Transport CommitteeWritten evidence from Stansted Airport Limited (AS 92)

London Stansted Airport (“Stansted”) is the third largest airport in London handling around 17.4 million passengers a year. Firmly positioned as the market leader for short-haul travel, with over 150 destinations across 30 countries, Stansted provides London and the East of England with excellent connectivity to Europe.

With planning permissions and environmental controls already in place to enable the airport to serve 35 million passengers per annum (mppa), Stansted has the space and permission to grow substantially. Stansted has a strong range of transport links, and with half of all passengers travelling to and from the airport by public transport, it is the UK’s leading public transport airport.

Stansted Airport will shortly be in new ownership, following BAA’s announcement on 20 August 2012 that it would not to appeal to the Supreme Court over the Competition Commission’s 2009 report requiring BAA to sell the airport. The separation and sale process in now underway and will conclude in 2013.

1. What should be the objectives of Government policy on aviation?
(a) How important is international aviation connectivity to the UK aviation industry?

Stansted supports the Government’s objective outlined in the Draft Aviation Framework (“Framework”) to ensure the UK’s air links continue to make it one of the best connected countries in the world. International connectivity is a vital component of a flourishing and successful economy. As noted in the Frontier Economics report, UK businesses trade 20 times as much with emerging market countries that have a daily direct flight to the UK as they do with those countries that do not.1

Stansted is well placed to serve point-to-point demand for travel. The airport already serves over 150 European destinations, more than any other airport in the world, and provides an excellent level of connectivity to and from London and the East of England. European connections are particularly important for passengers travelling on business, who comprise nearly 20% of Stansted’s overall traffic. The importance of Europe to the UK generally, and the importance of connections for small and medium sized enterprises to the European market is something Stansted is well placed to provide.

We want to build on this success and attract more airlines serving more destinations, helping to drive inward investment, productivity and exports. Stansted already has the capacity, infrastructure and planning permissions in place to handle 35 mppa, and can handle more of London’s demand with limited noise and other environmental impacts. Against the backdrop of constraints at other airports, Stansted has a critical role to play in providing capacity to meet the UK’s need for air travel over the next decade.

It is vital that future policy continues to recognise the contribution aviation brings to UK plc and places a much stronger emphasis on measures to further unlock the performance of the sector.

We believe that if the Government is to meet its objectives, any future policy must make the best use of existing airport capacity now and in the medium—long term. Further delay is damaging the industry and this needs to be addressed with urgency so that the industry and potential investors have confidence to invest in the UK.

(b) What are the benefits of aviation to the UK economy?

Stansted wants to play its part in growing the UK economy and we are encouraged by the Government’s renewed focus on growth. We are a key catalyst for growth and productivity in the East of England, and provide important connectivity to Europe for some of the UK’s most innovative and dynamic industries located in the East of England. It is critical for the success of these companies that they continue to have strong and cost-effective access to foreign markets and customers. Stansted is also the largest single-site employer in the region employing over 10,000 people across 200 on-airport companies. With significant spare runway capacity we are in an ideal position to support and sustain economic growth.

In addition Stansted is a key hub for express freight services, General and Business Aviation and tourism. The airport’s express freight market, anchored by key logistical companies such as FedEx and UPS, is the third biggest in the UK. In 2011, 204,000 tonnes of cargo were transported through Stansted, helping to connect the economy of London and the region with the global marketplace. The cargo hub at Stansted, and the ability to operate around the clock provides businesses with access to multiple overseas markets including the US and Far East, adds significantly to the desirability of the UK as a place to locate and invest.

Stansted is a key gateway for the UK and is the second busiest point of entry for non-UK residents arriving by air. In 2011, 18 million passengers used the airport with 47% of these visiting friends and family either in the UK or overseas. Tourism makes an enormous contribution to the UK’s economic well-being and is an essential component of a healthy and dynamic economy. We support the objectives in the Government’s Tourism Policy and refute any suggestion by certain groups of a “tourism deficit” in the UK. As recent research by ABTA shows outbound travel directly contributes over £22 billion to the economy, representing 1.6% of UK GDP. In addition the outbound sector makes a significant contribution to UK jobs, accounting for 620,000 people in full time employment.2

(c) What is the impact of Air Passenger Duty (APD) on the aviation industry?

The UK has the highest rates of aviation tax in Europe. APD is hugely disproportionate and fails to take proper account of the economic contribution of the industry and the impact it has on airlines and consumers. Analysis commissioned by The British Chambers of Commerce found that APD could cost the economy £10 billion in lost growth and up to 250,000 fewer jobs over the next 20 years.3 This impact would be felt particularly at Stansted, where there are a very high proportion of price-sensitive passengers and low-cost airlines. Consequently, we are concerned about the impact that future increases to APD could have on passenger volumes.

Additionally, the introduction of any form of regional differential of APD within the UK would create further competitive distortions and lead to further pressure on airlines operating from Stansted. Stansted already has significant spare capacity and any change to APD which placed additional costs on flying from the South East would only further impact our ability to fill that spare capacity.

