mechanism for applying the reduction was agreed in 2012 when the Executive sought to maintain valuable air connectivity to the US.

"It is disappointing that these services have ceased, but having a zero rate of direct long haul APD will help us in trying to attract long haul services as we seek to recovery from this crisis."