Category Archives: Regulation

At last they admit it – flight taxes pay for bank bailouts

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At long last, Chancellor Alistair Darling has said what we’ve known all along – that flight taxes (Air Passenger Duty) are used to sort out the dodgy banks, and nothing to do with the environment. Speaking to Northeast website The Journal last week, Darlin said:

I am quite blunt about it, we need to raise money to pay for some of the things we have done. If unemployment goes up there is a cost obviously to the family, there is cost in increased benefits, Northern Rock has cost a lot of money.

Now to be honest, no-one is going to step forward and offer their sympathy for the bankers, but many would still say that the bailouts had to be made in order to save the financial services industry. So, should airlines be made to suffer so another sector can survive?

Well, Darling seems to think so:

But if you think about it, what we are doing is putting a pound on to your average ticket, which about three quarters of people travel on. And you consider the cost of an air ticket, I don’t think a pound is that unreasonable.

The problem of course is that it isn’t “just a pound” on the average flight ticket. Last year, air passenger duty was doubled overnight in a move which saw one of the few taxes to have been reduced under the Labour government get re-stealthed. To make matters worse and add insult to injury, taxes had to be collected on flights which were already paid for – as if the chancellor (and former transport minister) was more interested in act of vengeance than a fair tax. Of course, Mr Darling, as MP for Edinburgh Central, is a fully paid-up member of the “you shouldn’t fly but I will” brigade, and that’s long before we bring up the issue of MP’s expenses.

Unlike some airlines and passengers, I don’t have a problem with air passengers paying their way through a ‘reasonable’ level of taxation – and I fully accept that the aviation industry must pay for its environmental costs. But let’s not forget that whereas motoring taxes are supposed to pay for the upkeep of the roads, usage of airports is already covered by separate airport handling fees levied by the (predominantly) private companies who run Britain’s airports.

Environmental costs should be covered by a global carbon trading agreement, due to be discussed in Copenhagen next month. Of course there’s loads of other arguments about the benefits of switching passengers from short hop flights to high speed rail, but that’s for another time. Or maybe, if that’s where APD funds were being directed, the travelling public wouldn’t mind so much. Mr Darling, if you are reading this, that isn’t an excuse to double APD again on you’re next whim!

 

 

 

 

Airlines put Heathrow’s Third Runway in the Dragon’s Den

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And so to the final ‘dragon’ in my review of the arguments for and against Heathrow’s Third runway.

If we just looked at the airlines serving Heathrow, then support for a third runway would be overwhelmingly positive. But no frills airlines such as Easyjet and Ryanair, who are being asked to pay increased landing charges at Gatwick and Stansted in order to help fund Heathrow’s infrastructure improvements, are less keen. As I haven’t yet mentioned the alternative High Speed Rail, perhaps this is the place to consider what ‘rail based airlines’ might think.

Heathrow’s existing Tennants

British Airways are unsurprisingly the most vocal in favour of a third runway at Heathrow, as they already benefit from having a massive hub operation in Terminal 5, which they want to expand by having extra runway capacity. In terms of the environmental damage caused by airlines, BA boss Willie Walsh was in New York recently, arguing that airlines across the world could achieve a 50% reduction in CO2 emmissions by 2050 – but many environmentalists are cynical about the industry’s ability to meet such targets, and even those that believe they are achievable do not consider that a 50% reduction is enough. So how does this relate to Heathrow, which is after all, just one airport out of several thousands worldwide which operate passenger flights, albeit the busiest one in terms of international passengers? The current government have made reductions in CO2 emmissions part of the conditions which would have to be met in order for Heathrow to gain approval. Obviously, this is all immaterial if the Conservatives stick with their policy to block an additional runway at Heathrow, but as Willie Walsh argued on Questiontime back in January, politicians in opposition can always play a completely different role once the enter government. At last week’s CIMTIG meeting, BAA’s director for Runway 3 said that “Conservative policy is about going after easy votes. As a transport policy, it is indefensible.”

Virgin meanwhile are pinning their environmental credentials on a massive investment of ‘all Virgin profits for the next 10 years’ in alternative fuels. Clearly both of these airlines believe that the aviation industry can still grow and cut emmissions at the same time. BMI also support a third runway, although speculation is that they will have been snapped up by one of their larger rivals by the time it gets built!

Non Heathrow based airlines

Ryanair in particular have launched legal challenges against BAA over the fees they are charged at Stansted, and have repeatedly refused to pay passenger handling bills, as they claim they are being forced to payin advance for infrastructure which they will never actually use.

