AIRPORTS OPERATORS ASSOCIATION RESPONSE TO THE AIRPORTS COMMISSION DISCUSSION PAPER: AVIATION CONNECTIVITY AND THE ECONOMY, APRIL 2013 The Airport Operators Association (AOA) is the national voice of UK airports. It is a trade association representing the interests of UK airports, and the principal such body engaging with the UK Government and regulatory authorities on airport matters. The AOA welcomes the opportunity to respond to the Airports Commission Discussion Paper 02, Aviation Connectivity and the Economy. I. EXECUTIVE SUMMARY The AOA believes that the UK requires excellent aviation connectivity right across the country, ensuring the UK has both vibrant point-to-point airports and sufficient world-class hub capacity. The AOA has set out the thoughts of its members on connectivity in detail in the paper; ‘An Integrated Policy Framework for UK Aviation: Connecting the Economy for Jobs and Growth’. Much of the information and data used in this response is drawn from this document.1 The AOA believes that the UK’s performance in terms of its aviation connectivity could be better and that some current policies on capacity mean airlines cannot always fly to destinations they may want to serve. Current capacity constraints in some areas means that the UK will struggle to maintain its current connectivity position. Whilst the UK is well connected to the US and Indian markets, it is less well connected to BRIC countries such as Brazil, Russia and mainland China compared to many of our European counterparts. If Hong-Kong is included as part of China in assessments, the UK does fare better in terms of its connections to BRIC economies. Aviation connectivity is vital in facilitating the trade of goods and services, contributing to a vibrant tourism industry; and it encourages more business and investment into the UK, improving business productivity. Every year, UK airports serve over 200 million passengers and handle nearly 2 million tonnes of freight. Some 40% (by value) of the UK’s exports travel by air, 65% of companies say that the UK’s international transport connections are crucial or significant for their future investment decisions, and air travel accounts for 84% of all inbound visitors’ spending. 80% of firms indicate that air services are important for the efficiency of their production. 1 AOA (2013), ‘An Integrated Policy Framework for UK Aviation: Connecting the Economy for Jobs and Growth’ – http://www.aoa.org.uk/media/7284/aoa-an-integrated-framework-for-uk-aviation-report.pdf Page 1 of 19 Without a vibrant aviation network, high value electronics exports would fail to reach their markets on time, food would not arrive fresh, and business passengers, who make UK companies world players, would be limited in their ability to travel in and out of the country. There is a growing amount of evidence to support the view that the UK is potentially missing out on trade and investment opportunities if it does not improve its air links with emerging economies. Adding just one additional daily flight to each of the eight largest high-growth markets in the world would increase UK trade by as much as £1billion a year2. UK airports are collectively doing all they can support these flights, with some success. People of all backgrounds fly and fly regularly. The development of air travel in the UK is one of increasing social inclusion. More and more people can afford to travel where they like, when they like. People travel to visit distant friends and relatives, for personal fulfillment, for leisure or tourism, to attend cultural and sporting events, to be educated, exchange ideas, and carry out research. Modern, large global events, such as the 2012 London Olympics, simply could not take place without the international connectivity air travel provides. Polls consistently show that about half of all UK people take a flight every year3; and nearly 90% of people have flown in the last three years.4 More than a quarter of all passengers travel to visit friends and relatives (VFR) and over 40% of these passengers are from households with less than average incomes.5 II. RESPONSES TO THE QUESTIONS POSED IN THE CONSULTATION DOCUMENT ON THE NATURE OF UK CONNECTIVITY (PARA 5.4) GENERAL COMMENTS 1. The AOA believes that the UK’s performance in terms of its aviation connectivity could be better; and with other European airports rapidly expanding, the UK will struggle to maintain its current position without similar ambition. Using ‘available Airline Seat Kilometres’ as a measure of comparison, since 2008 UK connectivity has declined by 4.9%, whereas Germany’s has increased by 4.3% and France’s by 3.4%. According to Oxford Economics, in proportion to the 2 CBI (2013), ‘Trading Places: Unlocking Export Opportunities through Better Air Links’ 3 DfT (2010), ‘Public experiences of and attitudes towards air travel’ [online] 4 National Centre for Social Research (2009), ‘Flying Decisions Research Report’ [online] 5 CAA (2009), ‘International Relations: The Growth of Air Travel to Visit Friends and Relations’ Page 2 of 19 size of its economy, the UK ranks in 12th position on air connectivity, as demonstrated in Graph 1 below.6 Graph 1: UK ranks no.12 in connectivity terms when compared to GDP III. RESPONSE TO QUESTIONS Do you agree with the definition of connectivity presented in the paper? What other factors, if any, should we take into account and how do they impact connectivity? 