Regional Airports

Gavin Newlands Excerpts

Wednesday 7th July 2021 Westminster Hall

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to serve under your chairmanship, Ms McVey. I congratulate the hon. Member for St Austell and Newquay (Steve Double) on securing the debate. He led it very well. I could not disagree with anything he said; in fact, that goes for pretty much every contribution.

The hon. Gentleman spoke of regional airports and regional connectivity being vital to the levelling-up agenda. It is also crucial to other sectors, as I outlined a couple of weeks ago. We have had a number of debates on a similar theme in recent weeks. I will try not to repeat too much of what I have said, but inevitably I will cover similar ground.

The hon. Gentleman also covered PSOs. He can correct me if I am wrong, but I think he said that there are only three in the UK and they are all linked to London. However, that is the English position, because there are a number in Scotland. There are three PSO routes linked to Glasgow—Barra, Tiree and Campbeltown—and a number of other PSO routes are subsidised by local authorities in the Shetlands, Orkneys, Western Isles and Argyle and Bute. As we heard from the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), there is a potential additional PSO route to Wick, which I would very much welcome.

The hon. Member for Truro and Falmouth (Cherilyn Mackrory) made a fantastic speech. Sadly and unusually, a number of Members have pulled out of the debate, but other contributors included the right hon. Member for Hayes and Harlington (John McDonnell), who always takes part in these debates, and the hon. Members for Mansfield (Ben Bradley) and for Newcastle upon Tyne North (Catherine McKinnell). And, of course, no Westminster Hall debate would be complete without a contribution from the hon. Member for Strangford (Jim Shannon). He said that we had regional airports to thank for getting him here on time each and every week. I do not think there is any better argument for regional aviation.

As well as being the SNP Front-Bench spokesperson on this topic, I also represent Glasgow airport, which is operating at just 10% of normal capacity at the moment. In addition, we are losing another summer. Let us not forget that, while we talk down here about the school holidays and summer season starting at the end of the month, in Scotland the summer season has been under way for two weeks, and the Northern Ireland school holidays started in the past week or so. The season is already getting beyond Scotland and, to a large degree, Northern Ireland. It is crucial to recognise that.

Glasgow has lost 100% of its long-haul routes, 70% of its international flights and half of its domestic flights. Last year, Glasgow carried 1.9 million passengers—bear in mind that some of last year’s restrictions were not as bad as they are this year—compared with about 9 million in 2019. The last time passenger numbers from Glasgow were this low there was in 1970. Airlines UK has found that without Government support, UK airports will lose around 600 routes as a result of the pandemic. Crucially, it says that some 80% of those lost routes will be from the UK’s regional airports. In other words, the Heathrows and the like will be shielded in the medium term from the worst of the damage.

Given that, and given the long delay in publication, will the Minister confirm when the regional connectivity review will see the light of day? If the Government are genuinely serious about the levelling-up agenda, they must do something to address that specific point. Regional airports, as has been said by many speakers today, drive the regional economies they serve. It is not just about going on holiday. Commerce follows connectivity, and without a meaningful direct route network, Scotland’s place on the world’s stage is at risk, thereby affecting our ability to export and attract foreign direct investments —something we have been incredibly successful at for a number of years. Our successful inbound tourism industry is also at risk.

Pre-covid, tourists were, obviously, spending. Tourism in Scotland generated approximately £12 billion of economic activity for the wider Scottish supply chain and contributed around £6 billion to Scottish GDP, representing about 5% of Scotland’s total GDP. Pre-covid, Glasgow exported over £1.7 billion-worth of goods—more than any other Scottish airport. The majority went out in the belly hold of passenger flights—the very flights we are at risk of losing for good.

There has been much understandable consternation in the industry and beyond with regard to the decision-making process behind the traffic light system. The Government must be more transparent about the decisions they are making regarding why country X, with a potentially lower incidence rate, is on the amber list, while country Z, with a significantly higher rate, is on the green list. Despite what the Secretary of State said during Transport questions the week before last, that level of data is simply not available. The virus is a big enough variable for the industry to cope with—it does not need an even bigger variable in the form of completely unpredictable Government decision making on the traffic light system. The public also need to be convinced and to trust a traffic light system. It has to be said again that the decision to put India on the red list for England was delayed for far too long, and we can see the direct result in our current incidence rate.

