Regional Airports

Catherine McKinnell Excerpts

Wednesday 7th July 2021 Westminster Hall

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is an honour to serve under you as Chair, Ms McVey, and I thank the hon. Member for St Austell and Newquay (Steve Double) for securing this important and timely debate.

The UK’s regional airports are important engines of economic development. As an international and domestic transport hub, Newcastle International airport in my constituency is a large regional employer that supports many regional jobs on site, off site and through its supply chain. It supports manufacturing business exports, higher education through its work with our world-class universities and, of course, the tourism sector, which thrived before this crisis. It is a strategic asset for the north-east and is central to our future economic growth but, like many other airports, its future and transition to sustainability is seriously challenged by the devastating impact of the current crisis on international travel, and the Government’s apparent unwillingness to support and understand the special nature of this sector.

We all know the pandemic has taken an especially hard toll on aviation. Between April and December 2020, passenger numbers were down 89.3% year on year. In the first quarter of 2021, they were down 94% on 2019. It has been an absolute collapse. The numbers are not expected to return to pre-crisis levels until at least 2023, in the most optimistic scenario. Although I and colleagues have continually raised the need to support aviation throughout the crisis, the Government still do not seem truly to grasp the special circumstances faced by the sector.

Unlike almost every other kind of business, which we know have all struggled through this crisis, airports are by their nature unable to adapt and diversify their product in a meaningful way. When travel itself is the product and it has essentially been shut down by regulation, adaptation is not an option. The key reason airports find themselves in such tremendous difficulty, however, is because they are stuck with very high fixed costs for the provision and maintenance of infrastructure and services, such as safety and security. They are unable to adjust down their operating costs, let alone their fixed capital costs, to compensate for the low levels of traffic, at a time when they have been effectively shut down by Government.

It is widely accepted that airports are, therefore, looking at elevated costs for the next few years at least, if not longer. With travel demand likely to remain weaker in the short term, due to ongoing restrictions and travel hesitancy, they cannot pass those costs on to airlines, nor would it be fair to do so. A level of ongoing, bespoke financial support to cover those costs should, therefore, be provided by Government, as we transition to the recovery phase.

The airport and ground operations support scheme provides some relief but a longer term and more extensive commitment is clearly needed. Ministers must urgently bring forward the long-delayed aviation recovery plan, and start thinking in earnest about linking the need for ongoing support to our wider goals as a country on climate change and sustainability. The immense problems airports are facing are due to factors entirely beyond their control. They are the result of understandable regulatory interventions from Governments, to prevent the spread of the virus, which include travel bans, traffic light lists and quarantine periods. From the Government’s announcements over the past couple of days, it seems as though aviation will be the sole industry to remain under restrictions.

Ministers like to talk about their £7 billion package of support, but only a very small amount of that has been sector specific. Other European Governments have provided much greater levels of financial support for their aviation industries, and have specifically linked that support to meeting climate goals, something the UK has also refused to do. A big chunk of that Government support will end in two months’ time, when the job retention scheme winds up. That scheme has been a lifeline for aviation workers currently on furlough, along with 51% of those working for tour operators. The Chancellor has been adamant that he will not consider continued sector-specific support for jobs. Unless he has a change of heart, significant redundancies will become stark reality for many in Newcastle, where Newcastle airport is a significant local employer. The loss of expertise will leave us with a less dynamic aviation sector when the recovery comes.

In 20 years, we will look back on the past year as a pivotal moment for UK aviation that will have long-term consequences. The covid-19 pandemic and the Government’s lack of support have crippled airports’ balance sheets. That will have a long-term effect on their ability to invest and create a sustainable future. It may not seem like much of an issue while international travel remains extremely limited, but problems are being stored up for when the recovery comes. The north-east needs Newcastle airport to thrive, to increase global connectivity and to drive our region’s growth and development. We need a clear road map from the Government for the safe resumption of international travel. Particularly if aviation is to continue to remain under restrictions, we urgently need the long overdue aviation recovery plan, alongside a comprehensive package of sector-specific support.