Aviation Strategy

Written evidence from The Air League (AS 121)

Introduction

The Air League was founded in 1909 and is one of the principal UK aviation organisations. It was instrumental in the formation of the Air Cadet organisation and The Air League’s President, Officers and Council members are elected by reason of their experience and proven contribution to the field of aviation, as is their Director. The Air League has produced a number of papers and organised lectures and seminars on key issues facing UK Aviation over many years, most recently on "London Airport Capacity".

The Aviation Industry

The UK air transport industry contributes over £50bn to GDP and £8bn to the Exchequer. It facilitates vital international connectivity to encourage exports and attract investment into the UK. It carries two-thirds of the tourists who visit the UK. It handles some 220 million passengers a year, thereby supporting 1 million jobs directly. It operates without Government subsidy whilst paying its full Carbon Cost. The UK air transport industry meets all its own capital and debt service costs for the development of airports and the acquisition of aircraft, unlike the rail network which received a £3.9bn subsidy in 2011-12 .

The Key Challenges

The Aviation Strategy faces five key challenges:

1. Lack of runway capacity in the South East, particularly at the Heathrow hub.

2. Level of Air Passenger Duty.

3. Lack of comprehensive air links from the UK regions to the Heathrow hub.

4. Lack of clarity and logical thinking on environmental emissions.

5. Lack of strategic understanding of the importance of aviation to young people and the community.

Lack of Runway Capacity

London is served by six airports but Heathrow is by far and away the most important as the national hub. Heathrow is the UK’s No 1 port by value but it is already running at 99% of capacity. London Gatwick is running at some 95% of its single runway capacity, already the most heavily used single runway in the world.

The capacity situation is such that Heathrow now offers some166 destinations compared with 244 at Paris Charles de Gaulle, 264 at Frankfurt and 252 at Amsterdam Schiphol. Paris Charles de Gaulle now has four runways, Frankfurt has three and Schiphol has five. Even Munich, Germany’s second hub, has announced the construction of a third runway.

China is planning 70 new airports by 2015 and annual growth for Beijing airport is projected at 13%, together with 19% for Djakarta, 15% for Dubai and 11% for Hong Kong. We need those entrepreneurs and travellers to come to the UK but the Heathrow hub has a projected decline in annual growth. London drives the UK economy especially during the economic downturn – it is an hour closer to the US. The richer that emerging countries get, the more important this will become.

Overstretch at the UK hub also impacts on UK regions. A Far Eastern entrepreneur doing business in Europe measures travel time from his home to the hotel door. Since the air link from Plymouth to London was removed, it now takes longer to get from London to Plymouth than Concorde took to fly from New York. Over 70% of British Airways flights are short haul and BA brings 2.5 million passengers down to London every year, half of whom transfer to a long haul flight. They do not want to land at one London airport, collect bags, catch a train and check in at another. Five years ago there were 124 flights a week from Edinburgh to Heathrow, 115 from Glasgow and 54 from Belfast - now there are 109, 60 and 42. Amsterdam Schiphol Airport has 22 links to UK regional airports and KLM advertises itself as Scotland’s favourite airline. Heathrow by comparison has 6 links to UK regional airports. The UK regions are increasingly disconnected from the ir capital through the lack of seamless, interconnecting flights. Rail investment alone does not provide a solution.

UK Air Passenger Duty (APD)

APD was originally introduced in lieu of tax on aviation fuel to offset its environmental impact. It has also proved a useful source of revenue to the Exchequer.

This indirect tax had risen by 225% on some routes in just seven years and UK APD is now the highest air passenger tax anywhere in the world. It is almost 4 times the rate of France for UK domestic and European services. For long haul travel, the comparisons are much worse with UK rates being almost £90 more than the rate charged in Eire. It can be cheaper to travel from Belfast to embark at Dublin Airport rather than fly out of Belfast’s airports.