2. The AOA believes that connectivity should be considered in terms of: the number of destinations served; the frequency of services; the economic value it drives; and the accessibility of destinations right across the UK. 3. The AOA also believes that while the range of destinations and frequency of flights are important variables in considering connectivity, there are other considerations that need to be taken into account too, such as whether flights take place at convenient times and their availability. 4. Table 2.1 in the consultation document gives a potentially distorted picture since it focuses on destinations that are served by at least a weekly service. This is quite a limited baseline and whilst this may work for holiday travellers who are happy to travel on a week return basis, it would be less useful to business passengers, who require shorter return journeys. 6 IATA in Oxford Economics (2011), ‘Economic Benefits from Air Transport in the UK’ Page 3 of 19 5. So, it is important to balance potential connectivity data, with the purpose in mind. This logic also applies to the data presented in the consultation document in Figure 2.4 and Figure 2.5. Figure 2.5 focuses on the increase in the number of flights to BRIC countries between 1990 and 2010. It suggests that flights from the UK hub airport, Heathrow, have increased the most significantly of the airports that are compared. Whilst that may be true, it does not give a complete picture of connectivity either now or in the future. 6. Figure 2.2, provides a useful analysis of how accessible the UK capital is to other parts of the world; but connectivity is important to the whole UK. For this reason, consideration should be given as to how accessible destinations are to other parts of the UK. In paragraph 2.1 of the consultation, it states that; ‘at its heart, connectivity is about making [these] activities as easy as possible, given the geographic separation involved’. The data that is presented in the report does not correlate with this statement since it uses aggregate numbers and does not consider the full journey time that is taken to get to the destination. For example, connections from point-to-point airports and different parts of the UK to its hub can be an important factor in connectivity terms. A useful analysis in informing the connectivity debate would be to conduct further research into the economic impact of time spent in transit. 7. For these reasons, the AOA feels that the conclusion presented in this section of the report i.e.; “the UK aviation market appears to offer a high level of connectivity, enabling people and businesses to travel efficiently and linked effectively to a wide range of markets”, is premature and requires further research. 8. Perhaps the most important factor in connectivity terms are the years ahead. It is not just how connected the UK is to the outside world today, but its connectivity in the future, and how this compares with other key EU and global airports such as those in the Gulf. The key question is whether the UK will require more or less connections with trading markets and holiday destinations in the future than is the case today? If the answer is more, then an analysis in connectivity terms of how many additional destinations may be required is crucial. The AOA would welcome some analysis that looks forward in this way, particularly given the long lead times to expand point-to-point and hub infrastructure. Page 4 of 19 Do you agree with the assessment we have made of the UK’s current aviation connectivity? 9. The AOA welcomes the work done so far in the discussion paper, but believes there is additional work to do to better understand connectivity. 10. Using ‘available Airline Seat Kilometres’ as the only measure, since the recession began in 2008 UK connectivity has declined by 4.9%, whereas Germany’s has increased by 4.3% and France’s by 3.4%. These figures suggest that the UK is losing ground relative to its competitors in comparison with other countries and demonstrates the importance of direct connections, if UK business is to remain competitive.7 11.