Written evidence by the Royal Aeronautical
Society (TE 02)
EXECUTIVE SUMMARY
There have been fundamental changes in the context
of UK air transport since the publication of the Eddington Report.
These include large increases in the cost of aviation fuel, the
introduction of EU environmental policies, and the growth of powerful
new international competitors. However, the provision of an adequate
UK air transport infrastructure remains essential to national
and regional prosperity. However, future development of the UK
air transport system must be environmentally sustainable and better
integrated into the UK transport system.
Improving the efficiency of existing transport systems
can provide a quick-win in the war on greenhouse gas emissions
without the need for major public sector investment and without
compromising safety. The key is to exploit the technology of satellite
navigation and satellite communications. Although the major impact
would be on Britain's roads, the principle also applies to air
and sea transport
INTRODUCTION
1. The Royal Aeronautical Society (RAeS)
is the world's only professional body dedicated to the entire
aerospace community. Established in 1866, the Society has 17,000
members in over 100 countries (including 3,500 classified as young
members), and is a leader and provider of foresight within the
aerospace community. The work of the Society is supported by a
number of specialist groups including an Air Transport Group and
a Space Group.
2. The Society's submission considers the
continuing importance of air transport as an element in UK transport
policy and the potential of space-based systems to resolve several
major transport-related problems.
3. In December 2006, Sir Rod Eddington produced
a paper analysing the existing socio-economic and impacts of various
transportation modes on the UK's economy[1].
Much has changed in the air transport sector since the Eddington
report:
- The extension of the EU "Cap and Trade"
emissions policy to air transport.
- A world-wide recession of epic proportions with
significant profit impact to the airline industry that is still
in the recovery phase.
- Oil price increases from $63 a barrel to $79
a barrel — an increase on the order of 25%, and with the
prospect of higher average prices in the future.[2]
- London Heathrow's planned runway expansion and
other plans for airports in the SE of England have been rejected
or put on hold by the new UK Government.
- Economic forecasters predict that the Mid-East
carriers and their respective airport hubs may supplant Europe's
in the coming five years due to friendly economic, investment
and policy environments.[3]
4. These seismic changes were not contemplated
when Sir Eddington drafted his initial report in 2006. With regard
to the impact on the UK's prominence and future in the area of
air transport the above will likely have significant impacts on
economics of the industry in the UK and for the UK consumer of
air transport.
5. Additionally, the UK's new government
has made it clear that in an era of waning fiscal receipts and
ever-growing financial requirements, reductions to spending must
occur and that all sectors of the economy are at risk for cuts
— in particular transportation. The government wishes to
define those areas most likely to have the least impact to the
overall health of the recovery should cuts be ordered.
THE ECONOMICS
OF UK AIR
TRANSPORT
6. Since the publication of the Eddington
Report, the economic importance of UK air transport has been revealed
by a number of studies, including the Oxera Study of November
2009 prepared for the Airport Operators Association[4].
7. The most salient features of this report
were that the direct benefits of Air Transport to the UK
economy were:
Wealth and Employment
- In 2007, measured by Gross Value Added (GVA),
the aviation sector (activities constituting airports, airlines
and aircraft service providers in the UK) generated £8.8
billion of direct economic output or 0.7% of total GVA of the
UK economy for that year.
- Including the aviation sector's supply chain
activity increases the impact by 115% to £18.4 billion, or
almost 1.5% of the total UK economic output.
- The number of air passengers has increased 81%
and freight tones by 33% from 1995. Therefore, the overall economic
value of the aviation sector of the UK economy has increased at
a significantly faster rate than just the value of the sector's
direct impact.
- Aviation provides direct employment to 141,000
UK residents or 0.5% of the total employment. This rises to 0.85%
or 234,000 jobs when indirect supplier employment is added.
- Aviation employees generate £62,000 per
employee of GVA versus the average of other UK employees at £46,000
GVA per employee. Therefore, aviation employees are over 35% more
productive.
Tax Revenues
- Aviation contributed approximately £4.8
billion in annual tax revenue to the Exchequer or 0.9% of total
UK tax revenue in 2007-08. A further £3.1 billion is contributed
by the taxes paid by the supply chain activities.
- The sector pays about 32.5% of the wealth generated
in tax. This compares favourably to the UK economy as a whole
at an average of 32.1%.
- When Air Passenger Duty (APD) is included, that
figure rises to 54.5%. The tax revenue contribution by the aviation
sector is therefore the highest in the EU.
- The study showed that the sector's tax contribution
is approximately £6 billion more than its environmental costs
(this is before the impact of the EU emissions trading scheme
is factored in).
8. The report concludes that the direct
economic impact of the aviation sector has increased 8.3%
in real terms since the Eddington report of 2006 — an average
of 4% per year, and one of the best results of any industrial
sector in the UK economy.
9. There are also several subjective affects:
- Connectivity — reduced travel times and
wide selection of destinations lead to greater access to the UK
market for foreigners and to foreign markets for UK products/citizens.
- Trade improvement — lower transport costs
and factors such as the ability of air freight to allow smaller
inventory holdings and rapid shipment of "just-in-time"
inventory/perishables leads to greater specialization in trade
flows between the UK and its trading partners.
