Aviation Strategy

Written evidence from Merseytravel (AS 47)

Merseytravel is a public body comprising the Merseyside Integrated Transport Authority (ITA) and the Merseyside Passenger Transport Executive (PTE), acting together with the overall aim of providing an integrated transport network for Merseyside which is accessible to all. Integrated Transport Authorities including Merseytravel have a statutory requirement to produce Local Transport Plans as a result of the Local Transport Act 2008. Via the Local Transport Plan (LTP), the ITA is responsible for multimodal transport policy including freight. However the Passenger Transport Executive (PTE) remains responsible only for delivery of passenger transport, concessionary travel, ticketing, etc and as a result we continue to work in partnership with the local authorities and other partners to deliver the LTP. The new Local Transport Plan 3 and its associated documents came into force on the 1 April 2011 and now form the transport policy framework for Merseyside.

We are also represented on the Airport Transport Forum and Airport Consultative Committee for Liverpool John Lennon Airport.

Our comments on the questions asked by the Committee are as follows.

Questions:

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

We feel it is important that the objectives of the aviation strategy focus on reducing the environmental impacts of aviation as an integral part of the strategy, in order to (a) meet CO2 reduction objectives and (b) reduce the impact on communities through poor air quality, noise and disturbance and (c) reduce reliance on imported, finite fossil fuels. Encouraging sustainable surface access to airports by public transport, walking and cycling and seeing aviation as just one mode within the context of an integrated transport system should be another major focus for the objectives of the aviation strategy. These areas are of particular concern for us as an Integrated Transport Authority and Passenger Transport Executive. More generally the aviation strategy should ensure good international connectivity for all parts of the UK to key destinations and markets globally. It should enable sustainable growth in aviation as part of an integrated transport system within the constraints of noise, emissions and other impacts. The strategy should also move away from the present focus on a single hub approach to connectivity centred on Heathrow and instead go towards a multi-hub approach that makes best use of the capabilities and potential of all airports in the UK and not just those in the Greater South East.

It needs to recognise that aviation is global, market led and rapidly changing so foreign airports now play a role in providing international connectivity for the UK not just airports within the UK. In recent years, due to severe congestion and capacity constraints at Greater South East airports, airports outside London are increasingly turning to major airports elsewhere outside the UK such as Madrid, Amsterdam, Paris or Frankfurt or even airports in the Middle East and further afield to improve their international connectivity. This should be reflected in the multi-hub approach.

The fundamental factor which is critically important is good connectivity for all parts of the UK to key markets and destinations globally regardless of how it is achieved. This improved connectivity will create opportunities across the UK for investment and growth and help enable a more diverse and balanced UK economy. This is especially important in terms of links with the new growth economies such as China, India, Brazil, Middle East, Russia, etc.

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

See answer to b) below.

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

According to research by the Airport Operators Association (AOA), the aviation sector in the UK is worth over £18 billion and plays a significant role in the economy and job creation. The aviation sector generates £8.8bn of economic output (measured as Gross Value Added). This increases to £18.4bn, 1.5% of the total economy, when the activity needed to supply the sector is taken into account. The sector accounts for 141,000 jobs in the UK, which rises to 234,000 (0.85% of UK employment) when supply chain employment is also taken into account.

Aviation and its airports also help sustain other sectors and industries such as £115 billion tourism sector. The tourism sector overall employs 2.5 million people and supports more than 200,000 businesses and accounts for almost 10% of the UK economy. The majority of international tourists visit the UK by air.

Airports are a major employer and gateway for inward investment, trade and tourism. Airports have a key role to play in spreading prosperity around the UK. For example, good air transport links are crucial to attracting inward investment from around the globe. The majority of Europe’s top companies regularly say they consider transport links a key factor. In other regions, airports provide vital connectivity allowing business passengers and exports to reach new markets. In recent years UK airports have seen success in securing an increasing number of direct long haul routes connecting our cities to a range of key foreign destinations.

