Aviation Strategy

Written evidence from the Royal Aeronautical Society (AS 11)

Summary

· The objectives of policy should be to promote sustainable civil aviation operations to the benefit of the United Kingdom as a whole: a simple statement, but inevitably complicated to implement.

· HMG has an opportunity to make a positive impact on the future of UK civil aviation. There are emerging technological and managerial solutions to pressing environmental challenges that should be encouraged to improve the sustainability of civil aviation and to reduce its overall environmental impact locally, nationally and internationally.

· There is an urgent need for a satisfactory and timely solution to the airport capacity problem in the SE of England that will require compromise in the national interest by all concerned.

· Air transport connections – both international and domestic are vital to the UK economy and to bolster political influence abroad.

· Aviation generates a similar range of direct and quantifiable benefits in terms of employment and foreign earnings, as well as the more qualitative returns associated with "connectivity".

· There is little, if any, resilience at Heathrow which is essentially operating at its maximum slot capacity. The development of regional airports and improved terrestrial links should help, but this will be limited.

· Given improvements in aircraft performance, and under stringent conditions, a third runway at Heathrow would help significantly to ease capacity problems.

· Improvements in technology and more effective air traffic management should enable the aviation to meet the 2050 carbon targets.

· In principle, there is a need for a new London hub airport; but proposed solutions may be too late, and may not reflect national requirements.

Introduction

1. The Royal Aeronautical Society is the learned society for the aerospace and aviation community. It has over 17,000 members world-wide. Its activities are supported by a number of Specialist Groups, including Air Transport, Space and General Aviation and Greener-by-Design, a group of senior academics, industrialists and aviators concerned to promote environmentally sustainable aviation.

Objectives of Government aviation policy

2. The objectives of policy should be to promote sustainable civil aviation operations to the benefit of the United Kingdom as a whole: a simple statement, but inevitably complicated to implement.

3. The current state of UK civil aviation is the product of decisions and failures to act strategically over several decades. The current impasse in resolving the airport capacity crisis in the SE of England, the failure to overcome Heathrow’s evident frailties as a national hub airport stems from a failure to develop a more appropriate hub airport in the late 1960s and early 1970s.

4. The UK is a relatively "open" aviation environment in terms of inward and outward investment in infrastructure and airline competition. This is not of itself a weakness, but concern should be expressed if UK national priories and interests are vulnerable and negatively affected by investment decisions made offshore. Similarly

5. HMG has an opportunity to make a positive impact on the future of UK civil aviation. There are emerging technological and managerial solutions to pressing environmental challenges that should be encouraged to improve the sustainability of civil aviation and to reduce its overall environmental impact locally, nationally and internationally. Measures can be taken to encourage the expansion of capacity at UK regional airports that will ease the pressure on the SE of England, but more important act to stimulate regional economies.

6. However, it should be stated from the outset, there is no easy solution to the crisis in airport capacity affecting the SE of England. This has become one of the most intractable public policy issues of the decade. In the final analysis, a satisficing rather than an optimal strategy may be the only cost-effective and publically acceptable approach. But there is an urgent need for a satisfactory and timely solution that will require compromise in the national interest by all concerned.

The importance of connectivity

7. Air transport connections – both international and domestic are vital to the UK economy and help to promote both trade and inward investment. There is also a political dimension where connectively may be interpreted as implying diplomatic importance to HMG.

8. At a simplistic level, and despite the considerable advances made in the speed and economy of land and sea connections, the multi-island geography of the UK underlines the importance of air connections. Improvements in road and especially faster rail connectivity has improved domestic connectivity, but the growing congestion of the former and the price of the latter, ensures a continuing importance attached to accessing easily the regional airports and the national hub airports at Heathrow and Gatwick.

9. A hub airport will maintain the UK’s connectivity to its main markets. It will also provide economic benefits to the airport operator and to UK airlines. It encourages the interchange between routes either by a single carrier or alliance, as well as access to other routes served by other airlines. The hub concept is enhanced by the fact that many long haul services are only feasible with traffic provided by feeder routes. While transit and transfer passengers are less important to the UK economy directly, indirectly they represent visible sign of the vitality of an airport as a hub or transfer point and help to maintain the viability of services in general.

10. A hub facilitates access directly by providing a greater range of destinations and indirectly by ensuring that most other destinations are accessible by a single overseas connection. An international hub also supports a national airline industry by affording local carriers a strategic position that underpins competitiveness and their ability to lead rather than to follow developments in the international airline industry.

11. Transfer via a foreign rather than a UK hub is likely to involve longer flight times and a greater environmental impact. It will take longer and will be perceived as more difficult, especially for non EU citizens, who may face additional visa issues. This could seriously discourage inward investors and tourists to the UK regions.

