Chairman’s speech at Airlines UK Annual Dinner

January 25th, 2017

My Lords, Secretaries of State, ladies and gentleman welcome to the 2017 Airlines UK Annual Dinner.

I would like to thank Venari Partners for generously supporting our event this year. I would like to extend my sincere thanks to the Secretary of State for Transport for joining us this evening and continuing the tradition of your predecessor, Sir Patrick who attended this event on several occasions

Before we hear from the Secretary of State, I would like to make a few remarks on our industry and our future prospects as we look ahead to the rest of 2017. In particular, I would like to reflect on the role our sector has to play in the post-Brexit Britain as outlined by the Prime Minister in her speech last week.

Listening to the Lancaster House speech it was the language on the United Kingdom’s new global approach that stood out. Terms such as, “more outward-looking” and ‘a truly Global Britain’ were used frequently. What struck me was how airlines are an embodiment of these characteristics, and therefore are an absolute vital component for any country looking for a more global future.

As a feature of everyday life, the sheer value, and for me the wonder of air travel is often lost. The fact that you can fly across the world in a day or to Europe for less than the cost of a short rail journey, raises few eyebrows these days. It’s therefore useful to remember the role airlines play as a key enabler of GDP, connecting all regions of the UK to countries across the world, including many of the important economies that, post-Brexit, the UK will be seeking closer ties with.

Thousands of British businesses rely on airlines to trade. Each year goods worth more than a £116 billion are flown by air from the UK to non-EU countries. This is a massive 35% of the value of all UK trade outside the EU. It is the connectivity provided by airlines that allows foreign business travellers to reach destinations across the UK, bringing vital foreign investment.

As an industry we are therefore uniquely placed to deliver the vision of a more outward-looking, global Britain.

However, there are obstacles to maximising this post Brexit opportunity so its in these areas we ask Government to work with us in creating the best environment for aviation growth in the UK.

As we all know Brexit itself has important consequences for the future of aviation. Leaving the EU will affect rights to travel not only between the UK and Europe, but also with other destinations, including the United States. Uniquely, aviation has an existing framework of agreements outside of the World Trade Organisation, that the EU and UK are both used to applying, allowing us to enter into liberal agreements with many non-EU states.  The UK and the EU have been leaders in opening up the air transport market, so we are looking to Government and its European counterparts to secure a deal safeguarding international market access for both sides. So far we have been encouraged by the dialogue and engagement we have had with Government since the vote in June.

Brexit apart, there is much to be done to ensure our aviation growth continues to the advantage of the wider UK economy. Even if everything goes smoothly, it will be many years before a new runway at Heathrow is operational and so the Government needs to take steps in encouraging airlines to develop new routes from other airports. Improving surface access to other airports around the country will enable catchment areas to be widened and make more UK routes competitive.

Air Passenger Duty remains a damaging tax on trade, tourism and investment. At a time when we are looking to strike deals and open up the UK to new markets and opportunities it is increasingly untenable to continue levying excessively high levels of taxation on air travel. The Scottish Government has acknowledged this and is reducing the tax by 50% from April next year. In order to eliminate concerns of the competitive distortion the Scottish reduction will create, the UK Government needs to reduce APD rates by at least an equivalent amount right across the UK.

We are looking forward to the imminent publication of the long-awaited consultation on airspace modernisation in the coming weeks, which we hope will demonstrate a much-needed recognition that capacity constraints in the sky can be just as damaging as those on the ground. We believe the time has come for the Government to join the sector in arguing the case for airspace modernisation so we can take advantage of the expected increases in passenger demand whilst reducing delays and delivering substantial improvements to the environment.

On the issue of sustainability, just last week Airlines UK produced a new report demonstrating the huge strides UK carriers have taken in reducing their impact on the environment. The results are truly impressive. Airlines have invested in more than 470 new aircraft since 2005, at a cost of over £37 billion, helping the industry to reduce its carbon emissions by 20 million tonnes and a further 400 aircraft are on order. Overall we are exceeding the industry target for improving our performance on carbon reduction, with an increase in fuel efficiency of 12% over the past decade. In short for the first time growth in UK aviation has been delivered without any increase in CO2 emissions.

Before I conclude I would just like to say a few words on the value of aviation beyond its vital economic contribution.

Tonight we should celebrate the size and success of our industry that punches well above its weight internationally. We have the third largest aviation market in the world and our airlines and airports are pioneers in their field, delivering unbeatable service and value to customers.

And lastly, something I think is frequently overlooked – we should celebrate aviation’s role as an enormously positive social and cultural enabler. For many hardworking families, our members make well deserved holidays possible. They allow distant friends to be reconnected, and reunites families otherwise separated by thousands of miles. Airlines enable people to broaden their horizons and enrich their lives.