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November 2, 2009

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

Filed under: Aviation Economics, Budget airlines, Budget flights, Environmental Issues, Flights v. Trains, Regulation — Tags: , , , , , — ja @ 8:01 am

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!

 

 

 

 

October 7, 2009

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

Filed under: Airlines, Aviation Economics, British Airways, Budget airlines, Easyjet, Environmental Issues, Regulation, Ryanair — Tags: , , , , , , , , , , , , — ja @ 12:16 pm

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.

October 5, 2009

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

Filed under: Aviation Economics, British Airways, Regulation, Uncategorized — Tags: , , , , , , , , — ja @ 1:26 pm

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

Filed under: Airlines, Aviation Economics, British Airways, Business Travel, Environmental Issues, Regulation, Routes & News, The Travel Business, Virgin — Tags: , , , — ja @ 6:03 am

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’?

June 17, 2007

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

Filed under: Aviation Economics, Budget flights, Coventry Airport, Environmental Issues, Regulation, Routes & News, Uncategorized — ja @ 7:49 am

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?

Filed under: Aviation Economics, Coventry Airport, Environmental Issues, Regulation, Routes & News, Thomson / TUI — ja @ 7:29 am

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?

Filed under: Aviation Economics, Environmental Issues, Media issues, Regulation, The Travel Business — ja @ 7:16 am

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.

Aviation Industry continues green fight back

Filed under: Environmental Issues, Media issues, Regulation — ja @ 6:52 am

I have just been pointed towards a long overdue website, which aims to provide information to counteract many of the false claims put forward by the environmental lobby, with regards to the pollution caused by flying.

The site is called enviro.aero.

As with any such websites, there are the usual caveats, but there is no longer any excuse for burying heads in the sand. Of course, this website is going to be biased towards protecting the aviation industry, but as the following article shows, the BBC isn’t exactly that neutral either!

Now if anyone doubts this assertion, lets take a look at the BBC’s coverage, or lack of it, of Easyjet’s recent announcement about their Ecojet initiative:

“Sorry

There are no results for “ecojet” on the BBC website.”

http://search.bbc.co.uk/cgi-bin/search/results.pl?tab=all&q=ecojet&scope=all

This is hardly surprising really - I was at the press conference, and they do not appear to have even bothered to send a reporter - even if the venue was just a short walk (sorry, all expenses paid taxi ride) from BBC HQ.

April 11, 2007

Want people to take less domestic flights? Leave it to the market

Filed under: Aviation Economics, Budget flights, Environmental Issues, Flights v. Trains, Regulation — ja @ 8:10 am

