Transport CommitteeWritten evidence from the Board of Airline Representatives in the UK (BAR UK) (AS 20)
BAR UK is the airline association for scheduled airlines with an UK operation or presence.
Comprising over 80 airlines, our membership includes two major UK airlines (British Airways and Virgin Atlantic) and a wide range of non-UK airlines from all around the globe. Full details of BAR UK can be found on our website www.bar-uk.org .
The Committee’s Inquiry into UK aviation strategy is of immense interest to them all.
The core issue is that of the country’s hub airport that has been fully utilised for years. Until any clear policy direction emerges, and allowing for due planning processes to be completed, the UK is effectively advising airlines, especially those from outside of the UK, that no additional hub airport capacity will be available for at least 10–15 years. That’s a terrible indictment for a country that intends to trade its way out of recession.
In fact, capacity is so full that, even with slot trading permitted, the costs are so high, or the timings of the slots so unattractive, that existing airlines are hampered in their efforts to improve, and many new entrants simply cannot bear the costs, especially when normal start-up costs are so high in any event.
The result? Those airlines outside of the UK, who take strategic decisions years in advance, are simply beginning to ignore London in their expansion plans.
Should no slots be available at ‘LHR’, their planners/schedulers generally don’t then look at ‘LGW’ or ‘STN’, they simply look at the opportunities presented in flying from their home base to other countries and operate additional flights to them instead of to the UK.
Those countries then become the beneficiaries of the vacuum in the UK’s aviation policy that denies any additional hub airport capacity; it’s as simple as that.
As even a 3rd runway at Heathrow, if approved this year, would possibly not be operational until at least the mid 2020s, the UK is effectively telling the world that no additional trading opportunities will exist at our hub airport for at least 12 years. That, in UK economic recovery terms, seems completely unacceptable.
In respect of the questions posed, we have endeavoured to provide high-level responses, remain readily available to provide any further information that may be required, and are ready to appear as witnesses at the public hearings that the Committee may hold.
BAR UK Responses
1. What should be the objectives of Government policy on aviation?
A: The overarching objective should be to permit the operation of a market-driven industry that meets the needs of its customers (freight clients as well as passengers) whilst adhering to all relevant environmental standards and policies.
(a.) How important is international aviation connectivity to the UK aviation industry?
International connectivity is paramount. Any country that is not well-connected to its trading partners, future as well as present, will not be in a position to grow, and risks stagnation and decline as competing States take precedence.
Connectivity means a world-class hub airport, if the UK is to compete on a global basis.
The UK’s hub airport is Heathrow and has been operating to capacity for many years. A direct consequence is reduced capacity and a propensity for arrival and departure delays; in turn, these create additional emissions.
Additional capacity at Heathrow has been required for several years, and the Committee is asked to note that it is the aviation industry that would finance the additional capacity, not the public purse.
There are many facets to what constitutes a hub airport, so the Committee’s attention is drawn to the points of reference below:
“Connecting for growth: the role of Britain’s hub airport in economic recovery” by Frontier Economics for Heathrow. (hub.heathrowairport.com/index.php/download_file/view/15/1/)
London’s Connectivity Commission—Britain and the World, Transport links for economic growth (http://bit.ly/QULCCF)
Response of BAR UK to the DfT’s consultation “Developing a sustainable framework for UK aviation: Scoping Document”
(http://bar-uk.org/consultations/response2011.htm)
(b.) What are the benefits of aviation to the UK economy?
The UK economy benefits enormously from its aviation industry, and government needs to ensure its advancement if it is not to decline.
There are 186,000 jobs directly created as a result of airport and airline activities within the UK, and a total of 520,000 directly and indirectly. Collectively, the UK benefits from direct economic activity to the value of £11.2 billion.
Separately, the inbound travel market arising from aviation generates another £12 billion in economic activity, generating an additional 170,000 jobs in the process.
By value, 55% of exports to non-EU countries are carried by air.