One third of on-site jobs at Glasgow airport have already gone, and countless more off-site jobs have been lost from supply chain companies. As I said in this very room two weeks ago, the crucial point is that, such is the cash burn of and outlook for the sector, thousands of jobs have gone while there is a furlough scheme in place. As the Minister knows, jobs in aviation and, indeed, in the wider travel and tourism industry will be decimated in September if the furlough scheme is not extended for those sectors. Not only will that be an economic and social tragedy for thousands of families across Renfrewshire, and perhaps hundreds of thousands around the UK, but the loss in economic output and the cost to the Treasury of short to medium-term unemployment support and associated benefits would be an act of economically illiterate self-harm. There is no pontification or equivocation here—furlough must be extended for these sectors, or many parts of the industry and the hundreds of thousands who work in it face ruin.

The Minister will get up and repeat the sums about the support given to industry. Much of that is furlough, which I and many others of course welcome and which must continue, but in essence the rest is debt, resulting in our airline industry having a much higher debt ratio than much of its international competition, where support, as outlined already, is largely through non-repayable grants. The sum in the USA is £23 billion, in Germany nearly £8 billion, in France £6.5 billion, and in the Netherlands more than £3 billion.

As others have mentioned, limited relief was provided to English airports in November, when the UK Government finally introduced a limited business rate support scheme for the sector. That was seven months after the Scottish Government had announced a similar but more generous scheme in Scotland, where it is not capped and extends to airlines based there, too. Moreover, the Scottish Government moratorium has been extended by a full year, whereas the UK Government’s limited and capped version will continue for only six months. That is clearly an unsustainable position. Will the Minister, in summing up, confirm that an extension is being considered?

Another issue that has hit regional airports a lot harder than the bigger airports was the loss of VAT-free shopping on 1 January, through the scrapping of the extra-statutory concession scheme. I was reminded of that by my hon. Friend the Member for Glasgow East (David Linden), who travelled through Glasgow airport a bit earlier than me on Monday. He spoke to a member of the duty-free staff who said that, just prior to my colleague going in, they had lost out on £6,000-worth of whisky sales to an individual, because the rules now do not allow for that. That was £6,000 lost in just one transaction.

The result of the Government consultation on the extra-statutory concession was overwhelming. In fact, it was near unanimous, such was the support for the continuation of some form of ESC after Brexit, but again the Treasury ignored those responses. This is yet another revenue stream that helps employ thousands of people across the country and is vital for many airports. Regional airports depend on the revenue from air-side shopping to a far greater degree than the Heathrows of this world. In fact, up to 40% of a smaller airport’s revenue is generated through shopping, as a higher proportion of passengers are flying point to point, rather than domestically through a hub such as Heathrow.

Kicking away that financial structure at a time of huge pressure on the finances of airports is another unnecessary blow to an industry that is reeling from the pandemic, and many regional airports in England are still dealing with the after-effects of the collapse of Flybe. In Scotland, it is estimated that the abolition of the concession will potentially result in the closure of most retail outlets at airports and lost revenue of about £20 million and hundreds more jobs, which neither retail or airports can afford. In fact, in Glasgow five retail outlets and at least three food outlets have closed and will not reopen. The UK Travel Retail Forum said:

“This could be the final nail in the coffin of several UK regional airports.”

The entire industry is on its knees, and I am concerned that the forum is right.

To come to a conclusion, I have made this point recently, such that I sound like a broken record. This is about the 37th time I have asked about support for the aviation sector. That is not just the furlough scheme, crucial though it is, but bespoke support for the sector, which let us not forget is the sector hardest hit by covid. Indeed, we need the kind of bespoke support that the Chancellor and the Secretary of State promised at the outset of the pandemic. I well remember being in the room when the Secretary of State, having claimed to have saved Flybe only to watch it collapse, said to the industry:

“I understand the enormity of what you are facing, and this Government will stand by your side.”

