United getting effective €161 per ticket subsidy on Belfast-US service
Published 18/08/2016 | 02:30
Stormont is subsidising a Belfast-Newark air route to the tune of €161 per return ticket after agreeing last week to stump up £9m (€10.3m) in funding to ensure US airline United keeps operating the service for at least the next three years.
The service is the only route from Belfast to the United States and the airline was due to cancel it next month.
In 2013, control over air passenger duty (APD) was devolved to the Northern Ireland Executive from London in a previous effort to ensure United retained the Belfast-Newark route, which the airline had then also considered dropping.
The APD was axed on the route by the Executive, with a resulting loss of £2.4m a year in tax revenue.
United uses a Boeing 757 with 169 seats on the Belfast route, which operates daily in the summer and three times a week in the winter. That equates to about 48,000 available seats a year on the service. But the airline operates the Belfast-Newark route with what's believed to be an 80pc load factor. That represents the proportion of available seats on the service that it's filling.
It means that including the APD removal on the service and the subsidy that's being provided, each return ticket sold by United on the service is benefiting from an effective €161 subsidy.
Although United was set to cancel the Belfast route in September, it's thought the service was profitable.
But the airline believed it could make more money by deploying the aircraft on the route to another service.
The suspension of air passenger tax in Ireland was credited with helping to boost air traffic in the Republic.
Dublin Airport also remains a popular gateway for people from Northern Ireland due to its extensive network. About one million people from the North used it last year.