Aviation Strategy

Written evidence from Engineering the Future (AS 106)

This is an Engineering the Future response to the Transport Select Committee inquiry on the government’s Aviation Strategy. Engineering the Future is a broad alliance of engineering institutions and bodies which represent the UK’s 450,000 professional engineers.

We provide independent expert advice and promote understanding of the contribution that engineering makes to the economy, society and to the development and delivery of national Policy.

1. What should be the objectives of Government policy on aviation?

i . The Government should review the role of aviation as part of a low carbon dioxide travel and transport strategy and low carbon dioxide economy for the future.

ii. Any transport policy that is produced needs to demonstrate integration between the modes where a multi modal approach better accomplishes transport policy objectives. The Government ’s aviation strategy should be balanced on the principle of accessibility for communities who rely on it for connectivity , and driving technological change to reduce aviation emissions, noise and other negative externalities.

iii. Government should pursue a balanced aviation strategy that allows businesses and customers across the UK to connect to the most dynamic and fastest growing markets and economies. With a growing amount of international trade the need for companies to have its entire manufacturing, financing and operational headquarters in one place no longer exists.

iv. UK domestic flights and international departures are one of the fastest growing sources of greenhouse gas emissions and policies to reduce air traffic movements, alongside fuel efficiency, will be needed to reduce GHG emissions to meet commitments in the Climate Change Act.

a. How important is international aviation connectivity to the UK aviation industry?

i. The UK’s aerospace industry is the second largest in the world with a 17% global share of the market. We must maintain good connectivity to the aviation industry around the globe so that we can demonstrate our achievements and skills within this industry, encouraging international investment in the UK.

b. What are the benefits of aviation to the UK economy?

i. The benefits of aviation to the UK economy include the creation of wealth and employment through our service industries and business communities. The use of Rolls-Royce engines and the involvement that UK manufacturers have in partnerships with Airbus and Boeing benefits the UK economy. Currently the UK aviation industry employs 234,000 staff and contributes £18.4 billion to the UK GNP and £7.8 billion in taxation to the Exchequer. In 2011, 129 million passengers and 1.1 million tonnes of cargo was carried as UK airline output.

ii. Hub airports draw in passengers from a range of places in order to reach a critical mass of passengers to make flights to other destinations economic. Having a European hub located in Britain gives cost and convenience advantage to the British people. It also makes the UK an attractive location for emerging markets to set up their European headquarters.

c. What is the impact of Air Passenger Duty on the aviation industry?

i. Increased taxes and duties can help aviation pay for its environmental costs and provide funds to reinvest in other transport infrastructure. Airlines currently pay no VAT on their fuel and changing this will provide extra revenue.

ii. Notwithstanding the objectives behind Air Passenger Duty, the application of a unilateral tax of this nature distorts the long distance aviation market while doing little to incentive airlines to utilise greener aircraft or to increase passenger load numbers on flights, as the tax is effectively passed on to the passenger.

iii. Suggestions include that air passenger duty ought to be raised on short haul flights to make them less attractive and to try to encourage other more sustainable types of transport for shorter journeys. Changing Air Passenger Duty to a ‘per plane’ duty would also ensure that flights that are not full, still account for the environmental externalities. Alternatively a tax on fuel usage could be another approach as this would encourage airlines to use more fuel efficient aircraft across their fleet and to maximise overall load factors, thus incentivising emissions reductions, while also bringing aircraft used for freight into the scheme.

iv. While taxation of aircraft fuel is favoured by the European Commission, an attempt to introduce this through ICAO (which would require a worldwide agreement to overturn provisions in the 1944 Chicago Convention) was rejected at the ICAO level. As a compromise, Directive 2003/96/EC allowed EU Member States to tax aviation fuel for domestic flights and through agreements on a case by case basis with other EU member states, which could be an option to explore alongside withdrawing APD for certain destinations.

d. How should improving the passenger experience be reflected in the Government's aviation strategy?

i. Passenger experience can be improved by Government taking a balanced approach when deciding its policies. A holistic strategy is needed that includes reference and acknowledgement to the impacts of emissions, noise and cost. Developments with information communications technology (ICT) allow the use of ‘apps’ on hand-held devices that can provided a complete door to door route option. These systems can provide options of re-routing as a result of travel disruption.

e. Where does aviation fit in the overall transport strategy?

i. The overall transport strategy should give an integrated plan on how journeys that are point to point can encourage the use of the different modes encouraging low carbon dioxide travel. This multi-modal transport strategy needs to take into account capacity and address peoples need to travel.

2. How should we make the best use of existing aviation capacity?

i. Make better use of the information gathered by the CAA, NATS, Airlines and Airport Operators to manage the flow of passenger and freight traffic through all of our airports is required.

ii. Aviation capacity should be carefully planned and managed to ensure that it is focused in those areas where there is greatest need, alternatives are impractical and the local environment is duly protected.

a. How do we make the best use of existing London airport capacity? Are the Government's current measures sufficient?  What more could be done to improve passenger experience and airport resilience?

i. There needs to be more work done on integrating our transport links between our airports and cities. An example of this can be seen with Stansted airport which runs at less than full capacity. It is fairly remote with poor rail links into London and elsewhere across the country.

b. Does the Government's current strategy make the best use of existing capacity at airports outside the south east? How could this be improved?

i. By mapping the flow of passenger and freight traffic across our South East network we could make better use of the capacity available. Commercial opportunities must be taken into account as airports are businesses. We can therefore not dictate to them which airlines and destinations they should serve.

ii. Other regional airports tend to be more accessible to the majority of the UK population. Regional airports could also be better placed for UK businesses, including those in the engineering and manufacturing industries, than those airports to the south or east of London

c. How can surface access to airports be improved?

i. Many of the adverse impacts of aviation disproportionately affect local populations with noise, light and air pollution.

ii. Through a national integrated transport strategy the UK could make certain there were good point to point multi-modal links. Individuals need to think about how they travel. Questions such as "Should we use rail for our longer domestic journey rather than flying?", need to be asked as currently rail is a less attractive option as these journeys are not competitive on price. This should be improved once the high speed network is extended. The Government should also consider alternative forms of travel which link suburban, urban and medium distance/intercity connections such as tram-train, which could help to reduce surface access congestion, emissions and noise issues.

