Emergency Air Passenger Duty waiver would save 45% of lost air routes and save 8,000 jobs, study concludes

July 20th, 2020

An emergency 12-month Air Passenger Duty (APD) waiver would save 45% of the air routes out of the UK that would otherwise be lost due to the impacts of the Covid-19 pandemic, a new report has found. In addition, the support could potentially save 8,000 jobs and contribute an additional £7 billion in GVA.

The study carried out by York Aviation and commissioned by Airlines UK, the industry association for UK-registered airlines, shows:

Without intervention by the Government UK airports will lose around 600 routes initially, with the situation improving as the market recovers to being about 130 routes down by July 2021;
In 12 months’ time, around 80% of the lost routes will be in the UK regions;
With an emergency 12-month Air Passenger Duty waiver in place, the situation improves with the number of routes that would immediately return at around 35. This grows steadily as the market recovers, with an APD waiver supporting an additional 56 routes by July next year. In other words, by July 2021 it would have saved around 45% of routes that would otherwise be lost;
The APD waiver would boost passenger demand by around 12% over the next 12 months. This equates to around 21 million passengers over the 12 months against a baseline of 170 million passengers.
An APD waiver could potentially save 8,000 jobs over the next 12 months and enable the sector to support an additional £7 billion in GVA. This GVA saving is around 3.3 times greater than the expected revenue from APD over the next 12 months.

UK airlines are now asking for an emergency 12-month APD waiver to be announced no later than the autumn Budget to boost demand and enable the UK aviation industry to recover from the worst crisis in its history.

Tim Alderslade, CEO of Airlines UK, said: “UK airports are in danger of losing many valuable routes over the coming months unless the Government steps in with a support package for our sector – starting with an emergency APD waiver to get us through the winter and into the recovery. Some of these routes may never come back but APD relief will – by next July – save almost half that would otherwise be lost. The UK came into this crisis as the third best connected country in the world – it would be a tragedy if through Government inaction and neglect we needlessly forfeited this position to our closest rivals.”

Andrew Griffith, MP for Arundel and South Downs and former No 10 Business Adviser to the Prime Minister, said: “It’s never been more vital that Britain remains open for business. It would be disastrous for our regional and international airports to lose hundreds of routes to important global trading and tourism destinations. Whilst not the whole answer, if suspending the headwind of Air Passenger Tax can help get UK aviation – one of the jewels in our industrial crown – back on its feet sooner we would be remiss not to seriously consider it.”

Graham Brady, MP for Altrincham and Sale West and Chairman of the 1922 Committee, said: “We are in grave danger of causing real and lasting damage to UK aviation if measures are not taken to protect routes out of our airports and support the sector through what we know will be an extremely challenging winter. Almost alone within Europe we have been slow to appreciate the importance of aviation – not only as an industry that supports a million jobs – but as an enabler of the outward facing trading nation we wish to be.”

Notes:

The situation facing UK aviation remains highly precarious. Passenger demand is around 70% down in August 2020 compared to August 2019.
Over thirty thousand jobs have either been lost, are at risk or subject to consultation amongst UK airlines.
Airports, aerospace and ground handling businesses have also announced thousands of job cuts.
A report by the New Economic Foundation suggests that without additional government intervention the aviation industry and its supply chains could ultimately lose up to 124,000 jobs.
In 2021 global passenger demand is expected to be 32% lower than IATA’s October 2019 Air Passenger forecast for 2021.
Bookings for intra-EU routes are slowly increasing but are a long way from pre-crisis levels. Recovery is not yet in sight on extra-EU routes.
Data shows that the intra-EU market is slowly picking up following opening of borders on the 15 June, but as of 1 July remained 72% lower year on year compared to 2019.

Download the full report here:

Report on the Demand and Connectivity Impact of a 12 Month Air Passenger Duty Waiver