Transport CommitteeWritten evidence from the Greater Manchester Chamber of Commerce (AS 25)

Introduction

We are the UK’s largest Chamber of Commerce representing almost 5000 businesses, employing over 300,000 employees, a third of the total workforce in Greater Manchester. Our purpose is to articulate the views and needs of our members whatever their size, sector or location. We welcome the opportunity to provide evidence to this enquiry, constituting views from discussions at our Transport & Infrastructure Committee, Regional Chambers Transport Group meetings and various meetings with our members.

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

(a.) How important is international aviation connectivity to the UK aviation industry?
(b.) What are the benefits of aviation to the UK economy?
(c.) What is the impact of Air Passenger Duty on the aviation industry?
(d.) How should improving the passenger experience be reflected in the Government’s aviation strategy?
(e.) Where does aviation fit in the overall transport strategy?

1. In the first instance, the Government needs to understand the role of aviation in supporting UK PLC going forward, and develop policy that allows for developments within agreed guidelines. Aviation policy should be developed that is looking clearly at the medium to long term but allowing for short term manoeuvre to manage the blips relating to external factors such as recession, security fears and natural phenomena like volcanic ash. There needs to be cross-party political consensus on the long term role of aviation in the UK.

2. Without international aviation connectivity, the UK aviation industry is irrelevant. Without aviation connectivity, the UK economy will fail. The Chamber’s quarterly economic surveys have consistently shown that businesses that export are doing better that those that don’t export. The Government has clearly articulated that exporting is a fundamental element to recovery from recession—to do this there needs to be direct aviation access to the growing markets, not just the BRIC countries (Brazil, Russia, India, China) but also the emerging markets of Cambodia, Indonesia, Vietnam, Egypt, Thailand, South Africa (CIVETS).

3. There is not a clear picture of the impact of Air Passenger Duty on the aviation industry—all the studies so far have not been done from an independent perspective which is why we have joined the “Fair Tax on Flying” campaign to urge the Government to invest in an impartial study. Anecdotally, we know that airlines have been deterred from flying to Manchester Airport, citing APD as a contributory factor. It is also clear that the Government does understand the potential barrier that APD causes by their agreement to devolve the setting of it to the Northern Ireland Assembly in order to protect the transatlantic flight from Belfast that helps to support their financial services industry. There are a number of options available on APD, including variations on geographic location, variations based on the emissions of the aircraft, or perhaps a waiver for business travellers.

4. Aviation is a fully commercial, competitive industry that relies heavily on passenger experience to gain repeat business. It is fair to say that passenger expectations are higher than in the past, regardless of the perception of lower quality from the low cost airlines. Whilst the passenger experience is largely the responsibility of the airports and airlines, there are elements that the Government needs to be mindful of, particularly security issues and the investment into surface access to the airports. Public transport access to airports is improving but often does not support airline timetables—the busiest times at most airports is the morning peak and check-in for a 6am flight is 4am when most public transport is not running.

5. The Government needs to develop a comprehensive national transport strategy that incorporates aviation and focuses on integration of all modes to allow transport to truly be an enabler of economic activity.

Q. How should we make 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?
(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?
(c.) How can surface access to airports be improved?

6. There is considerable aviation capacity in the UK however the airports serving the higher growth economic regions in London and the South East, particularly Heathrow and Gatwick, are experiencing capacity problems. The proposal to conduct a study that does not report until 2015 is a disappointing delay to any effective action being taken in the short time.

7. There are only a small number of levers that the Government can use to encourage best use of airport capacity outside the South East because of the commercial nature of the aviation industry. We believe that applying a variation to Air Passenger Duty is the best way to try to influence the airlines choices in the shorter term. Clearly any commitment to building greater capacity in the South East airports will impact on usage of regional airports.

8. There is the need to improve the accessibility to airports, particularly for business travellers who tend to be higher value passengers. A commitment to building the High Speed Rail network that connects Heathrow and Manchester airports offers some different options for travellers in terms of accessing direct flights however, given that the two airports are in competition, this does not necessarily mean a complementary rage of destinations for the UK traveller or overseas visitor.

9. For the regions, there is still a great deal of concern that there is no single body looking at the strategic role of airports and the required surface access infrastructure. For Manchester Airport the main surface access issue is the capacity of the M56 motorway, that has a direct spur, but other airports are not so fortunate to have rail, light rail and motorway access that support the accessibility of staff, passengers and freight.

Q. 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?
(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?

10. From a general business perspective we support the initiatives to reduce the impact of aviation on the environment in terms of noise and carbon emissions. We have a considerable number of businesses within the environment sector and measures to make aviation more sustainable could help to support that sector.

11. However, looking at the track record of APD which was introduced as an environmental tax, which is now just a tax on flying regardless of how “clean” the aeroplane may be and is probably damaging the UK’s aviation industry, we would be reluctant to see very many more measures introduced unless they had been worked on in collaboration with the aviation industry internationally.

Q. 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?

12. We believe that there is currently sufficient aviation capacity in the UK however is it not necessarily in the right place for current demand and is unlikely to be suitable for the future. Whether it is easier to build a new hub airport rather than further develop Heathrow as the recognised hub for the UK is not for us to decide. There are many factors to consider, not least that it is politically highly contentious. The impact of building a new hub airport needs to be considered from economic, environment and social perspectives, not least what would happen to Heathrow and west London if a new hub airport were built.

13. In conclusion we would like to see:

an independent review of the impact of APD, perhaps leading to a full aviation taxation review, but a short term measure of varying regional APD; and

the outcomes of the aviation review developed with cross party support so that action is taken on aviation capacity sooner, for the medium to long term.

17 October 2012