3. What constraints are there on increasing UK aviation capacity?

i. There are constraints in terms of land use, planning time and applications, and the need for better surface transport links to and from our airports.

a. Are the Government's proposals to manage the impact of aviation on the local environment sufficient, particularly in terms of reducing the impact of noise on local residents?

i. Government needs to ensure that it works alongside the regulatory bodies including the Climate Change Committee, the Civil Aviation Authority and the World Health Organisation to make sure it is proposing targets that will have the overall impact of improving the local environment, including reducing the impact of noise on local residents. The CAA (for noise) and the Environment Agency (for air quality) need to be given a legal duty and the necessary powers to require those in breach of limits to come back into compliance.

ii. Careful consideration should be given to attempting to reduce noise without understanding the potential impact this may have on other aspects of the design of an aircraft. For example, it is possible to reduce the noise by design but this may lead to an increase the environmental impact however, manufacturers are aware of this trade off.

iii. Other noise issues such as road vehicles used at an airport could be reduced through the use of electric or hybrid vehicles. The Government should link increased aviation capacity with stricter rules on the noise category of aircraft allowed to use that increased capacity, thus helping to incentivise environmental mitigation even more so if done during peak hour slots.

iv. Air pollution is also of great concern to local populations. In the past this has been attributed to road traffic, which whilst still an issue, there has also been a real terms increase in nitrogen dioxide emissions from aircraft and auxiliary power units on the ground. Depending on the location this can severely impact local residents.

b. Will the Government's proposals help reduce carbon emissions and manage the impact of aviation on climate change? How can aviation be made more sustainable?

i . Improved technology, more efficient air traffic management, the use of biofuels and other measures will help to reduce the impact of aviation on climate change. However the Committee on Climate Change concluded that in order to reach the interim milestone of cutting carbon dioxide by 26% by 2020, "deliberate policies to limit demand below its unconstrained level are [...] essential" [1] . Any policies to increase air capacity are incompatible with this.

ii. It is helpful that the Government have recognised that there are non-CO2 contributors to climate change. These too need to be included in the EU Emissions Trading System.

iii. The Government could implement additional incentives in contracts with OEMs which design, build, test and/or manufacture aircraft. The Government could also introduce tax incentives which operate in a similar manner to the Patent Box or RD Tax Credit schemes. These could be targeted at improving the design and operation of aircraft; this could have a positive effect on those aircraft characteristics which may impact the climate.

iv. The OEM takes the business risk when choosing to develop a new type. If Governments are to implement additional incentives, it would be by way of regulations and legislative changes, these changes would need to influence the design and operation of aircraft.

v. Of particular mention is the development of biofuels. For a sector that is completely reliant on a portable liquid fuel as an energy source, the development of sustainable alternatives must be prioritised. At present, there are Renewable Transport Fuel Certificate (RTFC) incentives to drive biofuel feedstock and supply into the road transport sector, not into aviation. A government policy must be put in place to govern the allocation of feedstock and resource across all transport modes and other sectors that could exploit biofuels, such as energy-intensive industrial processes. This should be carried out in consideration of other government policies such as the implementation of the electric car.

vi. On the subject of business risk, at present investment banks are hesitant to invest due to lack of overall business case, poor integration and assurance within the value chain and product maturity. This is stalling and stunting development of biofuel refineries and jeopardizing the future of this technology. Some incentive programme from the government must step in to provide the economics to drive a sustainable and investable way forward.

c. What is the relationship between the Government's strategy and EU aviation policies?

i. Government’s strategy needs to build on the work done by the Future Aviation Strategy developed by the CAA building in the work being done through programmes such as the Single European Sky Air traffic Management Research (SESAR).

4. Do we need a step-change in UK aviation capacity? Why?

i . Aviation has significantly increased over the last 30 years which is the time when the UK focussed its business on the financial services - and as stated in the document London is an exceptionally well served capital city. Do we need to have a long term vision understanding what our strategy is for the entire country, understanding what our business focuses will be over the next 50 years and ensuring that we have the right aviation policy for the entire UK and not just focus on the south east? The Committee on Climate Change have calculated that there is the potential to reduce business travel by up to 30% through teleconferencing.

ii. Our transport system needs to maximise our resources for the long term. As an island with over 60 million people living on it we are always going to be space limited when it comes to expansion of our airports therefore we need to look at how we can improve the efficiency to maximise the throughput of passenger traffic to meet the future demands.

iii. Policy should focus on encouraging connections from regional airports into all the major networks.

a. What should this step-change be? Should there be a new hub airport? Where?

i. No comment

b. What are the costs and benefits of these different ways to increase UK aviation capacity?

i. No comment

29 October 2012