UK airports losing out on over 60 new direct routes because of sky-high rates of Air Passenger Duty, report concludes

UK airports could be losing out on over 60 new direct routes – including 15 long-haul connections outside of London – because of current Government policy on Air Passenger Duty (APD) – a new report has found.

A study carried out by Frontier Economics – commissioned by Airlines UK, the industry association that represents 13 UK-registered carriers – looked to identify potential new connections that could receive a viability boost if the tax were abolished. It concluded that 66 new routes could be added by airlines, including:

  • 20 domestic connections
  • 31 short-haul connections (excluding the UK)
  • 15 long-haul connections outside of London

The report also found that of a sample of eight routes dropped by airlines in recent years on the grounds that they were loss making all of them could have been viable if APD had been abolished.

The purpose of the report was to describe how APD – the departure tax paid by all passengers taking off from a UK airport – impacts on airline route economics and capacity decisions. It concludes that by increasing the price of tickets for passengers, the tax dampens demand and impacts negatively on connectivity at UK airports. It highlights that:

  • APD was found to constitute as much as 50% of the price of an off-peak short-haul ticket (from UK to Poland) and 44% the price of an off-peak long-haul ticket (from UK to Israel).
  • By raising around £3.4 billion per year, APD represents around the same cost as the total aeronautical revenue (the money raised through charges paid by airlines) generated by all airports in the UK.
  • Through analysis of 2017 schedules data at the 20 largest airports in the UK, by movements, a total of 66 new direct connections could potentially be viable if APD were abolished, such as:

Domestic connections – examples include Liverpool to Southampton; Bristol to Leeds Bradford; and Edinburgh to Guernsey

Short-haul connections (excluding the UK) – examples include Belfast to Madrid; Southampton to Barcelona; and Aberdeen to Munich

Long-haul connections – examples include Bristol to Dubai; Edinburgh to Delhi; and Birmingham to Tel Aviv

Commenting on the report, Tim Alderslade, Chief Executive of Airlines UK, said:

“As we prepare to leave the European Union we should be doing everything in our power to create the conditions for economic success – and as an island nation it is hard to see how levying the highest rate of tax on air travel in the world is compatible with this goal. Airlines are in the business of responding to demand, and by increasing the price of a ticket by such an extent the Government is directly contributing to fewer connections at UK airports and lower frequency on existing services. The costs of such a counterproductive policy are there for all to see – with dozens of potential services, including long-haul connections outside of London, proving unviable under current conditions, putting a brake on the UK’s economic growth. 

“The message from this report is clear – get rid of this damaging tax once and for all and carriers will be in a position to respond in kind with more routes, greater frequency and better connectivity for the whole of the UK.”     

Johan Lundgren, Chief Executive of EasyJet, said:

“Removing Air Passenger Duty would allow airlines to provide more routes and lower fares for passengers in the UK, offering even more choice and important economic connections. This is a clear opportunity for the Government to help business all across the UK to do more business abroad.”

Craig Kreeger, Chief Executive of Virgin Atlantic, said:

“With Brexit on the horizon the UK should be working harder than ever to demonstrate it is open for business, not levying the highest rate of tax on air travel in the world. We need the Government to send a clear signal that it is serious about helping us to connect to international markets and that it sees our world-class aviation sector as a key component of the nation’s future economic success.”

Priti Patel, Member of Parliament for Witham, said:

“Britain’s high rates of Air Passenger Duty act as a barrier to economic growth and this report shows how this tax is damaging our country. When we are competing in a global market for businesses, investors and tourists to come to Britain this tax on travel puts people off and is stopping business from creating jobs. This tax needs dealing with so we can open up more trade links and travel routes to the rest of the world and attract more businesses and tourists into Britain.”

Jim Shannon, Member of Parliament for Strangford, Northern Ireland, said:

“This is yet more compelling evidence that the current high level of UK APD is damaging the overall UK economy. We’re particularly hard hit in Northern Ireland as we share a land border with a country with no equivalent aviation tax. Every extra route means more quality jobs and increased growth. Northern Ireland needs action on this tax, and so does the rest of the UK; action to boost jobs and trade. My colleagues and I will be pushing hard for this in the upcoming Budget.”  

