Memorandum from the Civil Aviation Authority
(CAA) (FT 27)
1. INTRODUCTION
1. The CAA is the UK's independent specialist
aviation regulator. Its activities include economic regulation,
airspace policy, safety regulation and consumer protection. There
are 3 departments within the CAA that have contact with cargo
related issues: the Safety Regulation Group (SRG), The Directorate
of Airspace Policy (DAP) and the Economic Regulation Group (ERG).
2. SRG is responsible solely for ensuring
that cargo aircraft, like any other aircraft entering UK airspace,
pass the minimum UK safety standards set for that particular type
of aircraft.
3. For DAP, there is no distinction between
passenger aircraft, passenger aircraft with cargo in the hold,
or all-cargo aircraft. Airspace management and modification is
independent of aircraft type, although issues may arise at airports
where there are high levels of all-cargo aircraft movements, which
may lead to a higher than average level of night flights with
associated environmental considerations.
4. ERG is responsible for collecting statistical
information on air cargo to fulfil the UK Government's obligations
for data reporting to ICAO and the European Commission. Cargo
statistics (by weight) are recorded according to whether cargo
is arriving or departing from UK airports, whether the cargo is
part of the bellyhold of a passenger aircraft or on an all-cargo
aircraft, as well as whether the cargo is made up of freight or
mail.[28]
These data are published monthly at an aggregate level, and are
available electronically by route and by airline on a CAA database
which holds monthly data back to 1986. Total freight revenue is
collected for main UK airlines only, but this information is not
broken down by origin/destination.
5. The CAA's principal expertise within
the all-cargo sector therefore is based primarily on its collection
of and access to cargo related statistics. This submission will
present some high-level data on air cargo carried to or from the
UK's airports, which we hope will be of interest to the Committee.
It also suggests some policy areas which the committee may wish
to consider; while the majority of ERG's more detailed involvement
with the aviation sector is in relation to passenger traffic as
opposed to cargo, we have sought to provide the committee with
some analysis of the data available.
2. CARGO OPERATIONS
FROM UK AIRPORTS
6. In the CAA's statistics, cargo is recorded
by weight in metric tonnes. It comprises both freight and mail,
with freight making up the majority of the weight (about 90% in
2006). Goods that travel by air tend to be highly perishable (eg
foodstuffs) or high-value (eg diamonds). However, the CAA does
not collect data on the type or value of the goods being transported
to and from UK airports.
7. In 2006, 2.3 million tonnes of freight
and 0.2 million tonnes of mail was carried by air into and out
of the UK's reporting airports.[29].
The combined total of 2.5 million tonnes represents a fall of
3% on the total for 2005, but an increase of 28% on the total
for 1996.
Cargo by UK airports
8. Figure 1 shows how cargo weight carried
is distributed between the London and regional airports[30].
It shows that the regional airports have seen sustained growth
over recent years, with an average annual growth rate of cargo
tonnes handled between 1990 and 2006 of 5.7%. The London airports,
however, show a more variable growth pattern. Between 1991 and
2000, there was a broadly constant growth rate of 7.4% per annum.
However there was a fall of 9.8% in 2001 alone and from 2001 to
2006, the average annual growth was only 0.7%.
Figure 1
TOTAL CARGO (TONNES) BY UK AIRPORTS, LONDON
AND REGIONAL, 1990-2006
Source: CAA airport statistics.
Notes: Flights to and from oil rigs excluded.
Cargo-only flights and bellyhold
9. Air freight or mail can either be carried
on dedicated cargo-only aircraft or in the belly-hold of passenger
aircraft. Figure 2 shows the total cargo weight at UK airports
by means of transport. It demonstrates a very similar shape to
the London/Regional graph in Figure 1. Both types of cargo transport
have shown a slight downturn in terms of weight since 2004.
Figure 2
CARGO (TONNES) BY AIRCRAFT TYPE AT UK AIRPORTS,
1990-2006
Source: CAA airport statistics.
Notes: Flights to and from oil rigs excluded.
Cargo on departing and arriving flights
10. For the most part passengers take return
journeys while particular items of cargo only travel in one direction.
