Forecast growth and prices
20. The average growth in air passengers over the
last 30 years has been nearly 6%.
In the South-East, air traffic today is a little over five times
the level of 30 years ago. The DfT forecast of an unconstrained
increase in demand to 501 mppa by 2030 is equivalent to an annual
increase of 4% every year.
21. If a 4% increase were maintained beyond 2030,
passenger numbers would by then be increasing by 20 million each
year. As the Aviation Environment Federation (AEF) has pointed
out, in the space of only three years this would amount to over
60 mppavirtually the entire capacity of Heathrow in 2000.
Such a scenario is obviously unsustainable, and we have indicated
above that the scope for a technological 'fix' is very limited.
The implied growth also raises fundamental question marks about
behaviour in terms of the number of foreign holidays which we
can takea point we raised with the Secretary of State for
22. The other closely related assumption contained
in the DfT consultation is that fares will fall by 2% a year.
The Department qualifies this by stating that the decrease might
only be 1% if account is taken of environmental costs. But it
then goes on to suggest that fares may in fact fall more than
this due to competition between low-cost carriers, and that a
rate of 1.5% might be more realistic even if a 100% aviation fuel
tax were in place to internalise CO2 costs.
An annual reduction of 1.5% would result by 2030 in a fall of
36% in ticket prices; while a 2% reduction would result in a fall
23. The DfT's consultation is therefore based on
an assumption that the air fares will fall by up to 40% in the
next three decades. Such a reduction in the price of flying is
frighteningly reminiscent of roadswhere we have seen a
similar drop in the price of motoring but where we are now paying
the penalty in terms of global warming, congestion, and a lack
of investment in public transport.
24. We are concerned that the Department should
have released a major consultation which assumes that passenger
numbers will increase by 4% every year for thirty years and that
fares will decrease by up to 40% over the same period without
a far more extensive discussion of the underlying implications
of such assumptions.
The need for demand management
25. In its November 2002 report, the RCEP noted the
Government's view that a charge of £3 per passenger on short-haul
flights and £20 on long-haul flights would reflect the environmental
costs, but considered this inadequate to address the huge scale
of the environmental challenge. It concluded that an emissions
charge would need to be "substantial", and that a tax
of £35 for single flights, as suggested by the Institute
of Public Policy Research, would "go some way towards removing
the discrepancy of treatment between aviation and motor fuel".
This received wide coverage in the media.
26. The Secretary of State for Transport expressed
some scepticism about the RCEP report in both the House and in
an interview with the Times. We commented on his apparently dismissive
attitude earlier this year.
In the light of the environmental impacts of a major growth in
aviation and the assumptions on which this is based, we took the
opportunity to question the Secretary of State for Transport directly
about the need for demand management.
27. In the case of roads, the Government does
seem finally to have accepted the need for some form of congestion
charging or road pricing framework. Yet the Secretary of State
for Transport entirely refused to accept that, in the case of
aviation, congestion may need to be dealt with in a similar way.
We were astonished that he denied there was any parallel in this
respect between road transport and aviation. He re-iterated his
opposition to "pricing people off planes" and the frequency
with which he used this phrase reinforced our perception that
the Department for Transport is little interested in sustainability.
28. In our view the Government should aim to decouple
growth in air travel from economic growthas it has
been attempting to do for roads. To achieve this, it must be
willing to use a range of fiscal and other policy instruments
to manage behaviour. This might go well beyond the need to incorporate
cost externalitiesas indeed the Government has accepted
in the case of waste.
18 DfT South-East consultation, paragraph 2.4. Back
Ev118, 136,140. Back
DfT South-East consultation, paragraph 5.13. Back
The exact figure is 3.6%. The DfT actually assumes a growth of
4.25% per annum until 2020, and then uses a slightly lower growth
rate in extrapolating the 2020 forecasts to 2030. See DfT South-East
consultation, paragraphs 5.18 and 5.20. Back
The Hidden Cost of Flying, Aviation Environment Federation,
February 2003. Back
DfT South-East consultation, paragraphs 5.16 to 5.24. Back
The Environmental Effects of Civil Aircraft in Flight,
Royal Commission on Environmental Pollution, November 2002. Back
EAC, Fourth Report of Session 2002-03, Pre-Budget Report 2002,
April 2003, paragraphs 35-40. Back
Ev9, Q63. Back