Source: The Economic Contribution of the Aviation Industry in the UK, Oxford Economic Forecasting, 2006 (http://bit.ly/O2mXPk)
There is a good range of studies that confirm the huge value of aviation to the UK economy. They include:
1.
2.
(via http://www.aoa.org.uk/reports-and-publications.htm)
(c.) What is the impact of Air Passenger Duty on the aviation industry?
Originally quite a small tax, Air Passenger Duty is harmful to the UK economy, not just to the aviation industry.
APD rates have become so high, that they are the cause of objections, from overseas (including diplomatic protests) as well as within the UK, and are causing a resistance to visiting the UK.
Originally devised as an environmental tax, the Treasury now openly admits that APD is simply a revenue-raising device. By its name, it is targeted solely at air passengers, with rates having increased since 2007 by over four-fold on long-distance routes eg:
|
Jan 2007 |
April 2012 |
|
|
Basic Economy Class |
£20 |
£92 |
|
Premium Economy/Other classes |
£40 |
£184 |
Such high rates of taxation act discriminately against the airline industry as other forms of transport have no such tax levied against them.
It can be seen that, for a family of four, the tax take on many long-haul routes is so high that it can be the equivalent of paying for five tickets but only getting four.
The Committee is asked to remember that potential visitors from overseas have a choice of whether or not to visit the UK, or to go elsewhere. Evidence exists that they are beginning to go elsewhere, eg continental Europe, rather than pay APD.
The “A Fair Tax on Flying” alliance (www.afairtaxonflying.org) has seen its activities result in over 200,000 people lobbying either their MP or, if from overseas, the Chancellor.
As an immediate priority, the first aim must to be to freeze the future increases to APD that the Chancellor has publicly planned.
(d.) How should improving the passenger experience be reflected in the Government’s aviation strategy?
The “passenger experience” can be complex, with a natural focus on the departure experience; however, recent events have shown that the arrival experience can be totally disruptive, and extremely distressing, if resources are not in place.
The well-known, and unacceptable, queues of two+ hours at the UK Border during this summer provide the main case in point, and are a direct consequence of government policy on one hand, linked to outdated processes and concepts on the other.
The amount of passenger data provided by airlines, in advance of travel, through the e-Borders programme should provide the stepping stone to move from a manually-intensive set of border checks to a knowledge-based (not risk-based) border control system.
A more specific strategy should be to continue the campaign for speedier implementation of the Single European Sky (SES). The benefits of this programme, if comprehensively implemented, would spread far and wide.
More direct flight routeings would be available, emissions would be reduced and so would delays to passengers.
It is recognised that the UK government is a leading proponent of SES and its efforts to date are valued.
In broader terms, the government’s role in respect of the passenger experience should be to ensure that relevant passenger legislation is complied with by airports and airlines, and to undertake any major review where major lapses seem to occur. However, it should not be the role of government to interfere with the market-place competition that is the backbone of airline and airport services.
(e.) Where does aviation fit in the overall transport strategy?
Aviation should be regarded as an absolutely essential component within the UK’s transport infrastructure; by definition, it should also be an essential part of the country’s overall transport strategy.
Aviation is a multi-layered spectrum. Within are included scheduled airlines, charter airlines, all-freight airlines, and business/general aviation.
Within that spectrum, scheduled airlines play a vital role through the provision of passenger and belly-hold freight capacity, linking the UK to the rest of the world, including its import and export markets.
Integration with surface transport/access is just as vital. BAR UK subscribes to the DfT’s Low Carbon Surface Access strategy, which aims to increase the use of public transport to and from UK airports.
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?
The use of London airport capacity is largely determined by market needs. Most significantly, this includes which London airport is considered for the marketplace.
Prime amongst market needs is a global hub, an aspect that is considered essential by BAR UK airlines. For the sake of clarity, that hub airport is Heathrow.
That spare runway capacity may exist at other London airports is, largely, of little consequence or comfort.