In the longer term, the main influence of the aviation sector on the economy is likely to be the way in which it facilitates improvements in productivity outside the sector. Aviation enhances the ability to conduct international trade by increasing connectivity between the UK and international destinations (and can increase connectivity within the UK as well) which can lead to increased investment and two-way trade.

The role of aviation will play an important role in underpinning and assisting the economic recovery by supporting businesses through international connectivity, the movement of goods and people, and attracting inward investment.

With the rise of new growth economies such as China, India, Brazil, Middle East, etc, these will increasingly become important destinations to be linked with and with new aircraft designs; there may be an opportunity to enable these linkages to be direct from regional airports. New aircraft designs such as the Boeing 787 Dreamliner with its improved capabilities opens up the possibility of long haul fights direct from regional airports such as Liverpool to destinations such as North America (West Coast), South America, Australia, etc, which previously were only possible with aircraft such as 747s which could not be accommodated on many regional airport runways, etc. So this could open up the possibility for regional airports to have direct flights to many destinations that previously were only possible via a major hub.

We feel that there is a significant risk that if development and infrastructure investment continues to be primarily focussed on the Greater South East then this reduces options for the future of the UK economy and is likely to only create a service economy based around London. As the Greater South East becomes increasingly congested and full, this congestion will risk becoming a disincentive to business and they will move to the Continent. But if development and infrastructure investment is well spread across the UK and regions are equally well connected to international markets and destinations, then this will create new opportunities for business to remain in the UK, attract business to the regions and will lead to a more diverse and balanced UK economy. This rebalancing in turn will help take the pressure off the congested Greater South East and airports located there and spread prosperity and opportunity across the whole UK to the benefit of everyone.

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

The incentive regime around aviation policy is just as important as the policy itself and these aspects such as tax, emissions trading, visas and security need to be set at a level that does not make aviation in the UK uncompetitive internationally but still mitigates issues such as noise, emissions, security controls, etc. Therefore a joined up approach to these issues is required within Government to tackle this.

It is known that APD is a particular issue of concern to the aviation industry currently, but airports and airlines will be better placed than us to give details on how Air Passenger Duty and the wider incentives framework affect them.

In our opinion, Air Passenger Duty needs to be reformed so that it is much more targeted and flexible and more clearly linked to offsetting the disbenefits of air travel (noise, emissions etc) and not simply be a blanket tax that goes to the Treasury. APD should also be based on factors such as the length of the journey - a domestic flight could have higher rate of APD than a long haul, to encourage travel decisions between air or rail on financial grounds where rail can be an appropriate alternative. But this would need to be flexible and take into account the fact that clearly some domestic routes are essential by air and rail cannot provide an alternative in some cases. There may also be scope for APD to be ringfenced and localised (a bit like Bus Service Operators Grant), so that it can be used to support surface access improvements, provide environmental mitigation, help to offset carbon etc. Also differential APD charging based on age and environmental efficiency of aircraft should be considered so that flights on the newer fleets of planes could perhaps be subject to a slightly lower rate of APD as they have better environmental credentials compared with older aircraft. Although we understand that there may be constraints on this due to the Chicago Convention which was agreed in 1944 and ratified by the UK in 1947, which is the treaty which still governs the conduct of international civil aviation, so this may need reforming as well. If these reforms to the APD etc could be achieved then this would create a more flexible incentive structure to support the aviation strategy.

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

The passenger experience should be not seen as just aviation (airports and airlines) but also include the entire seamless journey experience across all modes as part of an integrated transport system. See also answer to e) below.

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

Aviation is only one mode in an integrated transport system, therefore the aviation strategy needs to be set within the context of a clear transport strategy at the national level and take into account integration with other modes. Travel is just a way of getting from A to B and journeys are often undertaken via several modes. So transport should be seamless across all modes and individual modes should not be seen in isolation. The Government’s strategy can appear fragmented so needs to be much clearer how it sees aviation being part of a single integrated transport system.

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

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?

No comment, as this issue is not relevant for Merseyside

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?