As Figure 3 shows, arriving and departing cargo was roughly equal
in weight until around 2001. From then on there is a divergence,
with arriving cargo continuing to rise, before flattening off
by 2004. Departing cargo remained broadly flat after 2001, and
showed an apparent decline from 2004.
Figure 3
QUARTERLY CARGO (MAIL + FREIGHT) BY ARRIVALS
AND DEPARTURES
Source: CAA airport statistics.
Notes: Flights to and from oil rigs excluded.
11. This pattern can be seen more clearly
from the annual data shown in Figure 4, which shows that the divergence
between arriving and departing cargo weights is mainly due to
the recent lack of growth in departing freight weight compared
to arriving freight weight.
Figure 4
ANNUAL FREIGHT BY TYPE, ARRIVALS AND DEPARTURES,
UK REPORTING AIRPORTS
Source: CAA airport statistics
Notes: Flights to and from oil rigs excluded
Cargo by world area
12. As Figure 5 shows, the overall weight
of air cargo at UK airports since 1990 has been fairly static
for domestic and European routes,[31]
whereas the growth in cargo weight has been mainly seen on routes
between the UK and North America, and UK and the rest of the world.
In this analysis, world area is taken to be the origin/destination
of the flight (the first or last airport on the flight plan of
the aircraft). This will not always correctly represent the origin/destination
of the cargo because:
— if it is a multi-sector flight, the
cargo may have been loaded / unloaded at one of the intermediate
airports; and
— the UK—origin/destination airport
may only represent a part of the total journey of the cargo, since,
compared to passengers, cargo is less likely to avoid multiple
connections and long stopovers.
13. Figure 5 also shows that the disparity
between arriving and departing weight mainly comes from the "rest
of world" countries. To a lesser extent there is also net
inbound cargo from Europe. The only region where the UK has net
outbound cargo by weight is North America. The size of this net
outflow is approximately equal and opposite to the European net
inflow.
Figure 5
ANNUAL FREIGHT BY TYPE, ARRIVALS AND DEPARTURES,
UK REPORTING AIRPORTS
Source: CAA airport statistics.
Notes: Flights to and from oil rigs excluded.
14. Table 1 shows the breakdown of international
cargo weight carried between the UK and the ten countries that
had most air cargo traffic with the UK in 2006. These countries
accounted for 66% of the total air cargo weight in 2006, an increase
from 58% in 1990. The country in the top ten with the highest
growth in air cargo weight to or from the UK between 1990 and
2006 was the United Arab Emirates, followed by India and South
Africa.
Table 1
INTERNATIONAL CARGO FLOWS BETWEEN UK AND
THE TOP 10 COUNTRIES[32]
| tonnes (000s) |
1990 | 1993 | 1996
| 1999 | 2002 |
2005 | 2006 | Annual Growth
'90-`06
|
| USA | 342 | 414
| 557 | 754 | 730
| 747 | 724 | 4.8%
|
United Arab Emirates
| 22
| 23 | 34 | 52 |
93 | 142 | 151 |
12.8% |
Hong Kong
| 43 | 56
| 85 | 93 | 114
| 122 | 117 | 6.5%
|
| Germany | 99 | 89
| 118 | 109 | 105
| 123 | 104 | 0.3%
|
| Belgium | 34 | 33
| 46 | 93 | 83 |
81 | 85 | 5.9%
|
| Canada | 51 | 66
| 72 | 117 | 80
| 75 | 76 | 2.5%
|
| India | 16 | 14
| 22 | 16 | 27 |
49 | 67 | 9.4%
|
| Japan | 36 | 51
| 70 | 75 | 67 |
71 | 62 | 3.5%
|
| South Africa | 15 | 18
| 28 | 45 | 59 |
64 | 59 | 8.9%
|
| Australia | 21 | 29
| 31 | 38 | 36 |
52 | 47 | 5.2%
|
| Others | 488 | 554
| 683 | 798 | 772
| 793 | 773 | 2.9%
|
| Total | 1,168 |
1,349 | 1,743 | 2,190
| 2,166 | 2,317 |
2,265 | 4.2% |
Source: CAA airport statistics.