Looking back over the last few weeks, it really has been silly season from various so-called environmental organisations, who have each taken their turn at launching evermore ludicrous potshots at the aviation industry. One of the most bizarre episodes involved Greenpeace campaigners turning up to protest at British Airways reinstating their flights from London Gatwick to Newquay. It is not that I’ve got anything against environmental organisations protesting about short-haul flights - they have some valid points to make - it is just that they really do seem to pick on the most ridiculous targets.
Of all the major airlines operating flights from UK airports, why target BA? Surely these groups would want target the airlines which are growing fastest, and which they see as the biggest threat - Easyjet and Ryanair? They’ve levelled plenty of criticism about the growth of no-frills flights before, but I can’t help wondering that the real reason for targeting BA is that they are a soft touch. The dumbest of all anti-aviation groups, the aptly named (no, I don’t do irony) Planestupid, did try to have a go at Easyjet, but turned up at the Easy-brand headquarters in Camden, instead of the Easyjet head offices, which are situated in a bright orange hangar at Luton airport!   Perhaps Planestupid are one of the few organisations out there who practice what they preach, because anyone who has ever taken flights from Luton knows that Easyjet’s head office is impossible to miss! Of course, they wouldn’t dare mess with Ryanair – not only are the Irish airline notoriously litigious, but their tough talking (and highly intelligent) chief executive, Michael O’Leary, would tear them to shreds. 
So why even bother to add more fuel to the fire, and keep commenting on this topic? Simply because, in broad terms, I do actually agree with the principle – short-haul flights should be replaced by quality, high-speed train services. However, as always, the do-gooders have got plenty of sticks with which to beat us, but they are pretty lousy at coming up with carrots. So, looking over some recent UK domestic air route changes, I’ll do a bit of their homework for them. Below are just a few examples of routes which have been cancelled, or significantly cut back, in the face of improved competition from high-speed train services or more suitable airline rivals:
The end of BA Connect - whether British Airways continue to operate flights to Newquay or not, the least that groups like Greenpeace and Friends of the Earth could have done is given them a huge pat on the back for finally bringing the axe down on their heavily unprofitable, and equally wasteful, BA Connect regional airline. Despite half-hearted attempts to rebrand this business and launch it as a low fares operation, BA Connect was always going to be a costly company to run, and one which relied on heavily inefficient aircraft. Our understanding is that there were several BA Connect routes which regularly operated with single figure passenger loads. Those routes which are still viable, will continue to be operated by Flybe, leading to some inevitable rationalisation in the market, especially on numerous city pairs where the airline duo competed head-to-head with each other. This means that there are now huge efficiency improvements on flights between Scotland and major regional hubs such as Birmingham and Manchester.
Axing of British Airways Gatwick to Newcastle flights; reduction in frequency on British Airways Gatwick to Glasgow flights - in both of these cases, British Airways might be giving way to no frills competition in the form of Jet2 and Easyjet respectively, but it is generally accepted that no-frills airlines offer greater efficiencies than their traditional counterparts, in terms of both financial costs and fuel burn per passenger. Additionally, Eastern Airways were unable to make their flights from London City to Newcastle work. Although we always felt that this particular route looked ambitious, we would expect that the vast majority of sensible business travellers between London and the Northeast will continue to opt to take the train.
Manchester to Edinburgh (Jet2) - although this route continues to be operated by Flybe (who have inherited the route from BA Connect) and BMI Regional, we suspect that this flight is simply too short to be viable for no-frills operation.
Liverpool to Edinburgh and Glasgow (Flybe); Belfast City - Flybe’s attempt to muscle in to Liverpool has to be one of the most spectacular failures in low-cost airline base set-ups. Although there was no other competition on flights from Liverpool to Scotland at the time (Ryanair have subsequently launched cheap flights from Liverpool to Inverness and Aberdeen), there just does not appear to have been enough demand to make flights from Liverpool to the Scottish central belt work. It might look surprising that these routes were a failure, considering that Manchester can still support competition to both cities between Flybe and BMI regional, but this is significantly helped by transfer traffic, which is not relevant to Liverpool. Flybe’s failure on the Liverpool to Belfast City route was a little bit more surprising to us, but it seems that they just couldn’t compete against Easyjet’s well established flights to Belfast International.
Liverpool to London City (VLM) — reduced frequency. This service initially operated five times a day when the route started, but now VLM operate just three daily flights between Liverpool and London City. During the time that these flights of operated, the West Coast mainline has undergone significant upgrades. However, VLM have recently increased their frequency on their London City to Manchester flights, bucking the general trend towards rail. This suggests to us that rail travel has a significant advantage over flights into other London airports - especially Stansted and Manchester, but that for the time being at least, VLM can capitalise on being able to get people in and out of the Docklands financial district very quickly. As the West Coast mainline undergoes further improvements, and as domestic flights continue to be squeezed by having to pay two sets of air passenger duty, we wouldn’t be surprised to see VLM’s Liverpool flights getting dropped within the next 12 months.
Birmingham to Newquay (BmiBaby) – there isn’t much difference in the drivetime between Newquay and either Birmingham or London, but BmiBaby’s route to the Cornish surfing Mecca just did not seem to work from Birmingham. There might well have been the operational reasons behind this decision, but it was interesting to see that BmiBaby’s Manchester to Newquay flights (Manchester is another two hours up the road) have survived. We think this might be an interesting case in point about the viability of shorter domestic hops - even if the road journey takes a bit longer, people still prefer the convenience of driving in their own car. This is less of an issue for more business dominated routes, where speed, and the ability to work during the journey, offer advantages which outweigh the convenience of the car.

