Plans to relaunch the defunct Air Route Development Fund (ARDF) have been quietly shelved despite looser EU rules permitting new versions of the scheme, the Sunday Herald has learned.
In a U-turn on previous pronouncements, Scottish Government and Scottish Enterprise admitted last week that they are no longer looking to re-introduce any form of the fund, which was abandoned in 2007 because of then prevailing EU competition laws.
The European Commission has since relaxed these state aid rules under pressure to boost economic growth. Airlines flying to airports with fewer than 3 million passengers a year can now receive start-up financial help of up to 50% of airport charges for up to three years following the launch of a new route.
The revised rules would allow aid for routes to government-owned Dundee and Inverness airports, as well as Prestwick which is currently struggling to attract airline business. Aberdeen, Edinburgh and Glasgow airports would be excluded.
In June 2013, Scottish Enterprise said that it would announce details of a replacement for the ARDF "within months", but since then no replacement scheme has been proposed.
Despite the revised EU guidelines a spokesman for Transport Scotland said that, the creation of a new route development fund was now considered "unviable" and that the main thrust of government aviation policy was to persuade London to devolve control of Air Passenger Duty (APD) - currently the highest tax of its kind in the world - to Scotland.
As well as lobbying to take control of APD, the government, Scottish Enterprise and VisitScotland also aim to encourage new international air routes by providing selective help with marketing budgets and market intelligence. The fund was widely seen as a benefit to the Scottish economy, particularly in business and tourism, and was credited with creating a total of 55 new routes, and increasing direct international routes from 17 to 45.
Gordon Robertson of Edinburgh Airport said that, given the restrictions on state aid to airlines and airports, the alternative approach of offering financial help on marketing had worked well. Government agencies had operated a hands-off approach, giving airports the power to negotiate new routes with airlines directly without having to deal with Transport Scotland, VisitScotland and Scottish Enterprise.
"That gives us the ability to put a deal on the table without the airlines having to go elsewhere and that has been very effective," Robertson said.
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