Regional Airports

Angus Brendan MacNeil Excerpts

Tuesday 15th July 2014 Westminster Hall

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Gentleman makes a good point about connectivity across the UK. Perhaps the regional air connectivity fund should be used for airports in the north of Scotland. Some might say that such airports are on the periphery of the UK, but they are certainly not on the periphery of the globe. Money from the fund could be used to link Stornoway to the Faroe Islands, or perhaps for through-flights coming from Iceland or wherever, in order to improve the economies of areas that are currently seen as peripheral but are actually very central in the context of global routes.

[Mike Kane]

I am grateful for the hon. Gentleman’s intervention, although I thought Stornoway airport was bidding to be the UK’s spaceport—

[Mr MacNeil]

Space will exist after independence!

[Mike Kane]

Yes. Let us hope that Stornoway does not enter into competition with the beautiful island of Barra, where the landing strip is on the sea shore.

Since 2008, the UK’s connectivity has declined by 4.9%, whereas Germany’s has increased by 4.3% and France’s by 3.4%. My own airport, Manchester, has a positive story to tell about connectivity. After I have told that story, I will discuss other regional airports.

[Mike Kane]

That is a good point. If the hon. Gentleman will forgive me, I will come to the connectivity fund and expand on the points about airport passenger duty in a few minutes.

Manchester is the international gateway to the north. It has 60 airlines serving more than 200 destinations, which is more than Heathrow. I repeat for Hansard: that is more than Heathrow. Last year, Manchester added more new routes than any other UK airport, serving the 24 million people who live within two hours’ drive. It is the only airport outside the south-east with a strong long-haul portfolio. As well as serving destinations such as Singapore, Pakistan and the US direct, it also offers strong onward connectivity via the middle east: three times daily to Dubai, twice daily to Abu Dhabi and 10 times a week to Doha. More recent connections include Hong Kong, Jeddah and Toronto, and the new Charlotte service has increased transatlantic services at the airport to more than 60 a week. Most of the world can be reached from Manchester either non-stop or with one stop.

However, 5 million passengers a year from Manchester’s catchment area leak to the London airports to catch flights. The challenge for the future is ensuring that passengers have the option to fly from their local airport, taking the pressure off the congested south-eastern airports. However, I hope to welcome High Speed 2 to the airport station at some stage in the near future. It will reduce journey times from Manchester airport to Euston from two hours and 24 minutes to 59 minutes.

As I said earlier, Stansted is the UK’s fourth busiest airport, serving more European destinations than any other airport in the world. Both Ryanair and easyJet have committed to growing their Stansted portfolios; Ryanair’s will grow from nearly 500 flights a week to more than 700 in winter 2014. Edinburgh is Scotland’s capital airport, with over 40 airlines serving more than 100 destinations. More than 9 million passengers a year pass through the airport.

For smaller point-to-point airports, although direct flights are preferable, indirect flights offer an important alternative where they do not exist, either via UK hubbing or through hubs in continental Europe or the middle east. At East Midlands airport, the priority for the future is to access more European hubs in order to widen connectivity; it currently serves Amsterdam, Brussels and Paris. In the longer term, the airport is keen to have direct routes to emerging economies that are key to the region, such as India. Direct access to markets supports business and trade between the region and those markets. It is not just about how connected the UK is to the outside world today; it is about its connectivity in the future and how it compares with other EU and global airports, such as those in the gulf.

Access to global connectivity is not simply an issue of access to Heathrow. Passengers value the choice, competition and service offered by alternative carriers connecting through alternative hubs, such as in the middle east. Manchester airport does not have the luxury of a UK hub operator and relies on overseas carriers to provide long-haul connectivity. Without those carriers, Manchester would just be a spoke into Heathrow. Ultimately, it is the airlines that determine which routes are flown, and therefore overall connectivity, depending on long-term route profitability. However, political and regulatory factors can play a major role in influencing the attractiveness of starting and sustaining routes.