No one in the industry feels that the Government have been by its side. I ask the Minister again: are the Government actively considering a bespoke aviation, travel and tours recovery package? Many sectors that have been far less affected than aviation have had that kind of support.

As I have said, the UK started the pandemic with the world’s third-largest aviation sector, but as one third of that workforce are already gone, it will certainly not come out of this as the third largest. Thousands of people in my constituency alone are losing their jobs. Parts of the industry are on the verge of collapse. As I said two weeks ago, time is running out. We need action, and we need it now.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Robert Courts)]

It is a real pleasure and honour to serve under your chairmanship, Ms McVey. I thank my hon. Friend the Member for St Austell and Newquay (Steve Double) for securing this important debate. He and I have spoken on many occasions—not just about his vital airport, but about regional connectivity in general. He is hugely knowledgeable and passionate. As a consequence, he is an incredibly powerful advocate not just for his local community, but for regional air connectivity in Cornwall and the whole of the UK.

I thank all hon. Members for the varied and excellent points that they have made, and I will do my best in the time available to respond to as many of them as possible. The Government entirely understand and recognise the severe economic impact that the covid-19 pandemic has had on regional airports. They are critical regional and national infrastructure, and we continue to work to understand the industry and to see how it can be best supported at this time. Before I address some of the wider points that have been made, I will say a word or two about Newquay airport, because it is so important to my hon. Friend the Member for St Austell and Newquay.

Newquay airport is vital for connections to the south-western corner of our nation. It connects to nine UK airports, the Isles of Scilly, Faro and Alicante. Newquay airport provided vital access for world leaders accessing the G7 summit last month and, as my hon. Friend rightly says, it was clearly vital to the success of the summit. The £7.8 million provided by the Cabinet Office for infrastructure improvements for the G7 enabled the efficient handling of air traffic and the aircraft that were required for the summit. I am pleased that the works will also ensure that the summit leaves a long-term economic legacy at Newquay airport.

I will be in Cornwall tomorrow as part of the Maritime Safety Week programme. I will be returning from Newquay airport, and I am delighted that my hon. Friend will, I hope, be joining me on a visit to and tour of the airport. We will see again, for ourselves, quite how vital this airport is, not only to him, his area and the constituencies surrounding it but to the whole of the UK. That is because the UK enjoys one of the best connected, best value and safest aviation industries anywhere in the world. The aviation industry creates jobs, encourages our economy to grow and connects us, as my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) eloquently explained, with the rest of the world. It consolidates and expands this country’s position as a dynamic trading nation. That is doubly the case with regional airports.

Regional airports serve our local communities. As the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) vividly explained today, they support thousands of jobs and act as a gateway to the international opportunities to which I have already referred. They maintain social and family ties, and strengthen the bonds between our four nations.

The hon. Member for Strangford (Jim Shannon), as ever, made a wonderful contribution. He explained that regional aviation is vital not only to Northern Ireland as a whole but to his weekly commute. The hon. Member is the personification of the vital economic and social link that regional aviation provides for Northern Ireland and for the United Kingdom.

Prior to the pandemic, the aviation sector directly contributed at least £22 billion to GDP each year and supported half a million jobs in the UK. Maintaining a strong, privately operated and competitive aviation industry is vital to our economy. It supports a truly global Britain and the communities that surround airports.

The hon. Member for Wythenshawe and Sale East (Mike Kane) used a wonderful phrase: “the airport community.” He is absolutely right. He referred in particular to Humberside and, of course, to Manchester, which is so important to him. The phrase “the airport community” could apply, and does apply, to so many of the Members who have contributed to this debate, and to many others who would have liked to have done so.

