Written evidence from Flybe (TE 103)
INTRODUCTION
1. Flybe welcomes the opportunity to submit a
response to the Transport Select Committee inquiry. The movement
of goods and people is crucial as the country looks to emerge
from recession and it is important that the government does not
lose sight of the role the transport, and in particular aviation,
can play in economic development.
2. Flybe is Europe's largest and most successful
regional airline brand with 207 routes serving 13 countries, operating
from a total of 71 departure points, 39 UK and 32 European airports
and is the UK's Number One Domestic Airline, carrying more UK
domestic passengers than any other airline and flying more domestic
passengers to and from London Gatwick than any other airline (CAA
statistics - Aug 2009-July 2010).
3. Flybe understands the regions more than any
other airline because we operate over four times more domestic
routes than any other airline. We are maintaining and expanding
the domestic air network to connect Britain's regions, and to
reduce the dependence on London as the dominant transport hub
for domestic and European links. It is therefore no surprise to
learn that we are the largest scheduled airline, measured by air
traffic movements, at Belfast City, Birmingham, Cardiff, Edinburgh,
Exeter, Glasgow, Inverness, the Isle of Man, Jersey, Manchester,
Manston, Norwich, Southampton and Southend airports (CAA statistics
- July 2010).
4. We are also that rare breed of airline - solvent,
growing and profitable. Our financial results for 2009-10 highlighted
us as being one of only three major European airlines to have
made a profit throughout the recession.
5. Given the nature of the sector, and the fact
that it is overwhelmingly funded by the private sector, aviation
may not seem to be the prime focus of the Committee's inquiry.
Having said that, the fast moving nature of aviation - and particularly
regional aviation - means that while the country waits for high
speed rail infrastructure developments, it is aviation that very
often provides the transport solutions for UK plc.
6. Other than a very limited number of "lifeline"
routes, aviation receives no subsidy from the taxpayer. Airports
are, on the whole, privately owned and security, air traffic management
services, and the regulatory authorities are, uniquely in terms
of public transport, paid for by airlines in the form of fees
and charges.
TAXATION AND
THE REGIONAL
ECONOMIES
7. Despite these costs, our passengers contributed
£1.9 billion in the form of Air Passenger Duty (APD) for
the Treasury in 2009-10, a figure predicted by the Office for
Budget Responsibility to grow to £3.8 billion in 2015-16.
8. This, inflation-plus, increasing level of
taxation could have a detrimental impact on the country, and more
specifically the regions of the UK while there is no realistic
alternative to aviation outside London.
9. Flybe understands that for shorter trips the
train offers the more convenient option for our passengers where
the journey time is less than two and a half hours. There are
fast rail links to the likes of Manchester, Birmingham, and Exeter
from London terminals; however it is a very London-centric view
to suggest that rail travel is a realistic option for all passengers.
10. The rail network remains based around the
terminals in the capital city - as indeed will High Speed Rail.
On the other hand, regional air travel offers the flexibility
and convenience of non-London-centric journeys that airlines like
Flybe are committed to providing for passengers.
11. For example, a trip from Southampton to Newcastle
by train takes up to six hours, including a tube journey through
London. By contrast this would take 80 minutes on a Flybe flight.
Exeter to Manchester by train is around four hours 30 minutes
compared to a 50 minute flight time. Norwich to Edinburgh using
the rail network is over six hours (via Grantham and Darlington)
while flying takes 80 minutes. Regional economies rely on fast,
reliable air links and any policy shift to limit such services
run the risk of damaging regional businesses.
TRAVEL TO
AIRPORTS AND
REDUCING CAR
MILES
12. One of the often overlooked advantages of
regional air travel is the number of cars it takes off the roads.
Not only in terms of offering a real alternative to a long cross-country
road trip, but also avoiding the number and length of car journeys
to and from airports.
13. A study commissioned by Flybe into the impact
of the growth of Southampton International Airport as a major
transport hub of the South East, found that by offering a viable
alternative to Gatwick, Heathrow and Stansted, the airport has
reduced the need for travellers in the South East to get in their
car and face the congestion of reaching one of these London hubs.
The total number of car miles saved by offering customers the
opportunity to travel from Southampton to a wide range of domestic
and European destinations, is over 25 million. This not only demonstrates
the convenience of regional air travel for our customers, but
also the environmental benefits of reducing car journeys and therefore
carbon emissions from motor vehicles.
14. We support the aspirations in the 2003 Aviation
White Paper to enhance the role of regional airports but believe
this can only happen with suitable long-term investment in the
transport infrastructure in and around those regional airports.
15. Furthermore, the absence of an updated and
comprehensive policy that outlines the sustainable development
of UK regional aviation is something that should be remedied as
soon as possible.
PER PLANE
DUTY
16. The Coalition's stated aim to replace APD
with a Per Plane (PPD) tax raises a number of issues that could
impact upon the sector's ability to invest in infrastructure improvements.
17. Flybe recently commissioned the leading independent
economics forecasting unit, Oxera, to examine the possible impact
of a PPD. Amongst other things, their report highlighted the following
conclusions:
- Even if the tax is not designed to raise more
revenue, a per-plane tax, applied in a uniform manner, will increase
domestic air fares substantially (in some cases by up to 112%)
and reduce the number of domestic routes operated by regional
airlines. This will have a very significant impact on the shape
of the domestic aviation network.
- The loss of these regional aviation services
would have a substantial economic impact on UK regions, including
the loss of jobs (between 4,000 and 10,000 depending on whether
the tax is designed to raise extra revenue) and of economic output
(£350 million-£800 million), as well as wider
economic and social impacts
- A uniform per plane tax would disproportionately
impact the UK regions as they represent 44% of passengers but
62% of flights. Dozens of routes relied upon by British businesses
and families who don't live in London, are only feasible as a
day return by air but can only be flown economically on the right
size aircraft.
- A blanket per plane tax would incentivise the
use of large, inefficient, polluting aircraft and artificially
stimulate discretionary travel on these aircraft due to lower
marginal costs. The job of persuading a sceptical public of the
need for these changes would be made much harder by the knowledge
that bigger more polluting aircraft would be the beneficiary of
a tax change.
18. Flybe strongly believes a per-plane tax designed
to differentiate by distance and by aircraft—or more preferably
an emissions tax—would be more likely to achieve the government's
policy aspirations of cutting emissions and also mitigate some
of the negative effects on regional economies.
19. Such a move would maintain routes that are
crucial to the regions by endorsing the use of aircraft like that
Bombardier Q400 whose take off and landing CO2 emissions
are 817 kg, compared to that of an Airbus A319 or a Boeing
737 whose emissions are respectively 2,167 kg and 2,274 kg.
CONCLUSION
20. In summary, Flybe believes there continues
to be a crucial role for domestic and regional aviation in supporting
economic revival. Despite the industry being self-financing, government
infrastructure support in terms of road and rail access to airports
from can play an important role in the movement of goods and people.
21. High Speed Rail, in good time, will form
a key part of the transport mix of the UK and could act to move
passengers from the crowded South East of England to regional
airports such as Birmingham, Manchester and Leeds Bradford. However,
these developments are a long way off and it is vital in the meantime,
that policymakers appreciate the role regional aviation plays
in ensuring families, business people and leisure passengers are
able to enjoy the same access to transport as their counterparts
in London do.
October 2010
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