It is clear that the Government’s current approach to taxing the aviation industry represents a significant barrier to growth and connectivity, and is damaging the competitiveness of the industry and the UK’s economic performance. Other European Governments have recognised the strength of the case for reducing taxation on aviation to help drive economic growth. As a member of the Fair Tax on Flying coalition, we feel that it is necessary that HM Treasury commissions an independent analysis of the economic impacts of APD before it does lasting damage to the UK economy and our international connectivity.

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

We believe the passenger experience should be at the heart of the Government’s aviation strategy and should be aimed at encouraging not just excellent customer service, but also a choice of routes, airlines and other initiatives.

At Stansted, we have recently published a Passenger Charter which is supported by our business partners—including airlines, transport operators, ground handlers, local authorities, unions and the Stansted Airport Consultative Committee. The charter highlights the airport community’s commitment to helping our customers at every stage of their journey. We believe the whole airport community needs to play their part in helping our passengers reach their destination on time.

Delivering good passenger experience also requires airports to invest in new facilities and infrastructure. The Government’s aviation strategy can support and encourage this investment by providing a clear and stable policy framework for the industry, which provides investors with the confidence to commit substantial sums of money to delivering a better experience for passengers.

(e) Where does aviation fit in the overall transport strategy?

Aviation is important to the UK, both as an industry in its own right and in supporting growth, productivity and international connectivity across the economy. It is an integral component of the overall transport strategy and we encourage Government to work closely with other transport sectors, particularly rail, to ensure a holistic approach to future transport and infrastructure.

For example, there is a clear opportunity for Government to bring stakeholders from different transport modes together to improve the rail connections to Stansted and at the same time enhance rail services to the East of England. Achieving a 30 minute journey time from central London to Stansted would help make best use of Stansted current capacity and drive up public transport usage to the airport to minimise the airport’s impacts. At the same time rail fares from air passengers using the rail service would provide a significant contribution to funding the redevelopment of the rail line which would benefit rail commuters and leisure passengers.

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?

Stansted is currently operating at less than half its full capacity. We have planning permissions in place to handle 35 mppa and 264,000 air transport movements (ATMs) on our existing single runway and can handle more of London’s demand with limited noise and environmental impacts. Stansted’s existing facilities already have the capacity to handle significant peaks in demand. Growth to 35 mppa will largely be achieved through more intensive use of current facilities, and will require only modest further investment. Making best use of Stansted’s existing capacity would have significant economic benefits and would be delivered within approved environmental limits.

The Department for Transport latest forecasts show that unconstrained demand for air travel is expected to grow by 2.5% a year over the period to 2030, and then by 2.1% a year over the period to 2050. Against the backdrop of environmental and capacity constraints at other airports, this highlights that Stansted will have a critical role to play in providing capacity to meet the UK’s growing appetite for air travel over the next decade and beyond.

A primary objective of Government policy should be to make the best use of existing capacity, where this would be consistent with its sustainable aviation policy. This objective, combined with a presumption in favour of sustainable development, would provide strong support to airports by making clear to a wide range of stakeholders the importance of making full use of existing capacity.

Demand management measures would be an ineffective way of allocating scarce airport capacity and we believe priority should be given to reforming the existing slot allocation system. This approach would be most likely to result in the allocation of scarce capacity to those services that are most highly valued by consumers.

(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?

No comment.

(c) How can surface access to airports be improved?

We support the Government’s statement in the Framework that high quality, efficient and reliable rail and road access to airports contributes greatly to the experience of passengers, freight operators and airport employees. Rail, in particular offers opportunities for efficient and environmentally friendly connections to airports. At Stansted 25% of our passengers choose rail, and overall 49% of passengers use public transport to travel to and from the airport—the highest percentage of any major UK airport.4

To build on this record and help meet the Government’s vision for dynamic, sustainable transport that delivers economic growth and competiveness, Stansted needs faster and more reliable rail connections to London, Cambridge and beyond. Linking Stansted to Crossrail would also further improve connectivity with the Capital.

As part of our “Stansted in 30” campaign, we are asking stakeholders to commit to working with us to identify how journey times between London and the airport could be reduced to 30 minutes. Passengers tell us journey times and reliability are amongst their highest priorities, while airlines cite it as a key factor into whether they decide to operate from Stansted. The current journey time of between 47–59 minutes is simply too long, and reliability on the line to Stansted (West Anglia Mainline) has also become a significant concern for our passengers with around 1 in 6 trains delayed by at least 10 minutes.

To make the most effective use of Stansted’s spare capacity, it is vital that stakeholders commit to identifying the steps towards delivering a 30 minute journey time, to put Stansted on a level competitive footing with other London airports. “Stansted in 30” has already received considerable support from business leaders and politicians, and we are eager to take forward our discussions with Government and the rail industry to identify what investment is required.