The UK still enjoys a strong position in transatlantic aviation and flights to traditional partners such as India, but is linked to relatively fewer locations in Brazil, Russia and mainland China. Both Germany and France have much better connectivity to China in particular. In a 2012 survey by CBI and KPMG, almost half of respondents expressed dissatisfaction with the UK’s air links to emerging markets. Of companies that deemed flights to China to be crucial, only 46% were satisfied with their current availability.

Regional airport connectivity is not just about the number of destinations served; it is also about the frequency of services, the economic value that they drive, the accessibility of destinations right across the UK, whether flights take place at convenient times, and their capacity. The Government have demonstrated their support for the growth of connectivity from regional airports by announcing the regional air connectivity fund. This will provide public support for new intra-EU routes from airports with fewer than 3 million passengers per year, or 3 million to 5 million in exceptional circumstances. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) commented on the fund a few moments ago.

Funding will be available for five years and will come to an end in March 2019. Airlines will have to prove that they can make money from the route without public assistance after two years. However, in reality, competition rules will make it difficult for many routes to qualify. Those that do will be at the smallest airports and will be short-haul routes only, not the game-changing routes we need such as Manchester to Beijing.

It is important to acknowledge the steps the Government took in this year’s Budget, when the Chancellor cut air passenger duty on long-haul routes to destinations including China, India, Brazil and many other emerging markets. However, the Government could go further by offering a temporary air passenger duty exemption for new long-haul routes, as recommended by the Select Committee on Transport and mentioned by the hon. Member for Altrincham and Sale West (Mr Brady). It would help to make best use of existing capacity and encourage more routes to emerging economies.

A temporary APD holiday would have the advantage of being a proven commercial strategy and one that airports use: that is, a lead-in discount. It would cost the Treasury nothing, as the Treasury receives no income from routes that do not yet exist. Forgoing revenue on new routes until they were established would cost nothing and could result in an income stream later on.

[Mr MacNeil]

The hon. Gentleman is speaking eminent sense. I am sure that he is aware of the success in Iberia and Catalonia with routes from Barcelona. The Government in Madrid did not take the APD, and 21 new routes were started in one year due to the APD holiday, as he suggested. The Government here would do well to learn from the lessons in continental Europe.

[Mike Kane]

I am grateful for that contribution. We must continue to consider APD. We live in a competitive world and we want a competitive market, but we also want a level playing field with competing airports across Europe, such as those in Spain, particularly Barcelona. A temporary APD holiday would be in line with the Government objectives of making best use of existing capacity and promoting links to emerging economies and economic growth near regional airports.

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[Graham Stringer (Blackley and Broughton) (Lab)]

I congratulate my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) on a real tour de force; I do not think there is any airport in the UK of any significance that he missed out in his speech. The importance of aviation to Manchester, other regional airports and the whole of the UK came out extremely clearly in his remarks. He said that in round terms aviation is worth £50 billion to the UK economy, but in fact we could not have a modern economy without aviation. While the people who measure these things put the figure at around £50 billion, if we took aviation out of the system we would not be left with the economy minus £50 billion; we would be left with a very small and primitive economy indeed.

However, as my hon. Friend hinted, there is a paradox at the centre of aviation policy in this country: if we add up all the capacity on all the runways at London and regional airports, we find that we have more than 21 times the capacity that we need for aeroplanes to land in and take off from this country, but on the other hand Heathrow is congested because aviation depends on a hub system internationally. Heathrow is our major, indeed our only, hub airport, and it is congested. Many airlines would like to get in there but cannot. Airlines have cut off routes to the rest of the UK because that hub airport is full, yet we do not have the routes that regional airports, including those in Birmingham, Manchester, Newcastle and the east midlands, would like.

[Mr MacNeil]

The hon. Gentleman asserted that airports rely on a hub system, but that is an arguable point. I gently say to him that the hub system did not come about accidentally. For about 50 years, the UK had bilateral air agreements specifying that only London airports could be used. If there is a hub system, perhaps the most logical hub would be Schiphol airport, with its five runways. However, as we know, the reality is that a huge number of political choices contributed to the hub system, and similarly a huge number of political choices have been made that are not helping our regional airports. Specifically, they are not helping on APD, as the hon. Member for Wythenshawe and Sale East (Mike Kane) said.