 

The full report is available here.

UK airlines respond to Civil Aviation Authority poll on consumer satisfaction with air travel

Commenting on the publication of the latest Civil Aviation Authority (CAA) consumer survey into satisfaction with air travel, a spokesperson for Airlines UK said:

“UK airlines work hard to ensure that passengers have an enjoyable travelling experience, and as the latest CAA tracker shows in the vast majority of cases this is already happening. Airlines are committed to consistently improving their offering whilst delivering travel at lower cost, and it should be remembered that fares have come down by an average of 40% over the past couple of decades, with more people choosing to travel by air than ever before.

“Occasionally things do go wrong and that is why airlines provide support to passengers, including complying with all legal requirements on passenger rights and consumer protection – paying compensation when it is due and offering great customer service to their 270 million passengers, in what is a highly competitive industry.

“Many parts of the passenger journey are out of the control of airlines, for example and as cited by the CAA the experience of navigating the immigration hall upon arrival, and we have been vocal that the service provided by Border Force at many airports, in particular Heathrow, over the past few months has been unsatisfactory, with lengthy queues becoming the norm for many travellers. Airspace delays and multiple strikes also play their part – and the quicker Government gets on and delivers airspace modernisation the better. We are committed to working together with Ministers and all parts of the industry to ensure that passenger expectations are met.”

Latest CAA disruptive passenger data shows the need for airside licensing

Commenting on the publication of the latest Civil Aviation Authority (CAA) data on disruptive passengers, which show the CAA has already received more than 200 incident reports about disruptive passengers from UK airlines in 2018, Tim Alderslade, Chief Executive of Airlines UK, said:

“Although incidents of disruptive behaviour are rare, where they do happen the consequences can be serious. As these stats demonstrate, the problem has increased substantially over the past 5 years. We’ve been working closely with Government and the CAA, as well as other industry stakeholders, to tackle this problem, however this worrying trend of increased incidents shows that more can be done.

“As airline data shows around half of cases involve alcohol, airlines believe that the current exemption for airports from the Licensing Act should be removed so whilst passengers can still enjoy a drink to start their holiday, airport outlets would be subject to the same licensing requirements as bars, pubs and other outlets selling alcohol in towns and cities across the country, as well as landside at airports.”

UK airlines comment on Heathrow expansion vote – “a welcome shot in the arm for UK plc, but concerns about cost and early morning operations remain”

Commenting on parliamentary support being given to expansion at Heathrow Airport, Tim Alderslade, Chief Executive of Airlines UK, the industry association that represents UK carriers, said:

“This is a welcome shot in the arm for UK plc, and a sign that there is clear political consensus within the House of Commons for taking this project to the next stage. Airlines stand ready to respond to the unlocking of new capacity by creating new routes and helping to connect the UK to new markets and destinations. The economic boost this will provide to all regions of the UK will be transformational.   

“We’ve always said that we have concerns about some elements of the scheme – notably on future charges, as well as the impact of restrictions on early morning operations on UK connectivity for cargo and passengers – and we will continue to work constructively with the CAA on designing a regulatory regime that will ruthlessly protect passengers from increased costs. We fully expect the Secretary of State to enforce his stated aim of keeping passenger charges at today’s levels but until we receive complete clarity on this our support for the new runway will remain conditional for now.”

“It is now or never for Heathrow expansion – there can be no turning back if the vote is lost” – UK airlines back third runway

Ahead of the parliamentary vote taking today on Heathrow expansion tomorrow, Tim Alderslade, Chief Executive of Airlines UK, the industry association that represents UK carriers, said:

“It is now or never for Heathrow expansion and the prospect of a bigger and better hub airport – there can be no turning back if the vote is lost – and we hope MPs will recognise this and provide the all-important political support that is needed to take the scheme to the next stage. Airlines are clear that they will respond to the unlocking of capacity by creating new routes and providing consumers with more choice and frequency – including to regional airports within the UK. The country desperately needs a new runway if it is to cater for future demand from passengers and cargo customers and enable us to do business in new markets and destinations overseas – this will be all important as we prepare to leave the EU. The benefits are there for all to see – £74 billion to passengers and the wider economy, tens of thousands of new jobs and a huge expansion in capacity for goods – and we cannot afford to let these slip away.

