Derry struggling with air tax and Sterling/Euro fluctuations, new report finds

City of Derry Airport.
City of Derry Airport.

A new report on how to boost tourism says Derry has struggled with Sterling/Euro fluctuations over the years, as well as from lower VAT overheads in Donegal.

‘Promoting the tourism industry in Northern Ireland through the tax system’, which has been newly published by the Northern Ireland Affairs Committee (NIAC), also suggests a new £4million air route development fund should be implemented now to support City of Derry Airport.

“The land border allows people to take advantage of cheaper prices in the Republic of Ireland when the Euro is weak, and vice versa when the Euro is strong. The impact of this is felt particularly in border areas, such as Londonderry,” the reports states.

The NIAC review also found Derry hotels are affected by their proximity to Donegal, and “that hotels located closer to the border were feeling the combined effects of the lower rate of VAT and (at the time) the exchange rate”.

Visit Derry, the local tourism promoter, told the NIAC that “the competitive disadvantage faced by businesses in the area was demonstrated in the day-to-day transactions on overnight stays, restaurant choices and wedding venue packages”.

The report adds: “Visit Derry told us a VAT reduction would enable businesses in the Derry/Londonderry and Strabane areas to compete with counterparts in the Republic on a more equitable basis.”

The report also found Eglinton is suffering as a result of Air Passenger Duty (APD), which competitors south of the border don’t have to contend with.

It said the Department for the Economy’s new £4million air route development fund should provide a mechanism to boost flights in and out.

“We urge the Northern Ireland Executive to implement the fund as soon as possible. In particular, we hope that the City of Derry Airport, the smallest of Northern Ireland’s main airports, will benefit from this fund and improve its connectivity,” the report said.