- Investment — aviation permits UK businesses
to make and better manage foreign investments, facilities and
projects that create inward investment generating additional jobs
and tax revenues.
10. Access to a world-class air transport hub
is especially significant to the City of London:
- Globalisation of finance is a major driver of
the need for London-based financial firm employees to travel to
other world capitals/financial centres. Over three million trips
were taken in 2008 on behalf of London-based employees —
an amount which is 30% greater than in 2000. Business passenger
aviation service is a driver in the continuation of London's future
as a financial and business centre in the face of growing competition
from emerging market cities such as Beijing, Dubai, Bahrain, Mumbai
and Kuala Lumpur. All of these centres have seen massive public
and private investment in airports.
- The importance of the aviation offering in SE
UK is not the total number of flights but the frequency of service
to the other global financial centres that is of most importance
to the business traveller. Business travel is likely to increase
rather than reduce in the coming decade, although there is a trend
away from high premium business traffic, in some cases increasing
use of loss cost carriers.
- The modernization and expansion of Gatwick and
Stansted offer alternatives to the expansion of Heathrow but with
substantially lower environmental and practical impacts. But the
lack of coherence and linkage across London's airport network
could have a detrimental impact on services. In the long term,
a strategy which does not include some expansion of runway capacity
at Heathrow is likely to be detrimental over the longer term to
the City's role as a key global financial and business centre.[5]
- The continued prominence of London as a top-tier
financial and business centre is therefore in part contingent
on the ability of SE-UK airports to provide for the increased
passenger traffic expected from the London business community.
This expansion of demand will require either a relaxation of the
current curfew at Heathrow or additional runway occupancy through
new runways or increased use of Performance Based Navigation approaches
that improve acceptance rates.
11. The importance of London notwithstanding,
the role of provincial airports and the needs of regional travellers
should not be neglected. While the London airports are still the
dominant hubs for much of the UK, there has been steady growth
in traffic from UK provincial airports to other international
hubs in Europe, the Middle East and North America. In some respects,
this may lead to a loss of direct revenue to UK-based carriers
and erode the attractions of Heathrow as a global hub to UK originating
passengers. On the other hand, the connectivity values of accessing
a world transport system are as valid for the British regions
as they are for the London area. This underlines the new economic
geography of air transport, where competition between carriers
and airports has become global. Policy should be mindful of this
reality.
AIR TRANSPORT
AND THE
WIDER UK TRANSPORT
SYSTEM
12. There is a clear case for improving ground
access to major airports and integrating air transport into a
UK national transport system. There are several UK provincial
airports with good rail connectivity, including Manchester, Birmingham,
and Southampton. However, Heathrow and Gatwick are most notable
for surface transport access delays and that policy initiatives
to solve those issues remain a continuing challenge. Travellers
from the West Midlands and the Northwest also face difficult public
transport transfers to Heathrow from the centre of London. It
should also be noted that some rail connections to Heathrow are
more costly than most comparable airports elsewhere. As a minimum
requirement, investment in the Cross Rail extension to Heathrow
is essential and the wider importance of linking Heathrow more
directly to the national long distance rail system, especially
any dedicated high-speed network must be underlined for economic
and environmental grounds.
PRIORITIES FOR
UK AIR TRANSPORT
13. As a result of the continuing economic turmoil
in the global economy and its negative revenue impact on the Exchequer,
the new Conservative Government has clearly signaled its intent
to reduce budget outlays — particularly in the transportation
sector of the economy. As a result, the DfT has requested advice
on which sectors of air transport should be prioritized under
a new programme and why.
14. The Society takes the position that the principal
areas of air transport spending that are supported by the current
DfT budget programme need to be re-aligned. This re-alignment
needs to occur within the following overall philosophies:
- The polarized positions of some in government
and the public that either the Government must focus on meeting
increasing air travel demand without limitation or reduce environmental
impact of air transportation at the expense of expansion are mutually
exclusive philosophies. A creative, realistic and attainable strategic
plan to meet both of these legitimate issues concerning the SE
UK airports must be developed. This will require leadership and
moderation by both extremes or the UK economy will suffer.
- Due to increasing demand, both Heathrow and Gatwick
runway capacity requires improvement. The consequent environmental
impact can be mitigated by new methods of managing runway occupancy
and noise without the need to reduce the existing curfew or further
restrict the operational limitations of the airports or their
user community.
- Gatwick airport should be expanded to add an
additional runway on the expiration of the Planning Agreement
moratorium in 2019. The environmental and practical impacts are
significantly less for the additional runway at Gatwick than at
Heathrow. To facilitate this expansion, additional surface transport
options into the City of London need to be explored.
- The UK Government should seek therefore to minimize
any costly expansion of Heathrow via additional runways in the
short term but at the same time improve the current facilities
and capacity via implementation of existing technologies and improved
Air Traffic management.
- Additionally, budgetary allocations should be
made to reduce the delays associated with both the surface transport
to all SE UK airports via improved rail links and other mass transit
modes.