I would like to dwell for a moment, Chair, on some of the points made by my hon. Friend the Member for Mansfield (Ben Bradley). He made powerfully clear the importance of East Midlands airport to his constituency and region. Regional airports are vital for levelling up. They enable local communities and businesses to connect with London and beyond. They play a key role in levelling up our regions and building global Britain. It is absolutely vital that that air network is maintained, because it is key to achieving positive and growing economic outcomes for our regions. Our objective is to ensure that all nations and regions of the UK have the domestic and international air transport connections that local communities and businesses rely on, while of course ensuring that we meet our net zero commitments. I will come to that in a moment.

The importance of this regional aviation network has been seen as never before during the covid crisis. Although it has clearly impacted regional airports across the UK, and the airlines that operate out of them, the sector has continued to perform well and has adapted despite the challenges. We have spoken of Newquay already. The Newquay to London route is operating during the summer, as commercial operators are offering enough flights to be able to meet the demand for staycations. We have heard that the G7 summit was facilitated by that.

As of last week, a new route began operating from Teesside airport to London Heathrow. It will link passengers from Teesside, via Heathrow, to 134 destinations throughout the world. We have seen vividly over the course of the last year that the sector has adapted to provide critical support during the pandemic. For example, aviation freight has been vital for getting the amount of personal protective equipment the UK has needed, both through airports that are freight specialists and through passenger airports that also deal with a heavy amount of freight. My hon. Friend the Member for Mansfield has clearly explained the importance of East Midlands to his region, and Birmingham airport has also stepped up to provide more red-list terminal capability and capacity.

[Gavin Newlands]

The Minister has made a very good argument and case for regional air connectivity, so can he tell us if and when the regional air connectivity review will be published?

[Robert Courts]

I shall return to the hon. Gentleman’s points, but on that point, in brief, we will look to publish that regional connectivity piece as part of the strategic framework for recovery of the sector that we will publish later this year. I will come on to some of the regional connectivity review points in a little while, but that is the brief answer to his question.

I would like to say a word or two about the wider use of airfields, the diversification of them, and the ability for airports and airfields to provide highly skilled, dynamic and innovative businesses with opportunities to grow and flourish. That involves things such as the maintenance of aircraft, manufacturing, aviation services, and research and innovation. Airports and airfields are not just vital for their local economies, but critical to the success of the aviation sector more broadly. My hon. Friend the Member for St Austell and Newquay of course chairs the APPG on general aviation and will know how important they are for that. I know that he shares my passion for that.

My hon. Friend the Member for Truro and Falmouth spoke about the use of commercial airports for aerospace or military aerospace. There are of course many examples all over the country, but Cobham at Teesside airport is one that immediately springs to mind. Then there are regional airports that have diversified into other, additional functions—things such as pilot training. Oxford airport, just outside my own constituency, is a powerful example of that. Perhaps the most vivid example of all is Newquay airport in hosting a spaceport.

The hon. Member for Strangford pointed out that many services need regional aviation. He rightly referred to search-and-rescue helicopters, to police helicopters and, of course, to oil and gas maintenance and facilitation. The mixed use of aviation and airspace is absolutely vital, going far beyond the immediate core vital function that we have spoken about today.

I would like to say a word or two about route support and PSOs—an issue raised by a number of hon. Members, including of course my hon. Friend the Member for St Austell and Newquay but also the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), who spoke just a moment ago. The hon. Member for Caithness, Sutherland and Easter Ross had the wonderful phrase “from Cornwall to Caithness”. I suspect that other hon. Members might wish to add some stops en route, so that we have Cornwall to Caithness via Manchester, via Glasgow and via Belfast, for example; there are many other places. His phrase was wonderful; I apologise to him for having mangled it in the course of including other hon. Members. His essential point, that regional aviation covers the country from Cornwall to Caithness, is of course a very important one.

We continue jointly to fund public service obligation routes from, for example, Londonderry and Dundee into London, protecting air connectivity from some of the most far-flung parts of the UK. We are, as I have stated already, very pleased that commercial services have operated between Newquay and London over the summer and will continue until the end of October. We are working closely with Cornwall Council to ensure that air connectivity on the route can continue beyond the end of the summer season.

