5 Airports outside the south east |
87. There is ample airport capacity outside the
south east of England to meet demand for the foreseeable future
and the use of this capacity is set to increase over the coming
possible, passengers favour travelling from their local airport.
In this chapter we consider how best to support airports outside
the south east and encourage growth in the services they offer.
Developing new routes
88. We were told by witnesses that there is great
demand for more direct air services from airports outside the
south east and that the current lack of connectivity from these
airports was damaging local businesses.
However, as we previously stated, airlines are commercially driven
enterprises and will operate services only where there is a viable
market. It was
suggested that airlines did not consider routes to emerging markets
from airports outside the south east to be attractive.
Sian Foster, from Virgin Atlantic Airways gave us an example to
illustrate this point. She explained that, according to CAA data,
90,000 people a year fly between Manchester and Hong Kong. There
is no direct route, so these passengers are probably travelling
through Heathrow or a foreign hub airport. A direct route, using
Virgin's smallest aircraft would have a capacity of approximately
175,000 seats per annum. Ms Foster told us that a load factor
of 80% would enable the airline to break even and that given,
the shortfall in the number of passengers, this route would not
be commercially viable.
However, Emma Antrobus, from the Greater Manchester Chamber of
Commerce, told us that there was evidence that "around 200,000
passengers from the north west flew to Hong Kong last year".
Clearly, their evidence of passenger journeys from across the
north west, rather than solely from Manchester Airport, makes
the Manchester to Hong Kong direct route look more commercially
is a potential role for local authorities and Local Enterprise
Partnerships to ensure that there is robust research on demand
for new routes and to ensure that this is communicated to airlines.
89. While demand from the UK is important, Mike
Spicer, from the British Chambers of Commerce (BCC), reminded
us that for a route to be financially viable, there has to be
demand at both ends. He told us that "it is not just about
British businesses and British travellers looking to go overseas;
there has to be a reciprocal demand from the other end".
It was acknowledged that through improved marketing, awareness
could be raised about airports outside the south eastsuch
as Birmingham, Manchester, Liverpool, East Midlands or Bristol
Airportswhich might make them more attractive to foreign
Airport recently suggested that the Government should actively
support and market airports outside of the south east by designating
them as "National Airports", in order to assist them
in attracting new routes.
Jonathan Moor, Aviation Director at the DfT, assured us that the
DfT spends a lot of time promoting links to airports outside the
south east. We
recommend that the Government take a more active role in promoting
airports outside the south east, however, this seems to be at
odds with the DfT prioritising the views of British based airlines
who have objected to new international routes to our regional
90. We were keen to find out how else the development
of new routes from airports outside the south east might be encouraged.
The Scottish Chambers of Commerce (SCC) told us that the Scottish
Air Route Development Fund, operated by the Scottish Government
until 2007, had provided valuable support to airlines for the
development of new routes. Garry Clark, from the SCC, told us
that the Fund had been axed in the belief that it would have breached
European state aid rules, but the Scottish Government was looking
into alternative options that would be compliant with European
also heard that changes to aviation taxes, particular Air Passenger
Duty (APD), might also be used to encourage new routeswe
return to this subject later in our report.
91. The commercial viability of a new route does
not guarantee that a new service will be introduced. The provision
of international air services has traditionally been governed
by bilateral air service agreements, which are essentially trade
treaties between Governments that might, for example, cover "fifth
freedom rights" relating to whether foreign airlines can
land in the UK and then fly on to another country. Manchester
Airports Group (MAG) suggested that the restrictions inherent
in these agreements would "not be in the best interests of
passengers or in the interests of rebalancing the UK economy and
making best use of existing capacity".
MAG suggested that UK airlines are particularly influential in
the negotiation of bilateral agreements.
Andrew Harrison, CEO of MAG, told us that airports outside the
south east are more reliant on foreign airlines for long-haul
connectivity and therefore the fact that a UK airline might be
influencing the negotiations "puts a third party's not unbiased
view into the pot".
However, Mr Moor assured us that bilateral agreements were generally
not a constraint on access to UK airports. He explained that the
fifth freedom rights described above have been available for regional
airports for a number of years. He added that there is currently
only one route taking advantage of this: a Pakistan International
Airlines flight, which flies from Islamabad to Manchester and
then on to New York. Mr Moor indicated that other similar services
have not been introduced for commercial reasons.
92. An alternative approach would be to liberalise
air service agreements and thereby move towards an "open
skies" policy. Witnesses acknowledged that an open skies
policy might have some advantages but that it could also result
in the UK "giving away" its negotiating rights.
