Aviation: UK Civil Aviation

Baroness Gibson of Market Rasen Excerpts

Monday 23rd January 2012 Lords Chamber

Asked By

[Baroness Gibson of Market Rasen]

To ask Her Majesty’s Government what are their plans for the future of the United Kingdom civil aviation industry.

[Baroness Gibson of Market Rasen]

My Lords, I am very pleased to introduce this short debate this evening on this important and indeed timely topic. I thank the Airport Operators Association for its assistance with my speech.

[Lord De Mauley]

My Lords, will noble Lords leave the Chamber quietly so the noble Baroness can make her speech?

[Baroness Gibson of Market Rasen]

My Lords, in my capacity as a council member of the Air League, in my work with Youth in Aviation, as president of an air training corps, and as a member of the Air Cadet Council, I take a close interest in all matters relating to aviation. The civil aviation industry in the UK employs around a million people—352,000 directly, a further 344,000 people indirectly, and many more in its vital role in inbound tourism. It also contributes £50 billion to GDP and more than £8 billion to the Exchequer, according to a report published last year by Oxford Economics.

We are world leaders in designing and building aero-engines and airframes, in the design, construction and operation of airports, and in the safe and efficient management of scarce air space. Aviation is vital to any country and to any economy. However, it is especially vital to the United Kingdom for two clear reasons. First, and most obviously, it is because we are an island. It is the most efficient and sometimes the only way in which goods and people can get to and from the United Kingdom. Secondly, it is because we are and have been for many centuries a trading nation; a full 55 per cent of all our exports beyond Europe are carried by aeroplane, and we are all aware of the importance that the ever growing BRIC economies will have in the recovery of our nation.

All the nations and regions of the UK rely on good air links to connect them to the emerging world markets. Inward investors also need good air links not just to fly in essential parts and equipment but to ensure that their senior managers, executives and technicians have ready access to their offices and plants in the UK. Access to an airport with good global connections is vital, and there is another reason why we need to maintain and expand our aviation connectivity with the world. Tourism is already an important industry for the UK, with over 2.5 million jobs and £115 billion of GDP dependent on it. Shortly after he came to power, the Prime Minister expressed as one of his ambitions to make the UK one of the top five tourist destinations in the world. Given our heritage, our global positioning and the quality and quantity of the visitor attractions that we have to offer, this should not be an overambitious target. Indeed, the Tourism Alliance believes strongly that there is a need for aviation capacity to be expanded. It believes that that would support the goals that the Government have set for tourism growth, which should include consideration of current capacity, mid-term growth and an infrastructure for delivering long-term capacity.

Two big issues are preventing the aviation industry from playing its full part in helping to expand the economy and create more jobs. The first of these is taxation. I understand that the UK already has the highest level of aviation taxes in the world. The government standard or top rate of air passenger duty is up to 8.5 times the EU average, and the Chancellor has said that he proposes to raise it yet again by twice the rate of inflation during his Budget in March. This is at a time when aviation has just entered the EU Emissions Trading Scheme, which will add another layer of cost and complexity.

I urge the Government to think again about this tax rise. In the short term, it may raise extra revenue for the Treasury, but in the medium and long terms it will scare away airlines and routes and damage employment prospects for thousands of people. Other EU countries are lowering or scrapping their domestic aviation taxes as the EU Emissions Trading Scheme is phased in, and the Government should seriously consider doing the same.

The other big issue that is having a highly detrimental effect on UK civil aviation and preventing it playing its full role in boosting the economy and creating jobs is capacity. The whole of the UK and its regions rely on good air links to attract inward investment to facilitate the efficient deployment of key personnel, to open up access to new markets and to facilitate the export of goods. Airports are privately funded; they are looking not for government money, just for government support and permission to grow as and when extra capacity is required.

We are all aware that it is in the south-east of England that the problem is most acute. As European airports expand and plan for four, five or even six runways, Heathrow—currently our only hub airport—is stuck on just two. All three main parties have set their faces against additional hub runway capacity, but it is up to the Government to come up with a viable solution. There are a number of schemes requiring consideration relating to Heathrow, Gatwick and Stansted, through to a brand new airport in the Thames Estuary or, indeed, elsewhere. There are pros and cons associated with every solution and tonight I do not have a firm proposal to make. However, it is the job of the Government to examine all these options and come up with a speedy solution. The alternative will be that Schiphol becomes the UK’s hub airport, just as Europort became our capital’s seaport by default. This would result in the loss of tens of thousands of jobs and many billions of pounds of revenue, and all with no benefits to the environment.

Currently, flights and emissions are being displaced rather than obviated. Indeed, as people take connecting flights to Europe to avoid air passenger duty, the impact on the environment can be considerably greater. The Government need to take the lead on this issue, which is why the announcement last week that they will consult on the options for the creation of a new hub airport is welcome. A rapid and firm decision is needed that will ensure that the UK has a world-class hub airport fit for the 21st century.

We must support the UK’s aviation sector, in which we are world class and which employs so many people, contributing so much not just in GDP and tax but in what it enables other key sectors of the economy to do. Finally, I ask the Government again not to bring in further swingeing increases in air passenger duty and make the highest aviation taxes in the world even higher. Failure to address these issues—taxes that are too high and airport capacity that is too low—will send a sad signal to the world that we are not truly open for business.