I recognise, of course, the significant impact that covid-19 has had on regional airports, airlines, economies and connectivity. We will consider whether there are further opportunities to utilise PSOs alongside other policy measures that look towards meeting our ongoing regional-connectivity and levelling-up objectives.

The hon. Member for Caithness, Sutherland and Easter Ross asked to meet me about Wick airport. Of course I would be delighted to meet him to discuss that and any other issue that he may wish to discuss with me. He will of course realise that if a PSO is considered to be intra-Scotland, the Scottish Government would be the right place for him to direct his inquiries, but of course I am happy to work with him to see what more we can do to strengthen regional aviation in his part of the world.

A number of Members mentioned air passenger duty. Of course, as part of its plan to boost regional connectivity to support the commitment to net zero by 2050, the Treasury launched a consultation on aviation tax reform that explores reforms to air passenger duty. It is an area often cited by the sector as a barrier to domestic connectivity. That consultation has set out the Government’s initial policy position that, following our departure from the EU, the effective rate of APD on domestic flights should be reduced. The consultation closed on 15 June. The Treasury is now considering responses and will give an update on response timings in due course.

I have already briefly referred to the regional connectivity review, in answer to the hon. Member for Paisley and Renfrewshire North. The Union connectivity review by Sir Peter Hendy is under way and will be published later this year. That will explore how improvements to transport connectivity between the four nations of the United Kingdom can continue. That is independent of Government and is expected to examine various modes, including air links.

A number of hon. Members rightly mentioned decarbonisation: my hon. Friends the Members for St Austell and Newquay and for Truro and Falmouth, and the hon. Member for Wythenshawe and Sale East, in particular. The Government have introduced a wide range of measures to support the decarbonisation of the aviation sector, including a £15 million competition to support the UK production of sustainable aviation fuels—SAF, as they are called—and the introduction of the UK’s emissions trading scheme, which is 5% tougher than the EU equivalent, and covers all domestic and UK to European economic area flights. In June, we launched the first round of the £3 million zero emission flight infrastructure competition, supporting the development of the infrastructure that is required to aid electric and hydrogen aircraft. That will help to build the UK airports and airfields of the future.

The UK’s domestic aviation sector is well placed to be at the forefront of decarbonisation. I welcome the recent announcement from Loganair that its operations will be carbon neutral by 2040, to be achieved through the use of SAF, hydrogen and battery-electric propulsion, as technological advances allow. The Government will shortly consult on our jet zero strategy, setting out the steps that the sector will need to take to achieve net zero by 2050.

A number of hon. Members asked about the future, the recovery of the sector and the strategy: my hon. Friend the Member for St Austell and Newquay, the hon. Member for Newcastle upon Tyne North and the right hon. Member for Hayes and Harlington (John McDonnell) who was not Zoom-bombing—his contributions are always very welcome, whether on Heathrow, the green recovery or any other matter concerning aviation. We will be looking ahead for the sector and will need to set out the path for recovery in a way that supports not only the aviation market but the wider objectives of levelling up and building back greener.

We are working on the strategy for the future of aviation in the UK, to be published later this year. It will explore the sector’s return to growth, including workforce and skills, aviation noise, innovation and regulation, consumer issues and, critically, regional connectivity, as I have explained. It will also consider climate change and decarbonisation, as well as the critical role that aviation plays in retaining the UK’s global reach. As I explained, the strategic framework will be published later this year.

There is no doubt that the pandemic has had a devastating impact on the UK’s aviation sector but regional connectivity and regional airports are a vital part of it, and we are committed to ensuring that they are at the forefront of Government plans to help the sector to recover. The Government are always keen to engage with aviation stakeholders to find ways to ensure the swift recovery of the sector.

Although uncertainty remains in the path ahead, we are committed to this world-leading aviation sector, both its international and regional parts. We will ensure that the sector has the tools it needs to return and grow in a safe and sustainable way. I thank all hon. Members who spoke for such an excellent, wide-ranging, highly knowledgeable and helpful debate on this critical topic.