THE SNP’s flagship plan to cut and eventually abolish air tax in Scotland has been postponed for at least a year.

The Chancellor was forced to make a last-minute change to the Budget following a late intervention by Scottish Finance Secretary Derek Mackay, who asked on Tuesday for the devolution of Air Passenger Duty (APD) to be shelved.

Mr Mackay later confirmed the introduction of Air Departure Tax (ADT), the Scottish incarnation of APD, had been postponed until at least April 2019.

Westminster will continue to collect APD across the UK in 2018/19 and allocate a portion of the revenues to Scotland in the block grant as usual, the UK Budget report confirmed yesterday.

It comes amid concerns about ADT’s impact on Highlands and Islands airports, and friction between the SNP and their left-wing allies in the Scottish Greens on the policy.

Highlands and Islands airports were granted an exemption from APD in 2001 to improve transport links to remote communities, but the European Commission (EC) later changed their state aid rules.

The UK Government believes the EC is unlikely to allow Scotland to maintain the exemption under ADT, so Treasury officials are understood to have been working round the clock with the Scottish Government to help them design a tax model that does not penalise remote communities.

However, they were unable to reach an agreement in time for the Budget.

Mr Mackay, who told MSPs just last month that he hoped to reach an agreement to devolve the tax next year, said: “I was not satisfied that that exemption would be lifted, so I said to the UK Government that that had to be resolved.

“It’s their legislation, it’s their power and they’re handing it to us as essentially defective legislation.

“They’ve failed to resolve it and therefore we came to an agreement very late in the day that they would defer switching on ADT in Scotland and the UK Government would continue to levy APD.

“That safeguards the Highland and Island exemption for the time being so that we can work together to find a remedy to that so that I can switch on ADT in due course, so it has been deferred for a period of one year.”

Glasgow and Edinburgh airport bosses said they were disappointed by the delay.

However airline Loganair, which provides lifeline services to remote communities, welcomed the decision to prioritise the APD exemption.

An Edinburgh Airport spokesman said: “While this was not a surprising development given Derek Mackay’s statement last month, we remain disappointed that there has been no significant movement on an issue which we have spoken about for long enough.

“We have differing views on the legal issues around the exemption but either way we need a resolution as soon as possible so the tourism industry does not continues to miss out on the benefits of a cut in APD.

“Once again we call on the Scottish Government to show leadership and deliver a statement of intent on what they have consistently made a top priority and what will deliver real benefits for the wider Scottish economy.”

A Glasgow Airport spokesman said: “Air Passenger Duty is a regressive tax and one which continues to stifle our ability to compete in both domestic and international markets.

“Our position has always been clear that the Scottish Government’s proposed 50 per cent reduction on APD should be implemented as soon as possible, so we are disappointed with today’s announcement.

“In light of the ongoing uncertainty surrounding Brexit, a cut in APD would promote confidence in the wider industry - and airlines in particular - by sending a real message that Scotland remains open for business.”

Jonathan Hinkles, managing director of Loganair, said: “Although any delay to a programme which could reduce the huge burden of Air Passenger Duty on our customers is unwelcome in itself, we are heartened to see that preservation of the exemption from the tax for travellers in the Highlands and Islands has been rightly prioritised.

“We look forward to the programme in Scotland being able to progress once the legal issues around that exemption have been squared away.”

The SNP has a long-standing ambition to scrap APD to attract more tourists and encourage investment in Scottish airports.

Halving it by 2021 as an interim step would cost around £190m a year.

However, the delay has handed Mr Mackay a temporary cessation of hostilities with the Greens who have pledged to resist any attempt to cut air tax in Scotland.

The Scottish Government runs a minority administration at Holyrood, meaning Green votes will be vital to get the Scottish Budget through Holyrood in the New Year.

The Greens have accused the Scottish Government of handing “wealthy frequent fliers and under-taxed aviation industry” and unwarranted tax cut which won’t support everyday travel costs and will increase climate emissions.

However, it supports the APD exemption for the Highlands and Islands, as it recognises the benefit this has for lifeline flights.

A Scottish Green spokesman said: “The SNP policy of cutting ADT is not the public's priority as our polling showed, and witnesses at finance committee were unable to provide evidence that the policy will deliver any benefits. We will continue to resist any ADT cuts.”