The United Kingdom government is slowly relinquishing its hugely unpopular Air Passenger Duty (APD) and looks set for a showdown as airports in Scotland could be relieved of the tax.

APD in the U.K. has been raised over the past decade and is now the highest in the world. As a guaranteed means of bringing much-needed income during times of austerity, it works incredibly well for the government. But for airports, airlines and — most of all — those who want to travel by air, it is a painful reality.

Following last year's failed vote on Scotland gaining independence from the rest of the U.K., the government agreed to devolve decision-making on certain aspects of the economy to the Scottish Parliament. This week, it announced that decisions on APD in Scotland would be one of those aspects.

For those using Scotland's airports, it could lead to a big reduction in ticket prices, and consequentially growth in tourism and inbound investment. A big win.

However, let's not forget that Scotland is still part of the U.K., and the rest of the country's airports are still competing for passengers, particularly in the north of England.

Newcastle Airport is only 60 miles from the Scottish border and 120 miles from Edinburgh Airport. Both airports handle a mix of low-cost and full-service European schedules, with a few long-haul and leisure routes. If airlines flying from Edinburgh are suddenly able to reduce ticket prices to the same destinations, passengers from Newcastle may think nothing of taking a two-hour train or car journey to make that saving.

Following the devolution of APD to Scotland and claims that both jobs and up to 450,000 annual passengers could be lost from Newcastle Airport, Chancellor George Osborne quickly stated, "We'll have to look at what we can do to support regional northern airports to see that they not suffer a loss."

But this in itself would then put northern airports at a competitive advantage over airports in the south of the country.

Liverpool John Lennon Airport, sits in the northwest of England, but it's not deemed close enough to Scotland for help. The airport responded to the news by stating:

"If there are cuts to APD at airports in Scotland, then these need to be matched elsewhere across the U.K. APD remains a barrier to airline growth in the U.K., which the Scottish Government recognize. We will continue to campaign for the reduction and abolition of APD for passengers in order to stimulate the market, particularly at airports such as Liverpool where low cost airlines are dominant and these charges can make up a much higher percentage of the air fare."

Meanwhile Ryanair, one of the largest carriers of air passengers in the U.K., renewed its call on the government to scrap the tax entirely and "allow U.K. airports to become competitive, while stimulating jobs and tourism growth."

Whether Scotland will automatically reduce APD at its airports remains to be seen. Doing so would mean higher costs in the short term that would need to be met by higher taxes elsewhere.

With a general election in May, airports and airlines will be watching all political parties closely to see whether the future of APD (and other issues such as additional runways in London) will be added to the manifestos.