Should it be the only available option, and it’s not the preferred one for airlines, then Mixed Mode operations should be considered as an extreme option. Whilst additional capacity could be generated on the current two-runway system, by gaining maximum use of them both, the resilience of the airport, already very fragile, would be reduced considerably further.
The concept of a “virtual hub” eg Heathrow linked to another London airport, is theoretical at best and highly impractical for a variety of reasons. Should the airlines deem the concept practical, then they would readily advocate it.
In respect of passenger experience, various research, including the CAA’s, shows that overall satisfaction levels are high, although there is always room for improvement.
However, resilience is another matter. Any airport operating to maximum capacity and pace has little room for manoeuvre when circumstances change. Heathrow is in that position, and has been for several years. It is why airlines there, with BAR UK’s full support, have been lobbying for a third runway.
(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?
The government’s strategy allows for market forces to operate at all airports, so those outside of the South East already have the tools at their disposal to obtain better utilisation of their capacity.
BAR UK airlines have reasonable degrees of operations at airports such as Manchester, Birmingham, Glasgow and Edinburgh, but London and the South East dominates their market needs.
Ultimately, the issue is whether or not routes which they operate to/from regional airports are actually viable in their own right. Whilst there may be a proportion of the ex-UK market for which travel from a regional airport may be practical, are there enough inward travellers who also wish to use that airport—or is London, as the UK’s capital, still the prime destination?
(c.) How can surface access to airports be improved?
BAR UK fully supports the concept of improved surface access to airports, especially if there is a reduction in overall emissions as a direct result.
Any improvement programme would be specific to each airport, and the business case rationales for transport providers.
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?
The environmental questions asked here are broadly contained within the DfT’s consultation ‘Aviation Policy Framework’.
The Transport Committee’s attention is drawn to the fact that the aviation industry at large, not just the airlines, has a consistent track record of significantly reducing the impact of aviation noise. Evidence of this can be seen by the fact that the noise contours for Heathrow have shrunk so significantly.
1988–2011: whilst flights increased from 352000 per annum to 480,000, the area affected by noise, using the DfT’s own metric of 57dBA summer day Leq, plummeted from 331 sq. km to 110 sq. km. (Source: ERCD, CAA—Annual Noise Contour Reports)
(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?
Carbon emissions from aviation are, essentially, a global issue. They are being managed through a mix of regulation on one hand, and industry cooperation on the other. The UK strategy of working in conjunction with global efforts, and the industry’s own collaboration on noise, emissions and efficiencies continues to make aviation even more sustainable.
(c.) What is the relationship between the Government’s strategy and EU aviation policies?
The government’s strategy is one of support for EU policies.
4. Do we need a step-change in UK aviation capacity? Why?
(a.) What should this step-change be? Should there be a new hub airport? Where?
There is a step change required, and now. It needs to be one based on recognising that the UK is losing out on air connectivity to competing countries. Airlines make their strategic plans, for new routes and for new aircraft types, a number of years in advance; they are not made on a whim. The lack of a clear airport capacity policy, allied to slot constraints at Heathrow, is already providing feedback that the UK is losing out to new routes and airlines.
Consequently, this policy vacuum is making it easy to take decisions in overseas boardrooms to give the UK a miss, and no publicity will attach itself to such decisions. Competing states will continue to be the beneficiaries until the time that the UK takes a firm grip on aviation policy and states what its intentions are.
Additional airport capacity needs to be provided as soon as possible. The quickest way is still the provision of a third runway at Heathrow.
When and where a new hub airport may be required cannot be answered at this stage. There are far too many unknowns, not least the funding provisions for it, and what the situation may be in respect of the unamortised investments, paid for by airlines, at Heathrow.
BAR UK looks forward to contributing to the work of the Independent Commission, to be led by Sir Howard Davies. At that time, BAR UK will urge that all options will be considered.
(b.) What are the costs and benefits of these different ways to increase UK aviation capacity?
Reference is made to Question 4 a. regarding the funding of current airports, as well as any new one. There are no known answers at this stage, merely many questions.
15 October 2012