Consequently, not only does the rate of APD serve to reduce the rate of growth of air travel (plus associated income, economic activity and jobs) but also it encourages UK long-haul travellers to change their itinerary. For UK passengers flying onwards from Amsterdam (where APD has been removed), they can save up to £80 on the long haul APD; for a family of four, that would be a saving of £320. The high level of APD is damaging the UK’s international competitiveness.

UK Regional Links

Continued growth of traffic at Heathrow and Gatwick has only been achieved at the expense of links to the UK regions, with service to 17 points being lost to Heathrow in the last 20 years. The closure of Plymouth Airport can be directly attributed to the lack of slots at both Heathrow and Gatwick. The residents of Inverness, Liverpool, Humberside, Teesside, Newquay or the Isle of Man lack direct access to the UK’s only viable hub, London Heathrow.

The Government has consistently refused the regions’ air services protection via Public Service Obligations (PSO), which are used very successfully to protect air services in France and other European countries. This has led to the sale of slots by some regional and short haul airlines to intercontinental operators with larger aircraft that benefit from the economy of scale. Yet these self-same intercontinental airlines need the feed from a wide range of domestic routes to fill their aircraft and maintain frequency and connectivity.

Aviation and the Environment

Technological advances have drastically reduced aviation noise and pollution to levels hardly imaginable a few years ago. Aviation is responsible for less than 3% of world CO2 emissions, below that for shipping (for which no equivalent of APD is charged on cruise or ferry passengers) and significantly less than from commerce, roads or domestic sources. Furthermore, its noise impact has reduced by 70% over the last 30 years. The aviation industry has a programme in hand to ensure that by 2050 it will not be generating any more CO2 than it did in 2005. Changes in engine and aircraft technology, improved operating procedures, greater and better use of satellite navigation systems, improved Air Traffic Management, descent profiles and track-keeping will continue to improve and minimise the environmental impacts from aviation, yet Government avoids defining acceptable noise and CO2 levels that are necessary to sustain the future prosperity of the UK and the status of UK as a world aviation leader. Assumptions made as recently as 2010 concerning aircraft noise and associated environmental impact around Heathrow are already out of date. For instance, the Boeing 787 noise footprint is 60% smaller than the aircraft it will replace and the noise footprint now stays well within the airport boundary.

Importance of Aviation and Education to Young People and the Community

Aviation is one of the UK’s greatest success stories. It provides more skilled jobs and contribution to the country’s GDP than any other apart from the pharmaceutical industry. The future of aviation in the UK depends on stimulating and encouraging the brightest of the next generation to get involved. The Government is to be congratulated on developing apprenticeships but the background mood music is still that aviation is a rich person’s pastime. This must be corrected. Some 205,000 people depend on Heathrow for their livelihood. Around 20,000 pilots belong to the General Aviation community while 44,000 youngsters join the Air Cadets to fly. Yet there is no national strategy as to which airfields should remain and which should be allowed to disappear. Plymouth and Filton have closed in the last two years with others threatened by housing development and excessive, sometimes inconsistent, regulation. Moreover, UK professional flight training is subject to VAT which, when coupled with the high costs of aviation generally and the heavy tax on fuel used by the majority of training aircraft, will only further drive delivery of the training off-shore, with the loss of opportunity, skills, employment and standards oversight that goes with it.

Conclusion

Government policy and action should encourage all concerned to think in terms of "where does aviation fit in the overall transport strategy and its role in the national economy". Given the piecemeal approach to national aviation issues ranging from APD through environment and education to runway provision, the Air League believes that the Government’s aviation strategy should be much more integrated and focused than it is at present. Aviation contributes significantly to the economic and social well being of the UK. With the right forward looking policy, that contribution could be significantly improved.

The UK has led the world in air transport service, innovation, technical excellence and standards. But that is not the natural order of things. In 2001, Dubai was the 99th airport in the world while Heathrow was first: next year, Dubai will overtake Heathrow. Without Government recognition and pro-active policies to sustain the existence and development of UK aviation, this standing will be prejudiced further. Once the UK’s position as a global aviation leader is lost, it will be next to impossible to recover.

5 February 2013