Investing in the rail links to Stansted, either by improving existing infrastructure or developing new infrastructure, will allow Stansted to contribute most effectively to meeting the growing demand for air travel in a responsible and sustainable way. It would also be an integrated approach to meeting the aviation capacity gap in London and the South East, and have the potential to stimulate the long term economic growth that Government and businesses are targeting.

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?

Aviation noise has long been recognised by the industry as the biggest concern to the local community and a constraint on sustainable growth. Stansted has worked hard with airline partners to reduce the noise impacts associated with its operations. This includes increased focus on noise and track keeping; the introduction of a fining regime for aircraft flying off track and improving continuous descent approach (CDA) performance. We strongly believe that airports and airlines should limit, and where possible work to reduce, the impact of noise on local communities.

The aviation industry has made significant progress in recent years in either reducing, or containing aviation noise, while still meeting significantly increased demand for flights. Analysis of the CAA data shows that the collective size of the area covered by the 57dB noise contour at Heathrow, Gatwick and Stansted fell by 70% from 595km2 in 1988 to 170 km2 in 2011, while over the same period aircraft movements increased by almost 50%. Over the same period, the overall number of people living within the area covered by 57dB noise contour at Heathrow, Gatwick and Stansted fell by 60%.5 The focus of Government policy and local initiatives should be on minimising the noise experienced by local communities. This can be delivered, in part, by encouraging a more collaborative working relationship with Local Authorities in the development of Local Plans and planning policies. Stansted supports the idea of a “noise exposure greenbelt”, whereby planning permission is only granted to new developments or homes that are outside existing noise contours.

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

Stansted understands the importance of managing aviation’s climate change impacts and support the Government’s view that this requires a global solution. We want to see a solution that replaces local and national targets, ensuring aviation emissions are accounted for only once.

The inclusion of aviation within an effective global “cap and trade” deal provides the best way to address the industry’s climate change impacts. A cap and trade system will create powerful financial incentives for airlines to invest in carbon reduction technology, without necessarily limiting the strong economic and social benefits associated with aviation. We are working with a coalition of airlines to push for aviation to be included in a global emissions trading scheme as soon as possible, although we recognise that securing a global deal is likely to prove a difficult and lengthy process.

In the interim, the inclusion of aviation in the European Union Emissions Trading Scheme (ETS) is the appropriate way to tackle the industry’s carbon emissions and we welcome the Government’s commitment to achieving this. ETS should be used as the primary tool to incentivise the aviation industry to reduce carbon emissions. We agree that the EU ETS will create powerful signals for airlines and airports to tackle emissions through investment in new technology and research. It will also ensure that aviation is treated on equal terms with other sources of carbon emissions, and potentially create the scope for the industry to grow.

Stansted is a member of Sustainable Aviation (SA) and we support its CO2 Road-Map and its conclusion that UK aviation is able to accommodate significant growth to 2050 without a substantial increase in CO2 emissions. To achieve this we urge Government to continue working with SA and the industry and support the following:

Investment in research and development for more efficient aircraft and engine technologies;

Encourage the introduction of sustainable biofuels; and

Deliver on infrastructure projects such as the Single European Sky initiative.

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

Only Government can strike the right balance between the economic, environmental and social impacts of aviation. However, in striking this balance Government should take full account of the critical role aviation has to play in supporting the growth of the UK economy, For this reason, it is important that the UK’s future air travel needs are fully understood so that the benefits of meeting demand can be properly considered by Government when setting policy.

We believe there is a strong case for additional airport capacity in the South East, particularly where environmental impacts can be addressed appropriately. In this respect, we are encouraged by the Government’s decision to establish an Independent Airports Commission chaired by Sir Howard Davies. We will be asking the Commission to look carefully at all existing and new capacity options to help deliver a lasting solution for aviation.

However, the Government should not wait until 2015 before taking action in this area. There are initiatives that can be taken forward in the intervening period that have the potential to deliver significant benefit to UK economy and passengers. These include improving rail access to Stansted to help fully utilise spare capacity and continuing with the Government’s efforts to reform the slot allocation system. Both of these measures could be implemented quickly and would complement the work of the Commission by addressing the capacity issues in London and the South East.

In uncertain economic times it is imperative that Government look at the most cost effective solution to improving the UK’s aviation capacity and one that must be sustainable and able to handle more of London’s demand with limited noise and environmental impacts on the local community. For this reason it is important that the Commission considers the important role that point-to-point airports have to play in meeting future demand for air travel.

22 October 2012

1 Connecting for Growth: the role of Britain’s hub airport in economic recovery, Frontier Economics, September 2012

2 Driving Growth – the economic value of outbound tourism, ABTA, May 2012

3 Flying in the face of jobs and growth, British Chamber of Commerce, October 2011

4 CAA Quarterly Report, Quarter 1 2012

5 Source: CAA Annual Noise Exposure Contour reports

Prepared 31st May 2013