Written evidence from ABTA (TE 92)
1. ABTA - The Travel Association was founded
in 1950, is the leading travel trade association in the UK, and
currently has 1,307 members with 5,234 outlets. Our members range
from small, specialist tour operators and independent travel agencies
through to publicly listed companies and household names, from
call centres to internet booking services to high street shops.
ABTA members provide 90% of the overseas air package holidays
sold in the UK, as well as selling millions of independent arrangements
for travel both overseas and in the UK.
SUMMARY
2. The Committee has enquired into whether conditions
have materially changed since Sir Rod Eddington's 2006 report
and what priorities should now be in order to deliver growth,
both nationally and regionally. Sir Rod's priorities for investment
were identified as reducing congestion in urban areas, on key
inter-urban corridors, and at key international gateways (major
ports and airports).
3. ABTA feels strongly that the aviation and
tourism markets (domestic, outbound and inbound) could help lead
the UK out of the recession, but these markets are instead being
hit with a block on much needed airport expansion and continuous
tax increases. This threatens to suppress demand, risking the
future of international and regional airport routes and the economic
benefits which they bring, while making the UK an unattractive
destination for incoming tourism and international investment.
Access to international markets has long been a key driver of
success for the UK economy.
4. Investment in strategic infrastructure projects
should be a fundamental element of the UK's long-term economy
recovery package. It is important that projects are undertaken
now to provide for future growth when it is needed, rather than
postponing into future years. Good transport infrastructure is
critical to domestic tourism and the mitigation of the negative
effects of increasing visitor numbers to and within destination
communities.
5. We feel that it would be helpful if there
were greater coordination between the Government's transport infrastructure
and tourism policies. The latter is seeking to significantly increase
the number of UK residents taking one or more of their holidays
in the UK and overseas visitors. ABTA would like to see this coordination
in the Government's forthcoming tourism strategy.
TRANSPORT SPENDING
6. The Committee asks what type of transport
spending should be priorities, in the context of an overall spending
reduction, in order best to support regional and national economic
growth.
7. Unlike road and rail investments that have
traditionally been funded from the public purse, airport infrastructure
has largely been funded by the private sector. Creation of a regulatory
framework that maximises private sector investment should be an
important part of government policy as it searches for ways to
reduce the deficit without damaging the long term growth potential
of the UK. It is puzzling that the Government is turning down
the opportunity to benefit from infrastructure investment paid
by others.
8. What money there is should be directed to
investments that would benefit the country most. A core area
is the UK's transport network. Transport is one of the areas of
public spending that best supports long term economic growth.
By ensuring better access to airports and seaports, it improves
the connectivity of different parts of the UK, supporting growth
in the regions while making the UK more attractive to inbound
tourism and overseas investment.
AIRPORT EXPANSION
9. As an island nation, the UK is reliant upon
aviation as an integral part of its overall transport infrastructure.
Many parts of the UK are dependent upon aviation as a lifeline,
not just for communication purposes but economically (e.g. the
Scottish Highlands and Islands). UK plc benefits from the excellent
air connections with cities worldwide making the UK an easily
accessible country in which to set up businesses. Investors particularly
view London as one of the most attractive cities in which to do
business in Europe and the quality of its international connections
and domestic networks is viewed as key.
10. Tourism is one of the real success stories
of the British economy, bringing an estimated 29.9 million tourists
to the UK in 2009; furthermore, it has been credited with generating
one in five new jobs over the last 10 years. The UK might currently
be the sixth most visited destination by international tourists
but it is losing market share to other countries that are investing
heavily in expanding their own connectivity and aviation infrastructure.
Aviation supports inbound leisure and business tourism, as well
as export activity.
11. The recent aviation debate has focused primarily
around Heathrow. Whether this debate is actually about Heathrow
Airport or as a euphemism for aviation in general, it is important
that both issues do not get obscured and confused.