12. However, it must be emphasised that network connections are an airline responsibility. Few routes are now maintained for social reasons, although this is more common in other parts of the world. However, it is in the UK national interest to maintain and to develop strong connectivity with economically important regions, especially in the emerging economies. While airlines will reflect the changing patterns of demand and try to anticipate growth through opening new routes or changing priorities for services, HMG should ensure that it does not place unnecessary barriers to growth and where it has power to influence events, such as negotiating access rights, it should be ready to encourage new links or to expand existing services.

The benefits of aviation to the UK economy

13. There are widespread benefits to the UK from a strong and healthy aviation sector. In 2009, aviation contributed around £18 billion in UK output and represented about two per cent of gross value added. The sector currently employs over 250,000 workers directly and supports an estimated 250,000 additional jobs through the supply chain.

14. Aviation generates a similar range of direct and quantifiable benefits in terms of employment and foreign earnings, as well as the more qualitative returns associated with "connectivity". Studies of the location choices of high value activities in finance, corporate head quarters and R&D refer to the importance of good international transport links, which for the UK still implies air transport for most of Western European destinations and of course for global access. As the disruption caused by the 2010 volcanic ash cloud demonstrated modern production depends on a continual flow of components and supplies. The interests of both dedicated air freight operators and freight carried by scheduled airlines should be considered as part of a national air transport strategy. These are clearly not sufficient conditions to generate economic and social return, but they are necessary.

15. In terms of airport development, current Government policy will mean that there is likely to be stronger growth at UK regional airports, particularly those with good surface access links. Whilst this will undoubtedly benefit those living in the regions, there will be a significant level of unmet demand for air travel to and from London and the South East which will have important consequences for economic growth both in London and the South East and more generally for the UK as a whole.

Making the best use of existing aviation capacity

16. There is little, if any, resilience at Heathrow which is essentially operating at its maximum slot capacity. As a major international hub, it requires sufficient slot capacity for sufficient point to point and feeder services in order for it to compete with other European hubs. Some increase in Heathrow’s slot capacity could be achieved through mixed mode operations. Further, but limited, increases in slot capacity at Heathrow and Gatwick should be possible through improved ATM procedures. Passenger capacity will also be increased through the use of larger aircraft.

17. However, it is abundantly clear there is no spare capacity at Heathrow for large numbers of additional flights, forcing the airlines to go either to other less attractive airports in the UK, or abroad. It is likely many airlines will prefer this option, causing the UK to miss out on improved air transport links with these developing countries, and to miss out on the associated tourism, business and jobs

18. There are a number of smaller airports and ex-MOD airfields that could be used for commercial passenger and freight services, although clearly there will be environmental and local constraints. Whilst demand management measures are not generally desirable, it is possible that differential taxes may be used to promote the use of certain airports.

The role of other UK airports

19. Airports outside of the SE region already play an important role in increasing overall national capacity. Under current DfT traffic projections, by 2050 Manchester could be handling as many ATMs as Heathrow does at present, suggesting that resilience could be an issue unless further runway capacity is provided. In principle other UK airports could absorb some of the demand pressures on the south-east airport network. However, capacity does not alone dictate attraction, and the bulk of UK demand for air travel is in the SE of England. Airline business models again shape access. A number of new services have been launched successfully from provincial airports, usually to serve other European or global hubs. Direct services on thinner routes have proven less resilient. Even if acceptable to HMG, there is little scope under EU rules for financial incentives to encourage provincial services.

20. However, there is currently surplus runway capacity in the UK. Manchester is the only other two-runway airport other than Heathrow. Birmingham is also increasing the length of its single runway and upgrading terminal facilities. Many of the provincial airports are well served by land access, including in some cases fast inter-city services. However, growth in demand has been less than in the southeast, and most regional airports suffered more during the last down turn than Heathrow or Gatwick. The development of a "limited hub" airport will in the final analysis depend on airline strategies and their assessment of revenue earning potential. To date much of the growth in new services has been by airlines seeking to feed their own home-hub airports. This, in the scheme of things might ease the impact of future growth on the southeast, but it may not be to the benefit of UK based airlines.

21. Some demand in the south-east may therefore be met by the regional airports, although this is likely to be limited. New point to point services may emerge at the regional airports, thereby reducing the requirement for those passengers based in the regions to travel via the main London/SE airports. Similarly, improved surface access (such as the proposed HS2 rail link to Birmingham airport) could enable some London/SE based passengers to travel from a regional airport. Absolute capacity constraints on the most popular southeast airports might force a redistribution of traffic through natural market forces and passenger satisfaction. However, this is most likely to affect the more northerly London airports that might lose traffic to airports in the Midlands and perhaps Manchester.