“Carriers have been vocal in expressing concerns about some elements of the project, in particular its cost and affordability, however this debate will now be able to play out during the planning process and we will be working closely with the Government and Civil Aviation Authority to ensure that they protect customers from increased costs and inefficiencies, and the Secretary of State must enforce his stated aim of keeping passenger charges at today’s levels. What is clear, however, is that if MPs vote against expansion in the House we will never reach this stage and the benefits of a new runway – to consumers, businesses and UK plc more generally – will be lost for ever.” 

UK and international airlines respond to Heathrow National Policy Statement publication

Responding to the publication of the Government’s National Policy Statement, the UK and global airline community has published a joint statement expressing support for expansion at Heathrow Airport. Tim Alderslade, Chief Executive of Airlines UK; Dale Keller, Chief Executive of the Board of Airline Representatives in the UK; and Rafael Schvartzman, Regional Vice President Europe, IATA, representing a large majority of UK and international airlines operating in the UK, said:

“Heathrow expansion is a once in a generation opportunity to transform our domestic and international connectivity, which is why the airline community has been consistent in its support for a new runway. We hope that decades of delay and procrastination will soon come to an end and we can secure cross-party support in the House of Commons. It is time for politics to be taken out of this debate and a decision taken in the national interest. 

“UK and international airlines will continue to hold Heathrow Airport Ltd to account over the details of the scheme, in particular its cost and affordability. It is passengers, airport users, and UK competitiveness who must stand to gain – not just Heathrow shareholders – and we’re pleased that the Transport Secretary has made the ambition of expanding the airport whilst keeping passenger charges at today’s levels his number one priority. The CAA must enforce this rigorously to protect customers. Airlines are committed to working constructively with Heathrow and the CAA and we will continue to push for more clarity from Government as to how it will use the planning process to provide more clarity on cost.

“The time is now for the UK to invest in the necessary infrastructure that will enable the global airline community to deliver upon the national economic objectives and aspirations.”

Aviation Ministerial Roundtable

The Transport Secretary, Chris Grayling and Steve Baker, Minister for Exiting the European Union, met with representatives from the aviation industry to discuss how the sector can continue to flourish after the UK leaves the EU.

The meeting with senior representatives from the UK aviation industry follows the Prime Minister’s tour of the UK to mark one year until Brexit.

And it also follows agreement in March between the UK and the EU to the terms of the Implementation Period, ensuring the aviation industry can continue to benefit from the existing liberal market access until the end of 2020. This paves the way for the UK to continue to participate in the European Aviation Safety Agency during this period.

The Transport Secretary spoke of the importance of the liberal aviation access agreements and harmonised safety standards, underlining the benefits they bring to both the UK and the EU.

Both representatives from industry and Government Ministers agreed it is in the interests of both the UK and the EU to secure a good deal for aviation as soon as practical in the future negotiations, ensuring businesses and citizens can continue to enjoy a high level of connectivity, choice and value for money.

Transport Secretary Chris Grayling said:

“Aviation connectivity is crucial for businesses and citizens alike and it is vital that market access continues uninterrupted.”

“It has been invaluable to discuss with industry leaders their priorities for a future deep and special partnership with the EU on aviation. We are confident that the UK will get a good deal which allows our aviation industry to continue to flourish.”

DExEU Minister Steve Baker said:

“Britain’s aviation industry is one of the biggest in Europe, and we are pleased the EU has recognised its importance to people and businesses right across the continent as we move onto discussing our future partnership.

“We are focused on reaching an agreement with the EU which secures the right arrangements for this vital industry so it continues to go from strength to strength.”