High Speed Rail as an Alternative

The Conservatives have said that they will spend £20 billion on a high speed rail line between London and Manchester, and that they will encourage more people to travel to Continental Europe by train, in order to reduce the demand for a third runway at Heathrow. However, as BAA management have pointed out, offering easier rail access to Heathrow will only end up making it far more attractive for customers from the North of England. Meanwhile, Eurostar already have a 75% market share for point to point travel between London and Paris and Brussels, so there is little that government policy could do to switch more people onto the trains, apart from ban these flights entirely – a move which would be very un-Conservative! Although there is potential to see Eurostar services extended to cities such as Cologne and Amsterdam, this is a commercial matter for Eurostar to decide, and there is very little that a UK government could do to influence this, when the track and station access needed to make this happen is in other EU countries.

Verdict: Just as it goes without saying that most of Heathrow’s neighbours will be against further expansion, it can also be taken for granted that the main airlines using Heathrow would want to see it expand. But this misses out on the wider picture, especially as it is the no-frills airlines who are investing most heavily in new aircraft and new routes. It is therefore not a foregone conclusion to assume that the airline industry as a whole would say ‘we’re in’.

Final score – some of the referee’s decisions may be controversial, but my verdict is 2-3 against.

Economic Arguments for Heathrow’s Third Runway in Dragon’s Den

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Continued from – Heathrow in Dragon’s Den | Neighbours | Passengers

According to the Institute of Directors (IOD), delaying further investment in Heathrow is costing UK PLC £1 billion each year in lost opportunity and congestion.  Heathrow employs 72,000 people, making it the largest single-site source of employment inthe UK. Yet a third runway is projected to cost a massive £8 billion. How will this investment be recouped? Clearly, BAA believe that they will get their investment back, and the IOD figure would suggest that UK PLC would see a return in just 8 years – not bad for such a huge piece of infrastructure. But what if the airline industry continues to see weak demand?

Heathrow’s attraction

In the current downturn, Heathrow has stayed steady whilst other UK airports have seen demand fall. Heathrow operates at 99% capacity, whereas its main three European rivals (Frankfurt, Amsterdam and Paris Charles De Gaulle) all operate at around 75% capacity. Neither Amsterdam nor Frankfurt has the population to support airports of such size in their own right – these two airports only thrive because of the huge volumes of transfer passengers they attract. Only London and Paris can claim to be true hub cities, where there is substantial latent demand together with the demand for inter-connecting flights, which makes more routes viable.

But does UK PLC really want all these transfer flights?

There is a legitimate argument to say that transfer flights are the most wasteful form of air travel, and that it would be better to encourage people to make such connections at airports like Paris, where there is a lower noise footprint. This is, of course, a blatant ‘not in my back yard’ argument, but in terms of economics, is it really worth building an extra runway just to encourage more transfer passengers? The argument behind such transfers is that they enable huge numbers of routes to be profitable, when they would not otherwise be viable. Typically, 25-40% of passengers on long haul flights to and from Heathrow are making transfers – without these passengers, there would be much fewer routes.

Of course, point to point flying is the most efficient way of getting from A to B, but there are always going to be journeys where the hub and spoke system will be needed – for example from Edinburgh to Entebbe or Oslo to Osaka. Is it really right that these passengers should be forced to be funnelled through Paris, Dubai or Amsterdam, just because Heathrow doesn’t have the capacity?

Verdict: UK PLC clearly sees the advantages of Heathrow’s third runway and says ‘I’m in’. Score so far: 2-1 in favour.

Continue to: Environment | Airlines

Heathrow’s third runway in the Dragon’s Den

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Last week, I attended a discussion organised by CIMTIG regarding the future of Heathrow Airport, and the aviation industry in general. Sadly, because of limited time, and the attempt to discuss the whole industry, rather than just Heathrow’s third runway, they didn’t explore as many of the issues as I would like them to have done – but it was still a very informative evening.

This week is the Conservative party conference, and we expect some further discussion from the government-in-waiting about why they believe there are better ways of handling demand than building another runway.

I’d like to put Heathrow’s third runway into a ‘virtual Dragon’s Den’ and see how it gets along. Prior to last week, I’d say I was probably against the plans, but the presentation from the BAA director responsible for the third runway gave a very strong case, so I’m firmily back on the fence. Let’s see if the proposal can survive in the den. So here we have it – billions sitting on the table, rather than the usual £250,000, and I think we need a majority of the ‘Dragons’ to ‘invest’, rather than just the usual one or two.

Introducing the dragons.