22. There is a case for a limited number of protected slots for feeder services into Heathrow and possibly Gatwick – particularly from poorly served regions including the South West and Scotland. Several studies have demonstrated the value of regional connectivity to promote inward investment.

23. But Heathrow is the national global hub, and despite high costs and user charges, the major airlines have naturally sought to exploit its connectivity. Gatwick and Stansted have tended to attract the low cost carriers (LCCs) and charter business. The regionals have had some success in building local traffic, but their place in the national air transport economy will always be second place to London and to Heathrow in particular by commercial natural selection.

The impact of fast rail

24. In the case of short haul traffic, there will be inevitably a continuing shift towards rail travel, particularly as high speed rail networks develop. Fast rail has an economic advantage for journeys of less than 400 kilometres and has already had an impact on UK domestic air travel. But there are limits as surface access times will not be reduced for many transfer passengers. Furthermore, a combined rail-air (rather than air-air) journey may be less convenient in terms of baggage, and ticketing. Competition between air and rail should not be distorted by public subsidisation.

25. Improving the direct links between airports is of value in its own right as a means of improving connectivity and reducing the environmental impact of air travel. Strategically, this implies linking major airports to a fast rail system (which need not be HS2, but existing or proposed electrified fast long distance services).

The constraints on increasing UK aviation capacity

26. Increasing aviation costs from rising fuel prices, environmental charges and other taxes will increase air fares in the medium to long term and will provide some constraint on demand. It is likely that the gap between the legacy airlines and the LCCs will reduce as both seek to exploit each other’s markets.

27. Clearly, the immediate impact of aviation on communities is a constraint on capacity. Noise is a particularly vexing issue. It is preferable to minimise the total number of people affected by aircraft noise. This can be achieved by careful routing and technical improvements; although routing decisions designed to lessen the average impact of noise may increase noise for some.

28. Noise Action Plans have a key role in predicting and demonstrating an actual reduction in noise levels. To give local communities confidence that action is being taken to reduce the noise impact around airports, there is a need to demonstrate hard results and Government should introduce measures to incentivise airports to deliver against their statements of intent in such action plans.

EU aviation policies

29. Given the role of the EU in economic and environmental regulation, there are important links between national and European aviation policies and initiatives. In particular, there is a critical relationship between strategies designed to improve the management of European airspace. As demonstrated in the EU’s SESAR Programme, there will be some capacity improvement resulting from integrated network planning, collaborative decision-making and improved ATM procedures.

30. Europe’s investment in advanced air traffic management technologies, such as navigation satellites, is critical if the easing of congestion is to be achieved. In the past, the DfT has sometimes been unenthusiastic about European investment in such systems. The Society urges the DfT to recognise that these investments are for the benefit of the aviation community and will make a major contribution to reducing its carbon footprint.

31. The introduction of the EU ETS scheme should help to cap the impact of aviation emissions, although opposition from non-EU carrier and governments is causing considerable uncertainty in the airline and aerospace industries. However, HMG should continue to press for the development of global emissions standards through ICAO.

Sustainable aviation

32. Pollution and noise in the vicinity of airports are currently subject to regulation, both internationally and in some cases locally. These impacts are being progressively reduced, despite traffic growth, through the replacement of older aircraft by newer, cleaner and quieter types. Advances in technology – including low NOX combustors and higher bypass ratio engines – will reduce these impacts further. Improvements will be captured in more stringent regulation. The possible introduction of contra-rotating propellers on the next generation of short-medium-haul aircraft, in order to minimise fuel burn and CO2 emission, would result in aircraft noisier than equivalent turbofan powered aircraft but still comfortably within the current noise regulations. Stricter local regulation is unlikely to constrain traffic growth, although local political pressures may in some cases limit traffic growth at a particular location, diverting some of that growth to other airports.

33. From an environmental standpoint, there is a case for regulation to reduce fuel burn and CO2 emissions. Higher fuel prices should play a significant part in reducing CO2 emissions. New technological concepts could substantially reduce CO2 emissions. But the degree to which radical design improvements will be introduced into the world fleet will depend on airline business models and the trade-off between the cost of new equipment and the long term savings and improvement in emissions. Regulation may be required in order fully to exploit the potential full of these advances in order to increase the relative cost of operating conventional aircraft. The timescale for action is short. If the intention to regulate, at least at a European level, has not been declared by the time the key design decisions are made on Airbus A320 and Boeing 737 successors, an opportunity to influence the climate impact of this generation of aircraft will have been lost. But given likely technological improvements and operating procedures, a 60% increase in air traffic is possible whilst still achieving CO2 emissions 2050 targets.

