CHANCELLOR George Osborne must use his upcoming Budget to protect the North-East economy from the threat of unfair competition north of the border, airport chiefs demanded last night.

Earlier this week, the Government vowed to protect Newcastle Airport if the Scottish Government presses ahead with plans to cut air passenger duty (APD) when further powers are devolved. A reduction in APD would effectively make it cheaper to fly from Glasgow or Edinburgh than from the North-East.

But Mr Osborne is reluctant to tackle the issue prior to May’s General Election, and will wait until Scotland makes its move before he offers similar powers to English regional airports.

When asked about the issue in the House of Commons on Tuesday, Mr Osborne said: "I think this is something we have a couple of years to work out, it is not something that has to be done tonight or tomorrow. But we can work out a plan that protects the brilliant Newcastle Airport and Manchester Airport and other regional airports."

The Chancellor's wait-and-see approach could be hugely damaging to this region, warned Graeme Mason, planning and corporate affairs director at Newcastle International, who said Scottish airports are already attempting to secure deals with airlines - and potentially win passengers from the North-East - with the promise of a duty cut.

“This is a here and now issue,” said Mr Mason. “Airlines are planning now for 2016, so we cannot continue with this uncertainty and the prospect of unfair competition. We face being at a serious disadvantage. Ensuring we are all operating on a level playing field needs to be a part of the Budget (in March),” he added.

The airport has been encouraged by recent talks with Priti Patel, Exchequer Secretary to the Treasury, said Mr Mason, who explained: “The Government understand the issue, but where we differ is that we believe they have seriously underestimated the damage this could have on the North-East economy.

“This isn’t simply a Newcastle Airport issue - it will impact the whole region in terms of investment and jobs.”

The SNP has long campaigned for reduced APD and in a speech this week to air transport bosses in London Alex Salmond confirmed that Scotland would cut the tax, which the former SNP leader labelled: “a millstone around the neck of this industry and of the Scottish economy.”