Image caption The committee has recommended that air passenger duty should be abolished on all flights from Northern Ireland

Air passenger duty (APD) should be abolished on all flights from Northern Ireland, the NI Affairs Committee has said.

A report by the group has also suggested services to Northern Ireland from Great Britain should be exempt.

It says this is needed to counter the threat the tax poses to the economy.

In June, Continental Airlines warned that the region's only transatlantic route could be axed if passenger duty was not cut.

It adds £60 to every flight to the US.

Executives from the US airline, which runs the Belfast International Airport to Newark service, told a committee of MPs that it could not justify paying £3.2m a year in departure tax when the levy in the Republic of Ireland would soon be zero.

Chairman of the Northern Ireland Affairs Committee Laurence Robertson said: "If the current tax rate is not addressed as a matter of urgency, the implications for Northern Ireland are deeply troubling."

The MPs recommended that two air tax bands be merged and that a zero duty rate be applied.

'Bad for business'

The detrimental effect of the duty on the Northern Ireland economy is significant and its continuation may threaten the viability of Northern Ireland's connections to Great Britain and North America, the report added.

Witnesses to the committee's inquiry have highlighted serious concerns, including Northern Ireland's geographic location and reliance on air travel; the sharing of a land border with the Republic of Ireland, which levies air duty at a much lower rate, and the need for investment from businesses and tourism.

In its report, the committee said it was not convinced of the viability of devolving the power to set APD. It said that may be reconsidered if corporation tax was devolved to Northern Ireland and its impact assessed.

"Decision-makers must consider whether there could be local measures to mitigate the local effects of the tax in Northern Ireland," it continued.

APD for flights from NI ranges from £12 to £170 depending on the destination and class of travel.

The report's findings included: Decision-makers must consider whether there could be local measures to mitigate the effects of the tax in NI. For flights departing from NI airports, duty bands A and B should be merged. The resulting merger zero-rated for all flights departing from Northern Ireland airports, and for direct flights to Northern Ireland from Great Britain. The detrimental impact of the duty on the economy is significant and continuation may threaten the viability of NI's connections to Great Britain and to North America.

In comparison passengers travelling from airports in the Republic are charged only three euros in Air Travel Tax, which will soon be removed.

The 18-page report made five recommendations and conclusions.

Brian Ambrose, chief executive of George Best Belfast City Airport, said: "We welcome the findings of this timely and important report and hope that government give it serious consideration."

A spokesman for Belfast International Airport has also backed the report.

"All Belfast International Airport wants is a level playing field to eliminate unfairness and disadvantage - no more, no less," he said.

Antoinette McKeown, Chief Executive of the Consumer Council said that because of its location, Northern Ireland consumers "have a higher need to travel by air".

"APD has always been punishing consumers here more," she said.

Necessity

"Although this recommendation is an important step, Northern Ireland consumers will continue to bear the burden of APD until the Chancellor of the Exchequer acts to remove APD for flights to and from Northern Ireland."

Aer Lingus said the tax should be scrapped across the UK as a whole as it was "bad for business".

Easyjet said it "wholly" welcomed any move to abolish the levy.

Flybe said the committee had understood Northern Ireland was "a special case in the UK in that for millions of NI passengers flying is a necessity, not a luxury".

A Treasury spokesman said: "The Government recognises the unique position of Northern Ireland, given its land border with the Republic of Ireland, and welcomes the report by the Northern Ireland Affairs Committee.

"Further discussions are planned, and the Government will provide a response to the consultation in the autumn."