The need for a step change in UK aviation capacity

34. Unless further capacity is provided at Heathrow, the UK will lose out in terms of key transfer traffic markets and in providing a wider range of point to point destinations. Heathrow is also the UK’s high value airport: 34% of its passengers are travelling on business compared to 18% at the other London and provincial airports. This is also shown by the high proportion of long haul tourist using Heathrow and the fact that 60% of UK freight comes in via scheduled airlines.

35. This gets to the heart of the connectivity question and the virtuous circle between airports and economic activity. And just as easily, airports can enter a cycle of decline if they fail to meet new demand and to respond to changing international economic geography. Heathrow is not able sufficiently to provide direct access to the newly emerging economic power houses in Asia and Latin America. To some extent this reflects some commercial realities, and that UK airports operate in a free market – if subject to some crucial regulative constraints. There is little incentive for airlines voluntarily to give up currently lucrative routes such as North Atlantic services to the US and the Caribbean in favour of speculative, developmental routes to provincial Chinese cities.

The need for a new hub airport

36. Heathrow seemed a reasonable place to build an international airport back in the 1940s; but proximity to central London, its westerly location, and urban development (often drawn out towards Heathrow by the search for connectivity) with attendant local objections, has increasingly stymied easy expansion. Even a new terminal (T5) took years to navigate the planning process.

37. The attractions of an all-new airport in the Thames Estuary have received much attention, if only to minimise the inevitable local objections to Heathrow and other airport expansion schemes to meet equally inevitable access issues, this implies that the new airport must be at the centre of a sophisticated terrestrial transport network, preferable linked to the putative high-speed railway system. This is essential if London (East) is realistically to serve as an environmentally sustainable national hub, because to be east of London is far less convenient for most potential travellers from the north or west of England. No one doubts either that its likely cost could exceed £40 billion.

38. Significantly, several of the major carriers have been very quiet about the opportunity costs of moving. And while west Londoners might object to Heathrow as a neighbour, there is also an awareness of how much it contributes to the local economy. BAA, owners of Heathrow would also have something to say about a competitor being developed with public money. Initial reaction from BAA has been to hope that any consultancy exercise might reconsider the third runway option. This, however, seems to have already been ruled out – a very odd way to approach cost benefit analysis. It is not clear whether the proponents of an Estuary airport envisage a gradual transfer of flights or the adoption of a "big bang" close and move approach. The latter would ease the air traffic issues associated with opening a new airport under Heathrow approach paths, as well as maintain vital connectivity. It would, on the other hand, pose the most challenging problem for easing economic disruption to West London and the Thames Valley

39. Indeed, it may be too late for any all-new airport to solve the current and medium term problem of London’s "connectivity crisis". With a new airport at least a decade away – probably nearer two – the damage of lost or declining relative connectivity may already have been done. From this perspective, a less than optimal approach may be the most realistic way forward.

40. The noisiest of the current aircraft types operating on the two existing runways will be replaced by significantly quieter technology over the next ten years. A typical example of this is the Boeing 747 currently being replaced by the Airbus A380 and Boeing 787. It should be noted that much of this new technology has been designed and produced in this country.

41. The impact of noise from aircraft using a 3rd Runway will depend on the aircraft types using the runway and the approach pattern used. A short runway would limit the type of aircraft to the twin-engined small or medium-sized jets. Coupled with a steeper approach path and no night-time operations, the noise footprint from a 3rd Runway could be very much less than that experienced under the current runways. Some of the new capacity provided by a 3rd Runway could also reduce, if not eliminate, the queuing of arrival aircraft (known as stacking) with its attendant delays and emissions.

42. More immediate palliatives, such as mixed mode runway operation, and new approach patterns could help to ease stress on Heathrow’s capacity, but these would not create sufficient additional capability to meet rising demand. Improvements in ground based connectivity such as Crossrail will also help, but the concept of a "virtual hub" linking all of London’s major airports has little credibility.

43. Whilst it is recognised that it is current Government policy that there should be no further runways at Heathrow, Gatwick or Stanstead, this constraint will severely impact how UK aviation will develop in the next 40 years. There is a strong argument for some airport development in London and the SE. Indeed it has been pointed out that an additional runway at Heathrow would produce a 10% increase in traffic levels by 2050, which would be well within the carbon targets for 2050 without compromising future regional airport development.

44. This points, albeit reluctantly, to further development at Heathrow, backed by similar expansion at Gatwick. This is not the ideal solution, and in many respects, a site to the North of London, which might include consideration of a substantial upgrade to Stansted, accessing the national motorway and existing fast rail network (or one capable of further modernisation) or the putative HS2, would be a more optimal national solution than one to the east of London. If London is to claim a status as a "national" global airport, consideration of future options must include consideration of national factors as a key element in resolving the issue.

9 October 2012