Contents
- Background/Introduction
- Aims/Objectives and/or The Requirements
- Methodology
- Key Sources of Information
- Product
- Costs
- Timetable/Milestones
8 Changes to Specification
9 Conditions of Contract for Research Services
RESEARCH SPECIFICATION TEMPLATE
Air Passenger Duty Research
CONTRACT No A-456/2011/2012
- Introduction
The purpose of this tender is to understand the potential economic and commercial affects of varying Air Passenger Duty (APD) in Wales. In particular, the research will look at the potential economic effects of a reduction in APD on the Welsh economy and Cardiff Airport.
- Background
In 2010 the Holtham Commission[1] recommended that the Welsh Government should undertake an assessment of the usefulness of some minor taxes, including air passenger duty. Following that recommendation, the aim of this research is to consider whether APD would provide Welsh Ministers with a useful economic policy lever.
APD is levied on the carriage of chargeable passengers on chargeable aircraft from a UK airport. It is payable by the operator of the aircraft and is due when the passenger aircraft first takes off. The amount due is dependent on the final destination and class of travel of the chargeable passenger (HMRC 2012)[2].
APD is currently non-devolved but the UK Government is on record as continuing “to explore the feasibility and likely effects of devolution to Scotland and Wales”. This is likely to be considered by the Commission on Devolution in Wales (‘Silk Commission’), launched on 11 October 2011. The independent Commission has been established to review the present financial and constitutional arrangements in Wales. The first part will review the case for the devolution of fiscal powers to the National Assembly for Wales and recommend a package of powers that would improve the financial accountability of the Assembly consistent with the United Kingdom’s fiscal objectives. The Commission will report its findings on part one by Autumn 2012[3].
Pending the outcome and recommendations of the Silk Commission[4], APD could become an option that the Welsh Government may wish to deploy. An assessment of the usefulness of APD as a policy tool to help stimulate passenger numbers at Welsh Airports and attract a more diverse and frequent range of services is required.
Cardiff Airport is the only international airport in Wales. Its overall performance remains a serious concern for Welsh Ministers. Passenger numbers at Cardiff have fallen from a peak of 2.10 million in 2007 to 1.42 million in 2010. This decline is in sharp contrast to the growth in passenger numbers enjoyed by Cardiff Airport’s main competitor, Bristol Airport, which has witnessed continual increases to over 5 million passengers in 2010. As most air passengers flying direct from Wales use Cardiff Airport, this research should focus on the potential effects to Cardiff Airport and its wider effects on economic activity in Wales.
In addition to the possible use of APD, the Welsh Government is also exploring other potential options with the aim of attracting new services and increasing passenger numbers to increase economic activity. This tender exclusively concerns APD and its potential affects.
- Objectives
The overall aim of this tender exercise is to provide the Welsh Government with independent and robust research that reviews the implications of devolving APD including:
- any practical barriers;
- any competitive advantages for Cardiff Airport; and
- the wider costs and benefits to Wales of devolving APD, including social impacts.
The research will need to:
- a) Review any relevant studies and literature.
- b) Identify relevant methodologies, initiatives, best practice and evaluations undertaken in the UK and elsewhere in relation to APD or relevant alternatives.
- c) Obtain and estimate:
- current and projected demand for air passenger travel from Wales and the rest of the UK, including a breakdown by destination (long haul; intra European; domestic);
- comparison of passenger numbers and routes from Cardiff Airport relative to Bristol Airport and other regional airports across the UK;
- quantification of how much revenue is currently raised in Wales through APD, and its split between long and short haul routes;
- the price sensitivity of the demand for air travel (long and short haul) and potential implications for reducing APD on Cardiff Airport;
- the potential market size for short and long haul flights from Cardiff Airport;
- the impact of changing APD on airlines administrative costs.
- d) Consideration of wider issues such as:
- the impact of reducing APD in Wales on the competitive position / commercial viability of Cardiff Airport;
- the impact of a reduced rate of APD in Wales on Bristol Airport and other regional airports in the UK, including an assessment of the scale of additionality; the substitution and displacement of services, and routes from other competitor airports;
- undertake research / analysis to consider the indirect costs and benefits, including the potential social and environment factors including the impact on Welsh residents;
- the merits of targeting such an intervention on attracting and sustaining new routes (both short and long haul) from Cardiff;
- an assessment of the benefits to the Welsh economy of international connections and a competitive and commercially viable Cardiff Airport;
- an evaluation of wider catalytic effects on investment; trade; tourism and the aerospace sector in general and repair, maintenance and overhaul in particular.