Notes: Flights to and from oil rigs excluded.
3. AIRPORT CHARGES
FOR FREIGHT
OPERATIONS
15. The CAA sets limits every five years on the amounts
that designated airports may levy on aircraft operators by way
of airport charges. The designated airports are currently Heathrow,
Gatwick, Stansted and Manchester although the Government is in
the process of consulting on whether Stansted and Manchester should
be "de-designated".
16. None of the 4 designated airports charge passenger
airlines according to the amount of freight carried in the bellyhold
of passenger aircraft. Any charges levied on freight shippers
for the transport, warehousing and processing of freight at airports
are not directly regulated by the CAA. However, whole plane freight
operations will attract airport charges for the landing and parking
of freighter aircraft. These charges are regulated charges for
the purpose of CAA price capping and in the current price control
period (2003-2008) designated airports may not charge more for
a freighter aircraft than they would for an equivalent passenger
aircraft. The Competition Commission has recently recommended
to the CAA that this arrangement should continue into the next
price control period (2008-2013). The CAA is considering the Commission's
recommendations and will publish its own proposals in November
2007.
4. POLICY OBSERVATIONS
17. Although the majority of our involvement with the
aviation industry is in the passenger traffic sector, as opposed
to cargo, we would like to make three observations of relevance
to the all-cargo market.
— Traffic Distribution Rules (TDRs)—TDRs currently
restrict the number of peak time all-cargo flights operating at
Heathrow and Gatwick. After consultation with the airport operator,
BAA, and the slot coordinator, ACL, the CAA determines the peak
periods for the summer and winter seasons in a given year, after
which point all-cargo operators are allowed to operate in these
periods only with the approval of the airports operator, BAA.
TDRs have been in place in their current form since 1991 and it
might be timely, in the context of the availability of capacity
at these airports, to consider whether this administrative mechanism
is still the best way for allocating such resource, as opposed
to relying more on market mechanisms like slot trading.
— Bilateral Air Services Agreements (ASAs)—There
is no standard practice for the treatment of cargo rights between
countries negotiating bilateral ASAs, although the Department
for Transport has a policy of seeking a balanced exchange of bilateral
rights where a fully liberal agreement cannot be reached. In most
instances, all-cargo aircraft rights are negotiated alongside
passenger aircraft rights and negotiations are concluded as part
of a package as the commercial demand for the different rights
can vary significantly. Where it has not been possible to negotiate
an open agreement with a bilateral partner, it is common for there
to be different limits for cargo and passenger operations, with
the latter providing airlines with the opportunity to carry cargo
in their belly-holds. Whilst the CAA recognises that an alternative
approach of advocating the deregulation of cargo markets independent
of passenger operations would no doubt provide some immediate
benefits in terms of facilitating air-based freight, there might
be disadvantages to this approach in circumstances where such
rights might otherwise be utilised by more liberal treatment of
passenger services. The CAA therefore fully supports the Government's
approach to liberalisation on the basis of a balanced exchange
of cargo and passenger rights.
— The Environment—Air Passenger Duty (APD)
is levied on all passengers departing from a UK airport on an
aircraft of more than ten tonnes or with more than 20 seats. All-cargo
aircraft are by definition exempt from this tax. To the extent
that APD is regarded as an environmental tax, the exemption of
cargo operations, is anomalous. This issue will arise again in
the context of the introduction of any emissions trading scheme
in the future—in order to ensure a level playing field and
a more market based, incentive driven, economic solution, cargo-only
flights should be included in the system on a similar basis to
passenger flights.
October 2007
28
These criteria are in addition to the usual distinctions available
within CAA data sources, such as reporting airport and origin/destination
airport. Back
29
Over 60 UK airports report data to the CAA, including all those
with more than 15,000 commercial passenger movements or 1,500
tonnes of freight uplifted. Back
30
London airports are Heathrow, Gatwick, Luton, Stansted, London
City and Southend. Regional airports are all others. Back
31
Europe is here defined as geographical Europe. Back
32
Top ten countries by total cargo (arriving and departing) weight
in 2006. Back
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