We hope that the above examples show that market forces can and will have a significant effect on people’s choice of transport mode, regardless of any input from the environmental lobby. As each case has shown, the reasons for success or failure of any particular flight route can be extremely varied, and even these are subject to a liberal dose of our own speculation. However, what they highlight is that the aviation industry, in the UK at least, is extremely Darwinian in its weeding out of the poor performers. Perhaps this stems down to the ultimate paradox of air travel - because flying is an inherently resource intensive method of transport, companies have to be extremely efficient in their usage of fuel, and other assets like aircraft, in order to compete and survive. Adding additional environmental costs on to short-haul flights might tip the balance against inefficient routes even further, although this might also endanger some economically vital regional routes. 
There has been scant debate so far about where additional taxes on flights should be allocated, but any fiscally responsible government should take some very deep breaths before handing this cash straight over to the railway industry. When the national flag carrying airline (British Airways) withdrew from its base operations from every UK city apart from London, there was no big outcry - the move was accepted as a rational and necessary cost-cutting effort. Now what would happen if the same efficiency measures were proposed on the rail network? Mention of Dr Beeching (the notorious BR chairman who closed huge swathes of the UK railway network in the 1960s) will send shivers down the spine of any avid train proponent, but if we are going to be serious about making long-distance train travel an economically and environmentally viable alternative to flying, isn’t it time the rail industry borrowed a few efficiency measures from the no-frills airlines?

April 10, 2007

We must stub out this victimisation of aviation

Filed under: Aviation Economics, Environmental Issues, Flights v. Trains, Regulation — ja @ 3:29 pm

Last week, I got an early leak of a press release from the IPPR (Institute of Public Policy Research), suggesting that flights should now carry environmental health warnings in a similar manner to cigarettes.

The IPPR has singled out aviation, and called for measures including:

• Large, and clearly visible warnings, with statements such as “flying causes climate change”.
• Estimates of average emissions for each flight taken.
• A comparative emissions chart between flying and making the same journey by rail or coach.

The first measure is barely worthy of comment, such is its crass stupidity. The second measure looks reasonable enough - airlines such as Flybe have called for an environmental labelling scheme which would make it mandatory for all airlines to provide this information, in much the same way as household appliances have energy star ratings, and car manufacturers must declare their carbon dioxide emissions and fuel consumption.

The third measure might help consumers to make informed decisions, although we would of course argue that any such comparison must also include the subsidies handed out to the alternative rail journey, so passengers can weigh up the economic and the environmental externalities of the journey.

We continue to be disappointed, although not surprised, that none of these environmental organisations or supposedly intelligent think tanks are calling for similar emissions data to be made available for rail journeys. Whilst we fully accept that rail journeys are generally less polluting than flights, the margins are nothing like as great as claimed, once average occupancy levels and power consumption methods are taken into account.

Recent suggestions that we are a nation addicted on so-called binge flying are easy political soundbites, but has anyone checked growth rates on all other modes of transport, particularly on the roads and railways?

I challenge the Institute for Public Policy Research to run a survey of airline passengers checking in for flights at Stansted, or any other London airport of their choice. I guarantee that every single one of them will say that they enjoy the freedoms which flying brings them. I would also wager that the vast majority would be perfectly happy to accept the principle that the airline industry should pay a fair price for any environmental damage it causes.

Of course, the environmentalists will then argue that if people want to continue travelling, they should do so by less environmentally damaging means, such as by high-speed train. When the rail network is up to scratch, and when we have enough renewable energy to make inter-city train travel’s astonishingly low occupancy rates an irrelevancy, then we would unequivocally support this argument. However, passengers really don’t need the eco-puritans to tell them this - as the figures for modal splits between air and rail between London and Manchester (formerly 40% by rail and 60% by air, now the other way round) since the West Coast mainline upgrade, attest. 

More worrying still is the continued insistence amongst ill informed organisations like the IPPR that aviation taxes should be “raised to cover the environmental damage caused by flying”. At present, widely published figures are available for the cost of carbon dioxide offset for flights, and if the IPPR had bothered to check the references they quote, they would see that these typically range from just 39p (air passenger duty is £10) for a London to Amsterdam flight, up to £23 for a long-haul flight from London to Auckland in New Zealand (air passenger duty £40).

In most cases, the carbon dioxide cost is significantly lower than the air passenger duty, which even the government themselves have acknowledged is an incredibly blunt way to tackle the emissions caused by aviation. If there are additional costs which need to be factored in, such as noise disturbance, then let’s have a full debate over the respective figures. We would also find it far more constructive if the green brigade came up with some sensible proposals for how they would like any extra taxes to be spent, instead of just calling for them to be increased further.

The IPPR then goes on to call for the UK government to work with other EU member states to better integrate the “fragmented” European rail network. Last time we checked, we found that the European network is pretty well integrated - trains such as the Thalys run smoothly between France, Belgium, the Netherlands and Germany, using a combination of dedicated high speed and standard rail thoroughfares. If any rail network needs integration, then we need to look much closer to home. At least we will finally see a major step forward when the new St Pancras International Eurostar station opens in November.

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