12. Heathrow plays a significant role as the
UK's major hub airport. Gatwick has a similar, albeit smaller,
role and is the busiest single runway airport in the world. Hub
airports are important because their high proportion of transfer
passengers make viable long-haul air routes that could not otherwise
be operated profitably. Although some opponents claim transfer
passengers offer little benefit to the UK economy, they are critical
to supporting an international route network that provides the
UK's only direct air links to major world cities.
13. The regional airports offer direct services
to European cities and holiday destinations. This is more convenient
for passengers and saves them having to travel long distances
to another UK airport, thus reducing the total mileage within
the UK of outbound tourism. It is also vital to the regional economies
across the UK that good air links exist with regular scheduled
and charter services on offer at affordable prices; however, these
flights must attract sufficient passengers in order to mount a
viable service. When times are difficult, the regional services
are frequently the first to be cut back to the detriment of regional
economies.
14. ABTA has expressed significant concern at
the Government's policy to deny additional runway capacity in
South East England. We have long supported a third runway at Heathrow
and a second runway at Gatwick and feel that demand should be
the prime factor when deciding where to provide additional capacity.
15. Heathrow is operating beyond its design limit
and requires expansion in order to provide a good measure of operational
resilience. Heathrow's main competitors in Europe have increased
their capacity in recent years with all having significant unused
capacity, so they can recover quickly after any disruption such
as poor weather conditions. Middle East states are also investing
heavily in expanding their own connectivity and aviation infrastructure.
16. Major airlines have indicated that lack of
capacity at Heathrow may incentivise them to develop alternative
hubs outside the UK: British Airways has publicly indicated planned
expansion at Madrid; Flybe are developing new routes to service
Paris Charles de Gaulle and we expect others to follow. Foreign
airlines are actively seeking to relocate their aircraft to alternative
hubs as a direct result of a government policy that is endangering
the UK's position as a global hub for international aviation.
17. Whether they are intended or unintended consequences
of the new Government's changes, the aggregate effect of a doubling
of aviation taxes, restrictions on runway expansion and a generally
more negative view towards aviation, is putting the UK's long-term
position in jeopardy. Although many of our members use regional
airports for much of their holiday traffic, ensuring the UK has
a hub airport able to serve a global market is not only important
to the travel and tourism industry, it is also essential to the
long-term future success of UK plc. A reduction in route capacity
or competitiveness will reduce inbound tourism.
18. We question whether the long-term consequences
of the new Government policy have been properly considered. We
would ask the Committee to consider the answer to a simple question:
"Does the UK need a hub airport able to compete with other
European hubs?" If the Committee and the Government believe
that we do, then current policies must be reviewed. If we do not,
then the current seepage of traffic and routes to other European
hubs will continue, ensuring that the UK's long-term position
as a global aviation hub will diminish and with it our position
as a well-connected tourism destination.
19. We feel that it is essential that Government
processes, such as planning and regulation, do not create excessive
costs for business. We do not want to see a repeat of the Heathrow
Terminal 5 planning process, which took 15 years before the terminal
finally became operational in March 2008. The UK planning process
stands in remarkable contrast to processes in other countries,
where it has been demonstrated that new airport infrastructure
can be planned, constructed and made operational within a few
short years.
ROAD AND
RAIL
20. In his 2006 report, Sir Rod Eddington acknowledged
there are direct and indirect links between economic growth and
well managed infrastructure. Looking at how travellers (both domestic
and international) reach major transport hubs will show that the
UK's connectivity and the overall travel experience could be significantly
improved to encourage passengers to use public transport.
21. Whilst ABTA supports the principle of High
Speed Rail, we feel it should be complementary to and not as a
substitute for aviation expansion. The UK needs both.
22. In order to encourage innovative investment
by the Train Operating Companies (TOCs), it is essential that
rail franchises are of a longer duration. The current short franchises
offer no incentive to the TOCs to invest.
23. Investment in new rolling stock which is
compliant with disability regulations is essential. For example,
the original Type 460 Stock used by the Gatwick Express is not
disability compliant but the Type 442 stock which is replacing
it will not comply with disability regulations by 2020 which implies
a less than desirable compliance at present. The Type 442 stock
is not in fact luggage friendly and is much less accessible. An
early decision to replace it is needed by Government. Ensuring
that links to our airports are effective is, we believe, just
as important as the quality of the passenger journey within an
airport terminal.
