Scotland is to be allowed to set its own level of air passenger duty as part of a package of measures to strengthen devolution.
The move is likely to see the tax for flights north of the border cut to 50% in the first year before being completely abolished.
During its campaign for independence, the Scottish government said it planned to halve APD immediately and abolish it entirely as soon as finances allowed.
The Smith Commission, set up by Prime Minister David Cameron in the wake of the vote against Scottish independence, has now said the Scottish Parliament should be given the power to decide APD .
It also suggested Scotland should set its own rates and bands for income tax and retain all of the income tax raised in Scotland.
The Commission’s findings, which were warmly welcomed by the PM, will form the basis of legislation on more Scottish powers.
A stakeholder group will now be established to take forward the recommendations in the next Westminster parliament.
The Airport Operators Association said a reduction in APD anywhere should be matched by a cut everywhere in the UK.
Chief executive Darren Caplan said: "UK levels of Air Passenger Duty (APD) continue to be the highest in the world, and represent a growing barrier to trade, investment and tourism.
"The AOA supported the Treasury’s removal of APD for the longest flights in the 2014 Budget, but the fact remains that at a time when our international competitors are either freezing or abolishing their respective air taxes, overall levels of APD in this country are still at record high levels, and are increasing year after year.
"A cut in APD anywhere should be matched by a cut everywhere in the UK. The AOA will continue to make this case to the Treasury in the months ahead."
ABTA said any inconsistencies between what a passenger pays flying from Scotland compared to elsewhere i the UK could create ‘an uncompetitive and damaging situation’ for travel businesses.
Chief executive Mark Tanzer added: "ABTA has welcomed that the Scottish Government has recognised the damaging impact this tax is having on jobs and growth as well as on consumers. In light of today’s announcement, ABTA is urging the UK Government to review the level and impact of this damaging tax with a view to reducing it across the whole country."