Tim Alderslade, Chief Executive of Airlines UK, said:

“UK airlines support the implementation period and the reassurance that market access to, from and within the EU – as well as to third countries such as the United States – will be protected. We are pleased that the Prime Minister accepts that continued participation in the European Aviation Safety Agency (EASA) is both desirable and in the interests of all sides.”

“We welcome that aviation is a priority in the negotiations and look forward to discussions on future market access beginning as soon as possible. We are confident there will be a deal that secures open and liberal aviation arrangements beyond 2020, for the benefit of all European consumers.”

Chief Executive of the AOA Karen Dee said:

“With nearly three-quarters of visitors to the UK and 40% of the UK’s trade by value travelling by air, aviation provides the necessary international connectivity for a truly global Britain. UK airports stand ready to facilitate the connectivity of the future.

“We look forward to a continued dialogue as the UK Government and the EU begin negotiations on the future relationship to ensure that it allows the passenger to continue to benefit from excellent air connectivity, whether they live and work in the EU, UK or beyond.”

The UK Government and the aviation industry have agreed to continue their collaborative and positive engagement throughout the Brexit negotiations.

Airlines UK response to Aviation Strategy next steps document

Responding to the publication of the Government’s Aviation Strategy next steps document, Tim Alderslade, Chief Executive of Airlines UK, the industry association that represents UK-registered carriers, said:      

“The strategy is an opportunity to recognise the value and importance of aviation to the UK – in particular in a post-Brexit world – and identify how Government and industry can work together to meet rising passenger and freight demand, whilst continuing to deliver for the consumer.

“We’re looking for a Strategy that will seek to address some of the key challenges facing our sector – including putting in place a well-funded and effective border operation that can meet future growth, modernising an outdated system of airspace management, and dealing with an ever-increasing rate of aviation tax that does so much to damage our connectivity. We look forward to working with Ministers on these issues, and in the meantime airlines will continue doing what they’ve always done – putting on new routes and increasing the range of services to passengers, bringing down the cost of travel while improving accessibility, and reducing our environmental impact.”

Consumers – not Heathrow shareholders – must stand to gain from expansion at the airport and passenger charges should remain at least at current levels.

Responding to the publication of the Transport Select Committee report on the Airports National Policy Statement, Tim Alderslade, Chief Executive of Airlines UK, the industry association that represents UK-registered carriers, said:

“Airlines are pleased that the Committee has signalled its support for additional capacity at Heathrow. This is a once in a generation opportunity to transform the UK’s domestic and international connectivity, which will be more important than ever as we prepare to leave the EU.

“That said, the Committee has called for a number of changes to strengthen the National Policy Statement to ensure Heathrow expansion can be delivered, whilst keeping costs down and passenger charges at current levels. The Transport Secretary has said previously that consumers – not Heathrow shareholders – must stand to gain from expansion and that charges should remain at least at current levels – a position the Committee has endorsed.

“The Government should now follow through on its advice and bulk up the wholly inadequate section on cost in the NPS – and set out how it will use the DCO planning process to assess – independently – the scheme’s affordability. It will be at this stage that airlines – together with the CAA – can judge for themselves the likelihood of Heathrow being able to deliver on its promises to keep charges down, and until then they will reserve the right to withdraw support if this is not achievable.” 

Airlines UK response to Brexit transitional agreement announcement

Responding to the announcement that political agreement on a transitional agreement between the UK and EU has been reached, Tim Alderslade, Chief Executive of Airlines UK, the industry association that represents UK-registered carriers, said:

“UK airlines have long called for a transitional arrangement that will give much needed clarity to the industry and ensure that market access to, from and within the EU – as well as to third countries such as the United States – is protected. We welcome the political agreement that has been reached by both sides – which is a substantial achievement compared to where we were a year ago – and look forward to legal clarity being provided as soon as possible and further details made available as to exactly how our relationship with and participation within the European Aviation Safety Agency (EASA) will play out.

“Subsequently, we would urge both sides to begin work as soon as possible on securing a comprehensive UK-EU aviation agreement that ensures the continuation of services beyond December 2020 and – like other air services agreements – can be split off and negotiated separately from the main trade deal, and agreed well in advance of the end of the transitional period.”