24. Investment in an extensive road and rail
infrastructure throughout the UK is needed to encourage and improve
the travel experience. Not only do inbound visitors to the UK
need quick, cheap and efficient road and rail options, but so
too do those who chose to staycation in the UK whether they are
holidaying at home or visiting another part of the UK. Rural areas,
much visited by tourists, are frequently poorly served by public
transport and need a good road network. Mintel data shows that
in 2009, there were 22-24 million domestic holidays. If the Government
plans to move domestic tourism expenditure up to 50%, this would
take the total volume up to some 33 million domestic holidays.
67% of domestic holidaymakers travel by car or motorcycle, making
a minimum additional 13 million journeys for holidays each year
- and, we believe, the road network could not support that without
further investment.
AVIATION TAXATION
25. Since Sir Rod Eddington's 2006 report, aviation
taxation has increased substantially. The scheduled 1 November
2010 increases to £12 for domestic and European flights represents
a 140% increase and up to £85 for long-haul destinations
representing a 325% increase since that time. Further revenue
increases are foreseen with the tax take doubling in the next
five years. These figures are doubled if the passenger wishes
to enjoy a little extra legroom. This means that ordinary holidaymakers
on charter flights will pay double tax for a little extra legroom
- the same as a first class passenger in a flat bed.
26. Many people who could not afford to take
a holiday abroad a few years ago can now do so - some 58.6 million
did in 2009. The rise of the no-frills sector and the highly competitive
nature of the industry have progressively forced down prices over
the last 30 years so that flying is no longer the preserve of
the rich. The dramatic growth in leisure air travel makes it affordable
and convenient for ordinary people to enjoy a holiday in the sun,
visit friends and relatives, or experience the social benefits
of other cultures. The social impact of access to affordable flying
is very important.
27. ABTA is very concerned that constrained airport
capacity and increased taxation are pushing up the cost of flying
pricing some people out of being able to afford to fly.
28. We support a fair taxation system for aviation
recognising investment by airlines in quieter, more fuel efficient
aircraft, encouraging fuller aircraft and more closely aligned
to the distance travelled. We support the scrapping of Air Passenger
Duty when the EU Emissions Trading Scheme comes into effect in
2012. At present there is no clarity from Government as to what
will happen to APD, or any successor, in 2012. Adding ETS costs
to an already high level of APD (or successor) will further diminish
the UK's position as a global hub and price people out of being
able to fly. This is socially divisive and will be a form of economic
rationing of aviation for the benefit of the wealthy and businesses
with no choice but to fly. ABTA would welcome the Committee's
consideration of whether the inclusion of aviation in the ETS
has been built into the Government's thinking around aviation
taxation levels.
OTHER ISSUES
29. The current enquiry is about the funding
of the transport infrastructure. We would like to take the opportunity
to flag up other items which we believe the Committee should be
looking at in the current session.
30. ABTA believes that confidence in travel is
an important element in building successful businesses. The Committee
has previously investigated protection regimes for air travel
and ABTA would welcome the Committee's continuing attention on
plans to reform ATOL protection in order to ensure that as many
travellers as possible are afforded proper financial protection
in the event of insolvency or company collapse. Some years ago
during a previous inquiry, the scheduled airlines gave the Committee
an undertaking that they would be offering airline failure insurance.
We would welcome the Committee revisiting consumer financial
protection for air travel in this Parliamentary session given
the on-going review by the Department for Transport of the ATOL
scheme, the volcanic ash cloud disruption and recent holiday company
failures.
31. Passenger rights, other than financial protection,
have increased in recent years and cover different modes of transport.
We feel it would be timely for the Committee to consider passenger
rights, particularly in the wake of the volcanic ash disruption.
32. Thank you for taking our comments into consideration.
September 2010
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