- Methodology
The tender must include an outline of the methodology to be used, a description of how the work will be organised, an illustration of any relevant frameworks to be used in the analysis and a timetable outlining the key stages of the project.
The successful contractor will not be expected to undertake significant data generation, but if the study methodology requires survey fieldwork, approval from the Welsh Government must be obtained in advance of activity.
- Key Sources of Information
The contractor will be responsible for identifying and collecting key sources of information, however a number of sources that should be cited are listed below. Support in gaining access to required information sources will be provided where necessary. The Client will purchase for the Contractor any data the Client agrees is essential for this research.
Key definitions (for example impact, value for money) used during the study and in the outputs/ reports are expected to be defined or the source indicated.
What is the contribution of aviation to the UK economy? (Oxera 2009)
Available at http://www.oxera.com/main.aspx?id=8660
Green Book (HMT 2003)
Available at http://www.hm-treasury.gov.uk/data_greenbook_index.htm
Civil Aviation Authority research and statistics
- Products
The contractor will produce progress reports as set out in the project timetable at section 8. The final study reports (including draft) should include an Executive Summary. They should be submitted in Microsoft Word/RTF format, with an automatic table of contents; unbound (one copy), bound (three copies) and on CD. Backing data and tables should also be provided on CD in a publishable format. The use of recycled paper is encouraged.
All reports must be written in plain language, avoiding unnecessary technical language or jargon, and explaining the concepts in lay terms. Technical discussion can be included in annexes. The Final Report and any supporting documents (such as Technical Annexes) will be either bilingual or in separate Welsh and English language volumes.
The successful Contractor will attend steering group/progress meetings as required. The steering group will comprise representatives from the Welsh Government. The successful Contractor will be expected to present an update of work to the steering group at these meetings and should supply any supporting documentation at least five working days in advance of the meeting taking place. The successful contractor will be responsible for providing notes of meetings.
- Costs
Any travel and subsistence expenses incurred by contractors in the delivery of the contract will be paid at the Client’s rates – copy attached. The price schedule at Appendix 1 must be completed in full and include the costs of translation.
- Timetable/Milestones
The timetable of meetings and milestones will be agreed between the parties to include a date for the production and presentation of interim findings and a draft final report.
Environmental statement
The Client is committed to minimising the effect of it’s day to day operations on the Environment and Contractors are encouraged to adopt a sound proactive environmental approach, designed to minimise harm to the environment.
Factors to be considered should include areas such as:
- Adopting an environmental management system which includes focus on disposal of waste and packaging.
- More efficient use energy and water.
- Beginning to embed sustainability into the provision of goods and services supplied to the Welsh Assembly.
- Use of recycled paper containing only post-consumer waste for all non-specialist printing whenever possible.
- Reduction in carbon dioxide emissions from business travel by extending use of video conferencing and encouraging the use of low emissions vehicles.
- Building an environmentally friendly work culture through training and high quality communication with staff.
To assist you in considering these factors for this and/or future tenders, advice and an environmental assessment for your business is available free of charge from the following website www.netregs.gov.uk
Whilst on site the contractor should be aware of and actively support the Client’s Environmental Policy Statement which will be made available to you in advance or on arrival
Security
If the successful contractor requires for its personnel, frequent and uncontrolled access to the premises of the Welsh Government, or where such personnel have access to restricted information, or proximity to public figures, then all such personnel must satisfy the security requirements of the Client by completing a security questionnaire. No contractor personnel will be issued security passes until they have obtained the required security clearance. Until then, they will be issued with a temporary pass and will have to be escorted by a member of staff each and every time they have access to the premises’.
8 Changes to the Specification
This specification document sets out the Client’s current service requirement. It is possible that during the life of the contract changes, for example, in the nature and volume of the work and the timescale or other requirements will arise.
Changes to the Specification will be implemented by issuing written amendments to all those affected by the changes.
9 Conditions of Contract for Research Services
The Conditions of Contract for Research Services hereafter enclosed should apply in relation to this contract. The Contractor must have regard to these Conditions.
[1] Fairness and accountability: a new funding settlement for Wales. Available at http://wales.gov.uk/docs/icffw/report/100705fundingsettlementfullen.pdf
[2] For full details and rates of APD please see HMRC (2012) available at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000505&propertyType=document
[3] Wales Office 2011.
[4] For further details see http://www.walesoffice.gov.uk/about/commission-on-devolution-in-wales/