The Government's current approach is set out in its Aviation Policy
We are proposing [
] to offer bilateral partners
open access to airports outside the south east in order to facilitate
inward investment in new routes and extra choice for business
and passengers without necessarily having to secure reciprocal
access for UK airlines to the airports of the other country.
The granting of such rights would be subject to a
case-by-case consideration within the context of the current position
in the UK's bilateral aviation relationship with the country concerned
(for example, we might not grant such rights if there were concerns
that there was not a level competitive playing field in the market,
such as if it were argued that the airline in question was in
receipt of state aid that was distorting competition).
93. We welcome the Government's
moves towards further liberalisation of air service agreements.
However, we question whether the current approach goes far enough
in reducing the barriers faced by airports outside the south east
that are trying to secure new routes and still leaves the door
open for UK airlines to restrict access by claiming unfair competition.
skies policy which allowed airlines from foreign countries to
land and pick up new passengers to a third destination would make
some routes commercially viable which they would not be on a point-to-point
basis. There are arguments for the introduction of an unrestricted
open skies policy outside the south east, covering both point
to point services and fifth freedom rights, and we recommend that
the Airports Commission assess the impact that such a policy would
Connectivity through hubs
94. In the absence of direct routes, passengers
using airports outside the south east have little choice but to
fly to a hub airport and transfer onto a connecting flight to
their desired destination. Andrew Haines, from the CAA, told us
that this often involves connecting through international hubs
rather than a UK hub.
Many of the long-haul services that operate from airports outside
the south east are in fact supplying transfer traffic to overseas
hubs, such as Dubai.
Such connections were considered to be helpful in terms of providing
connectivity for business and leisure passengers in these areas.
However, there are also some potential negative impacts of relying
on hubs overseas. For example, as we previously noted, the use
of overseas hubs could generate unnecessary emissions.
Moreover, Mr Clark suggested that passengers arriving at the UK
hub in London were more likely to connect onwards to visit other
parts of the UK.
95. Due to current capacity constraints at the
UK's hub airport, connections between UK airports and Heathrow
are scarce. For example, the number of seats between Glasgow and
Heathrow has more than halved since 2000 and Liverpool Airport
lost its flight links with London in 2007.
We were told by Derek Provan, from Aberdeen Airport, that demand
from his region to Heathrow was greater than demand for travel
to all European hubs put together.
In the absence of access to the UK's hub, Flybe and Manchester
Airport have established an innovative 'regional hub' solution.
Flybe has optimised its scheduling at Manchester to allow passengers
travelling from other regions to access other air services offered
by the airport, thereby providing greater connectivity through
Manchester, rather than through Heathrow.
However, Manchester does not provide access to many of the emerging
markets that a classic international hub airport, such as Heathrow,
can offer. Mr Provan suggested that with increased capacity at
Heathrow, it might be possible to "carve-out" some slots
for airports outside the south east.
The Royal Aeronautical Society agreed that there was "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".
However, the CAA identified two problems with this approach. Firstly,
liberalisation of air transport across Europe means that it is
not possible to restrict access on the basis of either destination
or nationality of carrier and there are therefore "very clear
limitations within European legislation on how you can use public
service obligations and so on".
Secondly, restricting how scarce capacity is used at a particular
airport could well have unintended consequences, such as reducing
the number of passengers using the airport.
He concluded that this approach would be undesirable.
96. Transferring through overseas
hubs provides customers in regions outside the south east with
connectivity that they cannot at present achieve through the capacity
constrained UK hub airport. We hope that as capacity increases
at the UK's hub airport, connectivity between London and other
UK regions improves. In the short-term, the Government should
investigate whether it would be possiblewithin the framework
of current European regulationsto protect slots at Heathrow
for feeder services from poorly served regions.
97. Good surface access is crucial to ensure
that airports outside the south east are more attractive both
to potential passengers and to the airlines providing services.
We were told that road and rail links to the main airports outside
the south east were generally quite good but that there was room
In particular, the development of the HS2 network was considered
by some to be a "game changer" with the potential to
transform the way people are connected around the country.
The network brings Birmingham Airport and Manchester Airport much
closer to London and as we previously noted, it could potentially
relieve some capacity at the crowded south east airports.
98. Since the publication of our recent report,
Draft Civil Aviation Bill: Pre-Legislative Scrutiny, we
have maintained our interest in the system of economic regulation
of airports by the CAA. Charges levied by the CAA on airports
help it to fund its regulatory activities. These charges vary
for "designated" (Heathrow, Gatwick and Stansted) and
"non-designated" airports. Designated airports are deemed
to have market power and, as such, could increase charges to airlines
to the detriment of consumers. In contrast, non-designated airports
operate in competitive markets, where airlines often hold the
market power and can negotiate lower charges. During our inquiry
into the then draft Civil Aviation Bill, Mr Haines assured us
that despite the changes to the regulatory regime, the CAA was
"looking to reduce its costs and burden to industry".
