HANDING Scotland the power to axe controversial airport taxes is a “slap in the face” to North-East business that risks 1,000 jobs and £400m, say campaigners who urged ministers to protect the regional economy.

AS part of the devolution deal drawn up in the aftermath of the Scottish independence referendum Holyrood will be given power over Air Passenger Duty (APD), which could lead to it being cheaper to fly from Scotland than from the North-East.

Yesterday’s announcement by The Smith Commission - set up to examine what powers could be transferred to Edinburgh – has dismayed airport bosses and the NECC who fear it could hand Scotland a crucial economic advantage over its nearest English neighbours.

APD is levied on air passengers leaving UK airports. For short haul flights each passenger is charged £13, and £69 for longer flights. Giving Scotland the power to reduce or abolish APD could tempt passenger north of the border, and make it harder for Newcastle and Durham Tees Valley airport to attract and retain key routes.

Dave Laws, Newcastle Airport chief executive said he was “extremely concerned” about the proposals. Earlier this week he joined forces with fellow English airport bosses in a letter to the main political leaders that urged them to ensure there is a level playing field across the UK when it comes to APD.

He added: "We have undertaken intensive lobbying, including letters to the Prime Minister, Chancellor and other senior politicians. We have also submitted a full representation to the Smith Commission. This hasn’t been published due to its commercial sensitivity but may be in the future.

“Our submission predicts 1,000 fewer jobs across the North-East by 2025, significant impact on passenger numbers, £400m in Gross Value Added (GVA) lost between 2015 and 2025, and additional journey time costs of £265m between 2015 and 2025.

“Our understanding is that our submission was discussed at the highest levels of government and the response from the Chancellor indicated that our concerns would be taken into account. We would be surprised if our modelling is inconsistent with the official modelling undertaken.

“If Scotland were to stop applying a tax on passengers, it would penalise people from the North-East that want to fly from their local airport. We are now seeking a signal from the Chancellor in next week’s Autumn Statement that the Government is going to do something to address any future distortions.

"The Prime Minister said on 19 September that the devolution settlement had to be fair also to the people of the rest of the UK. We now want him to honour this commitment. The only way to achieve this is for any reductions in Scotland to be matched in the rest of the UK, or for this damaging Duty to be reformed in such a way that distortions are avoided.”

Mark Stephenson, at the NECC, said: “Handing the Scottish parliament powers over APD will be a slap in the face for North-East business.

"Providing a competitive advantage to airports north of the border places our region at a disadvantage at a time when businesses are doing their level best to provide jobs and grow our economy.

“The North-East is uniquely exposed to the impacts that such powers will have and it is vital that we are consulted fully before a decision is made. Reaching a fair deal for Scotland as well as in UK regions is crucial, but it makes no sense to rob Peter to pay Paul.

“If we in the North-East are to realize our economic ambitions and overcome our challenges then at some point the welfare of our economy must factor in decision making on Scottish, as well as English regional devolution.”