We feel that in its current form the Government’s policy remains too focused on the Greater South East and could do more to maximise the potential of regional airports. International connectivity for the regions is important to support economic growth and investment in these areas and the local airport has a role to play in this. Airports are a major employer and gateway for inward investment, trade and tourism. Airports have a key role to play in spreading prosperity around the UK. For example, good air transport links are crucial to attracting inward investment from around the world.

It is important that the role of all airports in the UK in enabling international connectivity is recognised and used to take pressure off the airports in the Greater South East. We believe regional airports have ample capacity to accommodate future growth and absorb some of the future demand from the congested Greater South East. Access from regional airports to key international destinations direct, without the need to go via London would improve the competitiveness and attractiveness of regional cities for investors and thus help provide a counter balance to London. We feel that the aviation strategy needs to consider all options regarding the future of international connectivity in the UK including moving away from the current single hub approach and instead considering a multi-hub approach using a London Airport as well as other major airports in the regions such as Manchester, Birmingham, Bristol, Glasgow etc. In this strategic context for infrastructure planning arguably the regions within England could be seen as Northern England, the Midlands, West Country and, of course, the Greater South East. The multi-hub approach needs to also recognise the increasing role played by foreign airports such as Amsterdam, Paris, Frankfurt, Madrid and even Middle East airports and elsewhere in providing connectivity for all parts of the UK. London Heathrow is not the only way to provide connectivity and airports in the Greater South East are just part of the UK’s network of airports and all airports (whether in London or elsewhere) should play a role in providing connectivity for all parts of the UK.

The increasing competitiveness of high speed rail will also be a factor to consider. Between certain cities where high speed rail offers a competitive advantage there may be an increasing reliance on high speed rail rather than domestic flights. This in turn can help relieve capacity constraints at airports. High speed rail may also be able to replace some domestic shuttle flights into major airports that serve a hub role, so linkages from regions into hub airports may not necessarily have to be by air. This could then free up capacity at major airports to offer more long haul flights while maintaining domestic / short haul connectivity into the airport for connections. To achieve this, linking airports into the rail and high speed rail network will be essential.

Like France’s TGV and Germany’s ICE high speed trains, give UK high speed trains airline codes so that they can act as "flights" into airports such as Heathrow just like KLM flight from Liverpool to Amsterdam used to feed into their worldwide network. Why do you need a flight when a high speed train can perform a similar role? High speed rail also needs to have stations to serve airports as well as city centre destinations. This way it can link to aviation as well as traditional intercity journeys.

High speed rail can take a greater share of the market currently taken by domestic and short haul air travel but air travel will still have a role to play as well. We are supportive of high speed rail and the role of rail in regard to its ability to provide a better environmental solution for short/medium-term length journeys than air. We suggest that the Government should advocate a hierarchical approach to transport planning (with sustainable modes being the most preferential). We feel that there also needs to be greater synergy between the government’s aviation and high speed rail plans so there is much more joined up approach to transport. All modes of transport should play important roles together as part of an integrated transport system and use and development of one shouldn’t be at the expense of development in another, although the shares of each mode will clearly differ.

Another important area to consider is reducing the need to travel in the first place. With new technology such as video-conferencing, etc, there are more options that mean travel may not even be necessary in some instances.

High-speed internet access is a prerequisite for many alternatives to travel and in some areas of the UK, such access is sorely lacking. Government should invest in the installation of fibre optic cables for the transmission of data as this will ensure a much more robust and secure network for all and allow more people to use these services at the same time, with less disruption to the service.

c. How can surface access to airports be improved?

We feel that surface access to airports is an important issue and encouraging access by sustainable modes such as public transport, walking and cycling in particular. As a result airport surface access strategies need to be aligned closely with the Airport Master Plan as well as with Local Plans and the Local Transport Plan. Where airports undertake new development they should be encouraged to contribute to any surface access improvements that may be required to support the development or their Airport Master Plan proposals via planning obligations.

Merseytravel has, in recent years, been working closely with Liverpool John Lennon Airport to support its Airport Master Plan and Airport Surface Access Strategy. We also are represented on the Airport Transport Forum and Airport Consultative Committee. As a result we have been working in partnership with the airport to improve surface access to the airport particularly by public transport including via Liverpool South Parkway rail station. This rail station is served by several train companies including Merseyrail Electrics, Northern Rail, London Midland, East Midlands Trains and Transpennine Express. We continue to work with the airport to open up the region and enable convenient access for people to the airport.