In other parlance, they might be known as ‘stakeholders’ or ‘investment solutions partners’, but as I hate both of those terms, I’ll definetely stick with Dragons!

  1. Airport neighbours
  2. Passengers
  3. The Economy
  4. The Environment
  5. Airlines

The article will follow later in the week. What do you think? Would you ‘invest’?

Want to expand an airport? Think about mitigation, mitigation, mitigation.

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Whatever has gone wrong with Coventry Airport’s attempts to open up a new terminal, and offer flights for upto 2 million passengers each year, there is no point in trying to find a scapegoat. Considering that the airport’s current owners took over the lease from TUI on the apparent understanding that the second public inquiry would be a formality, this ruling must come as a tremendous blow to them.

Infact, Coventry Airport’s managing director, Chris Orphanou, has not exactly minced his words when commenting on the decision to the Coventry Evening Telegraph:

“I’m not from Coventry, but had I been from Coventry, I would probably have been creating World War Three today”

Well, I’m not sure if I’d say I’m from Coventry either – I happen to live here, but I’d consider myself to be “from” that other town just up the road – Leamington Spa, or Royal Leamington Spa to the snobs out there. So having seen this argument from both sides of the fence, I think that this is the crux of the problem.

Poor Coventry is surrounded by affluent Warwickshire, which will only deal on its own terms – just look at the history of Warwick University, for more details on this. Meanwhile, just up the road is Birmingham, which is still trying to cling to its claim of being Britain’s second city. Sorry Brum, but in terms of culture, sport, and of course transport, you lost that one to Manchester many moons ago. So time for a quote from my favourite band, with whom I share my name, and who also happen to eminate from Britain’s real second city:

“Stop stop talking about who’s to blame, when all that counts is how to change.” – James, Born of Frustration.

The decision has been made, and we have to live with it. For anyone directly employed at the airport, or who’s business depends on the airport, this is a hard blow to take, especially as we approach what should be a busy summer, not to mention the excitement of the new flights to Poland.

I have lived in this area for 29 of the 31 years I have spent on this planet. Prior to moving to Coventry, I lived in north Leamington. I also took a substantial interest in green issues when at university, so I think I can see this debate from most angles. 

I have repeatedly pointed out that Coventry Airport needs an intelligent surface access (ie ground transport) strategy. They need to innovate, and to turn this obvious weakness into a strength – just laying on a couple of buses doesn’t do this. They need to look at the shared taxi system used by Chiltern Trains at Bicester North (where parking constraints are a real problem), or they need to investigate whether or not Thomsonfly’s customer database can be used to offer this service as an add-on (hey, potential revenue earner here too).

I don’t buy the argument that mitigation wasn’t sufficient. If this was the case, surely the inspectorate could have imposed greater restrictions on the airport. This is to be expected anyway, as environmental concerns continue to grab more headlines. Let’s not forget that 1 million departures each year would have sent £10m to the treasury, yet nimbys tend to go strangely silent when asked if some of that income should go towards mitigation schemes.

Noise and air pollution will be a problem at any airport, but it doesn’t take a genius to glance at a map, and see that the residential areas around Birmingham Airport are a great deal more dense than those around Coventry.

I still believe that this difference in noise footprint more than equates for any alleged lack of public transport at Coventry Airport - especially as most of Coventry’s passengers are on leisure trips anyway. Let us not forget that, for all Birmingham’s talk about having a station on site, 4 out of 5 people using it still arrive there by private transport or taxi. As with many other UK airport’s, Birmingham’s proximity to the main London to Birmingham railway line can be put down to an accident of geography, rather than any deliberate foresight. However much I would like to see more people getting to and from airports by public transport, this should never be a reason for an airport to be refused the opportunity to expand.

So I think that the environmental reasons for the refusal of planning permission can and should be challenged, however much of a whipping stick the media like to beat the aviation industry with. Once those are given a fair weighting, I think that the case for moderate, controlled and mitigated expansion at Coventry – which is all anyone has ever asked for – is entirely reasonable, and consistent with the needs of the Midlands as a whole.

Coventry Airport flights expansion refused – what went wrong?

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A couple of years back, I devoted a huge amount of time to defending Coventry Airport’s plans to launch more flights, and to cater for upto 2 million passengers per year.

Despite attempts by some of the anti-airport campaigners to suggest that I was doing this because I had commercial interests to protect, my reasons for getting involved boiled down to a simple belief that the airport’s plans were reasonable and moderate, and that they should be given full support.