[Graham Stringer]

There were a lot of points in that intervention, but I do not think that the key point about hub airports is that until recently most flights needed—some still do—bilateral agreements to get into Heathrow. The real point about hub airports is that we need that efficiency of transfer traffic in order to thicken routes that would not be viable at other airports. I will come on to APD shortly.

We have this paradox; we have loads of runway capacity, but insufficient runway capacity at Heathrow. That means that our aviation industry, which is vital, is not as good as it could be. My hon. Friend the Member for Wythenshawe and Sale East mentioned businesses such as Google moving to the north-west and having headquarters there. However, KPMG has moved its European HQ to Frankfurt because of the lack of runway capacity at Heathrow.

There are two solutions. One is blindingly obvious but has got caught up in party politics. I hope that the three political parties can keep a united front and support whatever comes out of the Davies report. However, my view is simply that we should build a third and probably a fourth runway at Heathrow, because this country is falling behind in its international competitiveness.

That is the hub issue, but what do we do about the second issue, which is the capacity we have in the regions? How do we attract extra airlines to our major regional airports? There are three things that we can do, but Governments have not been good at doing any of them. First, I can see no reason at all why there should not be a completely open skies policy in every regional airport outside London. Why should any airline in the world that wants to fly into the UK, take passengers and go wherever it wants not be able to do so? If it could, that would create jobs and benefit any airport that it operated from.

The Government have gone part way there by granting fifth freedoms to airlines coming here, but there is also the right for UK and other airlines to object to those freedoms, so that measure has not brought about the benefit that it could have had. Having completely open skies with rights for everybody and no right of objection for other airlines, whether British or not, would benefit our regional airports, particularly the bigger ones such as Glasgow, Manchester and Birmingham, but also some of the smaller ones. That is the one thing that we could do that would help the regional airports.

Secondly, as was mentioned both by my hon. Friend the Member for Wythenshawe and Sale East and in interventions, there should be a change in APD. Let me say clearly that APD is a bad tax. The PricewaterhouseCoopers report last year—I think it was published just before Christmas—showed that if APD was abolished, the UK economy would probably grow by 0.5%. I understand why Treasury Ministers, and Transport Ministers for that matter, say, “We don’t want to lose the revenue we’ve got”, even though other countries such as Holland and Ireland have scrapped APD and their economy has benefited as a result. Even if we cannot prove what would happen by creating theoretical models for this country, we can see what is happening elsewhere, follow the example of other countries and scrap APD; that would be the ideal way to approach the issue.

However, if scrapping APD is too much of a step for naturally cautious Treasury Ministers, we should adopt a step-by-step approach and measure what is going on. We could abolish APD for children, which would be very popular as APD is a tax on holidays as well as on business. Equally, we could abolish APD in the winter, when airlines find it difficult to make a profit; go to any UK airport in November and there will be people rattling about in it. Also, there could be a holiday—not with buckets and spades, but on taxation—for new routes, so the Treasury would not lose any money. In addition, APD could be reduced just in the regions. There are lots of different ways of approaching the problem of how to get rid of a bad tax, which would be beneficial for the regional airports. The Transport Committee looked at APD and recommended that the Government consider it in greater detail. On top of that, the Government should look at practical experience elsewhere, and adopt a step-by-step approach in this country.

The third point, already referred to by my hon. Friend and in interventions, is the importance of surface access. If we compare our airports with continental airports, many airports in north America and airports in the far east, we find that our train links are poor. Our biggest international airport—indeed, the biggest international airport in the world—is Heathrow, but apart from the Paddington link it does not have a mainline rail route going into it. In what country would one of the world’s great airports not have a mainline route going to it, so that people could not get to it by train from many other parts of the country? That is simply poor.

