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British Airways parent flies positive flag for Scottish independence

By Belinda Goldsmith

LONDON, Feb 28 (Reuters) - The head of the International Airlines Group, that owns British Airways, said on Friday that Scottish independence could be good for business, providing a boost to the campaign that wants Scotland to split from the United Kingdom.

After a flurry of companies this week raised potential risks from independence, IAG Chief Executive Willie Walsh said he was not worried about British Airway's prospects if Scotland voted on Sept. 18 to end a 307-year tie with England.

IAG is the first major company to sound a positive note for a breakaway Scotland.

"If anything, it will be slightly positive, since we believe (an independent Scotland) will abolish air passenger duty because they recognise the huge impact that tax has on their economy," Walsh told BBC television.

"So it is probably going to be a positive development, if it does happen, for British Airways."

His comments were welcomed by the Scottish government after financial heavyweights Standard Life and the Royal Bank of Scotland on Thursday voiced concerns about uncertainties over currency, regulation, and tax regimes.

The comments from the financial sector that accounts for 150,000 jobs in Scotland and about 12 percent of GDP threatened to undermine Scottish leader Alex Salmond's economic argument that oil-rich Scotland could be a prosperous nation.

Scottish Transport Minister Keith Brown said Walsh could clearly see how independence could benefit the tourism industry that is worth 4.3 billion pounds ($7.2 billion) a year and creates 190,000 jobs or nearly eight percent of the workforce.

The Scottish government, run by the Scottish National Party, has vowed to cut air passenger duty by 50 percent if it gains independence with a view to abolishing the levy totally when public finances allowed.

"This will make Scotland's airports more competitive, cutting holiday costs and increasing tourism," Brown said in a statement. "Only independence can give us the powers we need to boost business and give our aviation industry a better and fairer deal."

But a spokesman for the pro-UK campaign Better Together said "breaking up the most successful economic, political and social union in history for the sake of a tax on holidays doesn't seem like the strongest argument" and warned over job losses.

The independence debate has escalated in recent weeks due to a row over which currency would be used by Scotland and as opinion polls start to show nationalists narrowing the gap in support although they are still trailing the unionists.

Salmond, head of the Scottish National Party which runs Scotland's devolved parliament, wants to keep the pound in a currency union with the rest of the UK but the three main British parties have joined forces to reject this proposal.

The rest of the United Kingdom opposes Scottish independence, arguing England, Scotland, Wales and Northern Ireland are better together politically and economically as the union gives greater clout on the world stage.