However, since then we have heard concerns, particularly from
Bristol and Newcastle Airports, that the CAA has proposed to increase
its charges even to non-designated airports.
We raised this with the CAA and we were told that:
Overall, the main charges we are proposing for 2013/14
are held at current levels, which represents a reduction in real
terms. However, some specific charges are being lowered whilst
others are being raised. The increase in non-designated airport
] has been proposed to reduce the cross-subsidy
that this area of the industry has benefited from over a number
of years. To this end, we also anticipate a further increase in
2014/15 to fully eliminate the cross-subsidy. Historically, the
cross-subsidy has been paid by airlines, which also operate in
a competitive market.
Mr Haines explained that at the time he answered
our question in relation to the draft Civil Aviation Bill, he
had responded honestly on the basis of the general direction of
CAA charges, and that the disaggregated fees by airport designation
type had at that time not been considered.
The CAA's charging proposals are currently subject to consultation.
99. We are disappointed to hear
that the CAA proposes to increase charges for non-designated airports,
particularly given that we were previously assured that the CAA
was looking to reduce its costs and burden to industry. We consider
that higher charges for these airports risk making them less attractive
to airlines if passed on or, more likely, impact on their ability
to operate profitably. We recommend that the CAA reconsider
the need to impose these charges.
223 Paragraph 22, table 3 Back
Q 388 [Andrew Harrison] Back
Q 456 and Qq 460-461 [Jerry Blackett]; Q 457 [Emma Antrobus] Back
Paragraph 32; Q 14 [Simon Buck]; and Q 15 [Sian Foster] Back
Q 366 [Andrew Haines] Back
Q 15 [Sian Foster] Back
Q 469 [Emma Antrobus] Back
Q 439 [Mike Spicer] Back
Q 471 [Jerry Blackett]; AS 055, para 25 [Bristol Airport Ltd];
AS 086, para 3.18 [Birmingham Airport]; and AS 089, para 21 [Virgin
Atlantic Airways] Back
Birmingham Airport, Don't put all your eggs in one basket:
A challenge to aviation orthodoxy, June 2012, p 19 Back
Q 839 [Jonathan Moor] Back
AS 044A [Manchester Airports Group] Back
Qq 474-475 [Garry Clark] Back
AS 044A [Manchester Airports Group] Back
AS 044A [Manchester Airports Group] Back
Q 397 [Andrew Harrison] Back
Qq837-839 [Jonathan Moor] Back
Q 381 [Andrew Haines]; and Q 480 [Paul Gilbert] Back
Department for Transport, Aviation Policy Framework, Cm
8584, p 24 Back
Q 290 [Andrew Haines] Back
Q 88 [Dale Keller] Back
Q 393 [Paul Kehoe]; Q 394 [Andrew Harrison]; and Q 395 [Robert
Paragraph 38 Back
Q 490 [Garry Clark] Back
Q 414 [Craig Richmond]; Q 459 [Garry Clark]; and AS 063, para
30 [Liverpool Chamber of Commerce] Back
Q 412 [Derek Provan] Back
AS 094, para 2d [Flybe] Back
Q 412 [Derek Provan] Back
AS 011, para 22 [Royal Aeronautical Society] Back
Q 305 [Andrew Haines]; and Q 357 [Andrew Haines] Back
Q 357 [Andrew Haines] Back
Qq 357-358 [Andrew Haines] Back
Q 495 [Jerry Blackett]; Q 496 [Emma Antrobus]; AS 038 [Newcastle
International Airport Ltd]; and AS 055, para 23 [Bristol Airport
Q 406 [Paul Kehoe]; Q 476 [Jerry Blackett]; and Q 477 [Emma Antrobus] Back
Paragraph 84; Q 406 [Paul Kehoe]; and Q 476 [Jerry Blackett] Back
Transport Committee, Thirteenth Report of Session 2010-12, Draft
Civil Aviation Bill: Pre-Legislative Scrutiny, HC 1694, Ev
Qq 399-401 [Robert Sinclair]; Qq 422-423 [Graeme Mason]; and AS
055A [Bristol Airport] Back
Qq 295-301 [Andrew Haines]; and AS 075A [Civil Aviation Authority] Back
Q 301 [Andrew Haines] Back