It just happens to be that Flightmapping.com is based in Coventry, and that much of the opposition to the airport’s expansion plans was eminating from within the chattering classes of Warwick District, within which I had lived for many years. I have to give it to Warwick District Council, they are a tough bunch – much as though I completely disagree with the stance they have taken, their viewpoint has been vindicated – at least for now.

How different it might have been if the airport was in the boundaries of Coventry? I also can’t help wondering if the decision would have been the same, had TUI still maintained ownershop of the lease on the Coventry Airport site.

At some stage in the not to distant future, I will need to thoroughly digest the report, but I am still sensing that the grounds for refusal ultimately boil down to the presence of Birmingham Airport, rather than the inherent strength of local opposition. I expect that this is a combination of the pre-existence of Birmingham (for mainstream passenger purposes), the public transport provision that Birmingham offers, and its inherent political clout, rather than any individual reason – or grand conspiracy, as some commentators might suggest. I’ll leave the conspiracy theories to the government’s White Paper proposals to build a new airport near Rugby – an obvious political hoax if ever there was one!

Despite the obvious blow that the airport operators have just been dealt, this is far from over – there are appeals, and possible alternative submissions to think about. Meanwhile, the current terminal continues to operate, and to do so with planning permission.

I hope that the key political voices in Coventry will make their opinions known in the right places – shame on Jim Cunningham for caving in to the nimby arguments.

If a local shop of 70 years’ standing was refused planning permission to open a second checkout desk, on the grounds that there was a large supermarket with 12 desks, and plans to expand to 36 desks, just 120 yards away, there would be total outrage, and cries of bullying on the part of said supermarket. Yet shops also cause disturbances, albeit on a different scale. And don’t get me started on the nuisance going on outside a certain local pub last night!

I hope that people will sense a similar outrage over what has happened here, and that they will see through the political points scoring which is so easy to do these days in the name of the environment, when it is perfectly clear that there are other, far greater, vested interests at play.

Aviation v. Environmentalists – has the PR battle been lost?

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The debate over aviation’s contribution to climate change and other environmental problems was well under way when I started Flightmapping.com almost 5 years ago. I’ve never been one to pretend that this isn’t a serious issue, but it does appear that most industry bigwigs are finally waking up to this.

Earlier this month, Leo Van Wijk, who is vice-chairman of Air France-KLM, the world’s biggest airline by turnover, lashed out at the annual IATA conference, claiming that the industry was doing too little, too late.

I have always felt that the cost of flights should cover the so-called “externalities” of pollution, and that this can still be done whilst making sure that aviation also make a reasonable contribution to the exchequer. Prior to December’s doubling in Air Passenger Duty, I would have argued that there was still room for these costs to be accounted for, and that they should be done in a manner which was proportional to the pollution caused, or at least to the cost of the ticket.

Then Gordon Brown decides to not only double APD overnight, but to apply the increase to tickets which had already been purchased. So where was the public outcry over this extremely vindictive move? There wasn’t any – all we got was the green lobby telling us that this increase wasn’t enough. Judging by the carbon offset costs produced by DEFRA, and endorsed by websites like Climate Care, which puts the climate cost of a domestic flight at less than £1, this increase was more than enough, even if the government itself has already admitted that APD is a very “blunt instrument”.

My biggest gripe with the £10 APD is that it is levied in both directions on domestic sectors. Try telling a family of four living in Belfast that they should take a weekend break in (already expensive) London (£80 goes to Gordon), when they could drive down to tax-free Dublin, and fly three times further to Malaga, paying a mere €5.78 each for the return journey.

Unlike many within the aviation industry, I don’t think that global warming is a hoax, but I do like to try and understand as many angles to the argument as possible. One thing I am sure of is that there are more effective ways of reducing CO2 output than going after aviation.

We might be an easy target, but how many politicians realise that they can only ever exercise limited control over an industry that is inherently international. Perhaps that’s why we’ve suffered here in Coventry, but that’s for another debate.

If even a fraction of the extra billions raised from APD was diverted towards investing in better facilities for walking and cycling – including safe routes to school, then we’d all be better off. For all the unproven talk about radiative forcing at higher altitudes, vehicle emmissions at ground level are indisputable, and one way to limit these is to make the walking environment as safe and attractive as possible.

That’s what the Dutch and Swiss do, and it is no wonder that their levels of obesity are a fraction of ours. Unfortunately, both countries tend to operate under a much gentler form of democracy, whereas we have to sex everything up to keep the tabloids busy.

Sex up self powered transport anyone? Somehow the walk-a-mile-a-day club is never going to be as salacious as bashing the mile high club.