The Transport Committee is holding an inquiry into rail. We recently quizzed Network Rail and the Office of Rail Regulation about how they assess railway lines going to and from airports. I have been on the Committee on and off for a long time, but I found the answer pretty extraordinary: they do not assess them any differently from routes to anywhere else. We should, as the Davies commission recommended, change that approach so that we give priority to our airports. That would take traffic off the roads, help to support the airports and help to attract traffic into them.

The Committee looked at the example of Stansted, which could be part of the solution to some of the congestion in the south-east system. The rail line to Stansted is poor, and the sooner we get a decent fast rail link, the better. We can argue about whether the journey time should be 30 minutes, as Stansted thinks, or whether it can be reduced only to 40 or 45 minutes, but it should certainly be reduced; that would benefit everybody.

In Manchester, we have made our own arrangements in a sense. We have paid for the southern link to the rail system at Manchester airport, as well as for part of the northern link. With other Greater Manchester MPs, across all parties, I had to fight the Labour Government to get the tram link. All airports really should have decent surface links—preferably rail or, in some cases, rail and light rail.

I will finish on that point. Aviation is vital to our economy. It is not as good as it should be. We need to make sure we use the assets we have, invest to make them work better and certainly sort out the south-east system, which will help our regional economies as well.

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[Jim Shannon (Strangford) (DUP)]

Thank you, Ms Dorries. It is a pleasure to speak in the debate. I congratulate the hon. Member for Wythenshawe and Sale East (Mike Kane) on bringing this issue to Westminster Hall for consideration. He made a passing comment about Northern Ireland’s airports, and I will, very parochially, mention all three. I want to put down a marker for the importance of not only regional airports but, on behalf of myself and my right hon. Friend the Member for Belfast North (Mr Dodds), those in Northern Ireland.

Today’s debate is important for regional airports. It is also important for me, as the Member of Parliament for Strangford and the Democratic Unionist party spokesman on transport. It is therefore a pleasure to make a contribution. I also wish to put on record how important the debate is for Belfast City airport, Belfast International airport and City of Derry airport.

As the quest continues for another runway for Heathrow—nowhere has been confirmed as yet—we cannot allow connectivity with airports in Northern Ireland and on the mainland to drag. I am concerned about that question mark over where a Heathrow runway will go. The hon. Member for Blackley and Broughton (Graham Stringer) mentioned the importance of a third and a fourth runway. I subscribe to that view, because their importance is clear.

Northern Ireland cannot expect to have a hub airport. We cannot expect to have international contact all over the world, but we do expect to have more direct connectivity internally in the United Kingdom of Great Britain and Northern Ireland and, ultimately, internationally. The World cup has just finished, and I am reminded of a football saying we have in Northern Ireland: “We are not Brazil. We are Northern Ireland.” While that is meant for football, it is clearly relevant to the airport world. [Interruption.] It is good they got to the semi-finals. However, we recognise what we have in Northern Ireland, and we recognise that contact with the regional hubs—with Heathrow and other places in the United Kingdom—is what makes the difference.

[Mr MacNeil]

On the reference to Brazil, I happily remember that Northern Ireland did just as well as Brazil in the 1982 World cup, when, as I am sure the hon. Gentleman clearly remembers, Gerry Armstrong scored a fantastic goal against Spain. However, the substance of my question relates to excellent idea from the hon. Member for Blackley and Broughton (Graham Stringer) about open skies. The hon. Member for Strangford (Jim Shannon) will know that, although there have been negotiations with Russia over routes—137 in and 130 out—none are coming into Scotland, and I am sure it is the same for Northern Ireland. The fact that bureaucrats have spent this long negotiating to achieve zero for Scotland and Northern Ireland may lend credence to the idea that we should further investigate what the hon. Member for Blackley and Broughton said.

[Jim Shannon]

I thank the hon. Gentleman for his contribution. Yes, I can remember the 1982 World cup. I was in the stadium when Billy Armstrong scored—