You asked
What formula is used to determine APD for Scotland compared to Gatwick Airport (which is located in the South East): £245 million for Scotland £36 million for the South East of England?
We said
Thank you for your enquiry.
Our methodology used to allocate Air Passenger Duty was updated in our Country and Regional Public Sector Finances: financial year ending (FYE) 2017 and we have recently published the bulletin for the FYE 2018. The methodology applied is explained in detail in our methodology guide.
Our main data source is the Civil Aviation Authority’s (CAA) Departing Passenger Survey (unpublished variables) and this is supplemented by CAA UK Airports data.
One of the differences between the estimates you have derived and those we compiled is that we include Gatwick in Nomenclature of Units for Territorial Statistics: NUTS1 region, Greater London.
A further difference is that we compile data for financial years, we understand you have not made any adjustments for this. We take the same passenger numbers from the CAA UK Airports data that you quote. Financial year numbers are estimated by assuming a uniform distribution across quarters each year, i.e. total passengers in FYE 2017 = (0.75 * total passengers in 2016) + (0.25 * total passengers in 2017).
Our methodology can be summarised as follows:
We use the destination country to determine which band flights should be in.
We use the type of ticket to determine whether standard or reduced class is applicable.
We use date of flight to group data by financial year.
The dataset includes variables to identify whether or not it is a connecting flight
Exemptions are accounted for e.g. children and airport staff
Some band, class and exemption numbers are interpolated as not all airports are sampled every year.
Below you will find a worked example for Gatwick. The figures derived for Scotland use similar formulas. Total passengers with detailed data in FYE 2017 = 27,076
Band A = 18,128 (reduced = 18,000; standard = 128)
Band B = 8,948 (reduced = 8,040; standard = 908)
Total exempt = = 3,541
Non-staff adults on terminating flights (non-exempt) = 23,535
Proportions:
Reduced Band A = 18,000 / 27,076 = 0.664795
Standard Band A = 128 / 27,076 = 0.004727
Reduced Band B = 8,948 / 27,076 = 0.296942
Standard Band B = 908 / 27,076 = 0.033535
Non-exempt = 23,535 / 27,076 = 0.869220
Revenue:
Total passengers 2016 = 43,114,888
Total passengers 2017 = 45,553,837
Total passengers FYE 2017 = (0.75 * 43,114,888) + (0.25 * 45,553,837) = 43,724,625
Reduced Band A passengers = 0.664795 * 43,724,625 = 29,067,929
Standard Band A passengers = 0.004727 * 43,724,625 = 206,705
Reduced Band B passengers = 0.296942 * 43,724,625 = 12,983,675
Standard Band B passengers = 0.033535 * 43,724,625 = 1,466,315
Reduced Band A revenue = 29,067,929 * £13 = £377,883,081
Standard Band A revenue = 206,705 * £26 = £5,374,337
Reduced Band B revenue = 12,983,675 * £73 = £947,808,282
Standard Band B revenue = 1,466,315 * £146 = £214,082,070
Total revenue = £1,545 million
Total non-exempt revenue = 0.869220 * £1,545,147,770 = £1,343,073,304
Total UK revenue from Departing Passenger Survey = £8,151 million
Total UK revenue = £3,236 million
Final contribution from Gatwick Airport = £3,236m * £1,343m / £8,151m = £533m