Merseytravel is represented on the Airport Transport Forum and Airport Consultative Committee. Based on our experience on these groups we believe that the current role of the Airport Consultative Committee (at least in the case of Liverpool’s) strikes the right balance between challenging the airport management over issues that may be of concern to communities close to the airport and recognising the important role this airport has in the current and future needs of the local economy it serves. If Airport Consultative Committees were to increase their remit to look in more detail at certain topics, levels of workload could then be an issue and impede getting a good cross-section of representation from key organisations and interested parties.

Liverpool John Lennon Airport is a major economic driver for Merseyside and indeed the North West Region. Therefore its continued prosperity, development and growth is of paramount importance to the economy. Airports are a major employer and gateway for inward investment, trade and tourism. Airports have a key role to play in spreading prosperity around the UK. Additionally Liverpool Airport is an important contributor and asset as part of the Liverpool SuperPort initiative which aims to develop synergies between the airport and the port and logistics sectors.

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

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?

Noise is an important issue to consider in regard to aviation strategy and this is partly caused by older, noisier and less efficient aircraft. But just tackling this with replacement of old aircraft with newer, more efficient ones will not solve all of the issue. Frequency of flights can also contribute to noise for local communities due to the cumulative effect. But this understandably is quite hard to tackle.

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?

Climate change will be one of the major challenges especially in a sector that is growing. There are a number of issues that can be addressed such as direct emissions from the airport through efficient asset management and operation efficiencies.

Emissions from the flights themselves will need to be reduced in order to contribute to carbon reduction targets. Alternative fuels will have a major role to play in this as more and more studies and trials are carried out to determine the most effective. It is important that sustainability is considered for the biofuel and where possible is locally sourced from the area airports are located. This will become more apparent with the advance of second generation fuels such as syn gas derived from lignocellulose.

We feel it is important that reducing the environmental impacts of aviation is an integral part of the government’s strategy, in order to (a) meet CO2 reduction objectives and (b) reduce the impact on communities through poor air quality, noise and disturbance and (c) reduce reliance on imported, finite fossil fuels. We understand that the aviation industry is already doing much to safeguard the environment but there is always scope for further improvements while balancing these against sustainable growth in aviation.

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

The incentive regime around aviation policy is just as important as the policy itself and these aspects such as tax, emissions trading, visas and security need to be set at a level that does not make aviation in the UK uncompetitive internationally but still mitigates issues such as noise, emissions, security controls, etc. Therefore a joined up approach to these issues is required within Government to tackle this. Linkages with EU policies are not often clear and the cumulative effect of both EU and UK policies in terms of aviation and its surrounding incentive regime needs to be considered carefully to ensure that it does not make the UK uncompetitive.

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

International connectivity for all parts of the UK is fundamentally important, and the way to deliver this outcome and achieve better international connectivity for the regions and all parts of the UK is really down to all partners in the aviation industry and the Government working together to properly debate and resolve the issue.

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

It is important that the role of all airports in the UK in enabling international connectivity is recognised and used to take pressure off the airports in the Greater South East. We believe regional airports have ample capacity to accommodate future growth and absorb some of the future demand from the congested Greater South East. We need to move away from a single hub approach and to a multi-hub approach which will bring benefits across the UK.

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

The fundamental factor which is critically important is good connectivity for all parts of the UK to key markets and destinations globally regardless of how it is achieved. It is clear that airports outside the Greater South East have ample capacity to accommodate future growth and absorb some of the future demand from the congested Greater South East. It is really a matter for the Government and aviation industry to debate and come to a decision on how best to achieve this connectivity and what capacity implications this may have in the short, medium and long term.

It is a strategic decision of national importance and will shape the future direction of the UK economy and arguably presents a major opportunity to rebalance the UK economy to benefit all parts of the UK and take pressure off the South East.

19 October 2012