- The Government should investigate the prioritisation
of budget money to include the addition of a parallel runway at
both Gatwick and Stansted whilst ensuring maximum mitigation of
the environmental impacts of those improvements.
- Care should be taken to ensure than actions taken
to improve the links and capacity of the London airports should
not negatively impact on Britain's provincial airports.
SPACE-BASED
SYSTEMS AND
UK TRANSPORT POLICY
15. Space systems are already central to the
efficiency and safety of maritime transport, are becoming so for
aviation, and are emerging as a game-changing technology for road
transport. UK industry is playing a central role in the development
of these space systems, thus enabling the relevant UK transport
policies to be based on a sound understanding of technical trends.
16. Maritime transport relies on satellite communications
as the basis for the Automated Identification System (AIS) on
a global basis. Mariners world-wide rely on the space-based Global
Maritime Distress & Safety Service (GMDSS). The UK's Inmarsat
is the world leader in providing the relevant communication services.
17. The operator of Europe's EGNOS satellite
navigation service has recently been awarded a certificate of
Air Navigation Service Provider pursuant to the Single European
Sky Regulation 2096/2005. Europe can now join the USA in applying
satellite navigation to the improvement of flight efficiency and
safety across Europe. EGNOS ensures that defects in GPS satellites
are detected and immediately reported. The UK's Logica designed
and supplied the essential intelligence at the heart of EGNOS
that verifies the integrity of its information and thus underpins
the certification of the service.
18. Europe's Galileo will be similar to GPS but
will be independent of it. Users will obtain position and timing
information from both systems and thus get a more robust, accurate
and reliable service. Surrey Satellite, Astrium and Logica are
among the UK companies providing major elements of the Galileo
satellites and the associated ground infrastructure.
19. The use of satellite navigation to provide
in-car navigation information is proliferating. The potential
to deliver public benefits using this same technology can now
begin. Road tolling on a regional, national and international
basis is now feasible and can help reduce congestion and thus
deliver economic and environmental benefits. The investment in
EGNOS and Galileo has been an essential enabler for road charging
and any other safety-related transport applications of satellite
navigation, as without this GPS alone does not have the integrity
or accuracy needed for these applications. The UK's Avanti is
leading a group of British companies defining how to deliver suitable
services affordably and fairly (e.g.: no urban-rural divide).
FIVE SPECIFIC
ISSUES
20. Space-based systems will play a key role
in achieving reductions in the carbon footprint of transport through
the optimal use of all modes without compromising safety. Satellite
services are one of the key technologies for improving the efficiency
of road transport — and without the need for expensive and
slow-to-deploy gantry-based sensors. Furthermore, once in orbit,
satellites run on sunlight and are thus inherently eco-friendly.
21. Priority should be given to investments that
both improve transport efficiency and reduce its carbon footprint.
Furthermore, preference should be given to solutions that minimise
public sector spending. Road tolling based on in-car satellite
navigation devices is an example that meets these three criteria:
(i) reduced road congestion, (ii) consequential reduced carbon
footprint, (iii) sensor systems financed by users rather than
by the public sector. One important step for central government
to take is to negotiate national standards for in-car systems
and thus avoid the need for users to purchase multiple in-car
devices.
22. Satellite navigation technology enables a
charge to be levied for road use when and where it is in short
supply, ie: congested. This is an important and logical extension
of the use of fuel tax to charge road users for the nation's road
infrastructure. The user of roads in congested areas and/or at
peak times pays a premium, as is already the approach with travel
on trains, ships and planes.
23. Under the previous Government, the DfT stated
that its strategy took full account of transport's wider impact
on climate change, health, quality of life and the natural environment[6].
However, decisions on funding relevant space programmes have not
always reflected this. The DfT initially declined to fully fund
the early phases of the EGNOS navigation system, which has recently
been certified for aviation use, relying on BIS to provide the
bulk of the funds. The same is true of the Galileo satellite navigation
programme. Both will be critical for road and other safety-related
applications.
24. Satellite-based services are most economical
when defined as continental or at least national systems. Furthermore,
a system that delivers benefits to ships, aircraft, lorries, buses
and cars may not easily match individual compartmentalized sectoral
DfT units. Better cross-sectoral coordination is essential to
maximise the opportunities afforded by space-based systems.
25. Britain's transport users and Britain's economy
will enjoy the benefits of satellite technology if suitable standards
are laid down at national level, thus avoiding the need for users,
operators and manufacturers to provide a plethora of in-car devices
for each region or local area. The benefits will be improved further
if the standards are harmonised at international level, thereby
extending the economies of scale.
September 2010
1 The Eddington Transport Study, HM Treasury
and Department for Transport, TSO, December 2006. Back
2
UK AA Fuel Report, December 2006 and June 2010 as seen on the
web site shown below: http://www.theaa.com/motoring_advice/fuel/fuel-price-archive.html Back
3
Business Intelligence - Middle East, December 2009. Back
4
What is the Contribution of Aviation to the UK Economy, Oxera
Consulting Ltd, November 2009. Back
5
Aviation Services and the City, York Aviation, July 2008,
Introduction and Executive Summary. Back
6
Delivering a Sustainable Transport System, DfT, Nov. 2008. Back
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