Aviation Industry

Graham Stringer Excerpts

Tuesday 15th November 2011 Westminster Hall

[Mr Donohoe]

I will always be corrected by the Minister in that respect. Under the previous Government, there was a trial period of mixed mode. I understood that the only way we could increase the number of passengers going through the airport was if we brought mixed mode into operation. I do not think I will be proven wrong in that respect.

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

Does my hon. Friend not agree that the number of passengers going through Heathrow is only one measure of its economic importance? If we look at the destinations served by Heathrow in its constrained state, we see that it is losing out in many of the emerging economies such as China, Brazil, Malaysia, India and Russia, and that is where the damage to the UK economy is being done.

[Mr Donohoe]

I could not have put it better. My hon. Friend will be speaking in this debate and will no doubt reinforce that point. It is clear that that is the situation.

--- Later in debate ---

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

The future of the aviation industry has been hobbled by Government policy, but that future is important, and I hope to explain why in the few minutes available. I congratulate my hon. Friend the Member for Central Ayrshire (Mr Donohoe) on securing this debate, which is vital not just to aviation but to the whole UK economy.

Historically, the United Kingdom’s aviation business has been the second largest market in the world, not just in the production of aeroplanes but in the flying of them. We are in danger of losing that position; we almost certainly will. The arguments for constraining runway and airport capacity in the south-east fall down when looked at in detail, as do the solutions, and I will try quickly to go through the reasons why.

Aviation is vital to the economy, not just because airports and aeroplanes—the production of them and the flying of people in them—produce jobs, but because reducing the connections that aviation gives us to the rest of the world is, in essence, like switching off the internet. If someone in the House stood up and said, “We’re going to stop the growth of the internet and communications with the rest of the world,” people would think that that Member had gone off his or her rocker. Effectively, however, that is what we are doing by constraining air capacity in the south-east.

There is only one hub airport in this country, and that is Heathrow. By constraining its runway capacity, we will not necessarily reduce any increase in the number of passengers using it, because operators can use larger aeroplanes on the same runways. However, we will certainly reduce its importance to the economy, because we will reduce the number of destinations it serves. Already, the number of short-haul destinations served by scheduled services from Heathrow is 46, while Amsterdam has 67, Frankfurt 74, Paris 78 and Madrid 63. Heathrow still has more long-haul destinations than those airports, but there is an ecology of short-haul and long-haul routes, and as the number of routes diminishes, so Heathrow’s importance also diminishes. Heathrow already has fewer connections to some of the growing cities in China. As I said in an intervention on my hon. Friend, it has fewer connections to Malaysia and to the BRIC—Brazil, Russia, India, China—economies than its competitor hubs in the rest of Europe, so it is already losing out, and it will lose out further.

It is often said that the regional airports can take the strain, and the hon. Member for Redditch (Karen Lumley), who is no longer in her place, said that people will go to Birmingham. However, all the evidence is that the airlines have no levers to help them to get extra capacity at regional airports, and they have not had any for 20 years. We are going through a recession and economically difficult times, and the loss of traffic at regional airports is about twice the rate at Heathrow. Indeed, the Government’s policies—this also applied to the previous Government—are having a perverse impact, because of the nature of the economies involved. Air passenger duty has a really negative effect on regional airports, and some airlines are choosing to use hubs outside a region because of it. The most recent example that I have come across—there are others—is AirAsia, which was more or less signed up to using Manchester airport, but which is now flying from Kuala Lumpur to Charles de Gaulle. The reason that it gave was simply air passenger duty.

What is true for regional airports, where air passenger duty has a differential impact, is also true for the whole United Kingdom economy—we can do the sums and see the transfers. It is not just that flights are not happening at regional airports, but that operators of flights—particularly tourist flights—from Japan, south-east Asia and the emerging economies are choosing to go to Charles de Gaulle, Frankfurt, Schiphol, Copenhagen and Madrid, rather than Heathrow, because of the extra cost of air passenger duty. As a result, air passenger duty is damaging not only regional airports, but Heathrow itself.

I was pleased by the decision to reduce air passenger duty at Belfast airport. However, if we want to use the capacity at our regional airports, there needs to be a differential between them and the south-east airports. Any differential must help our regional airports, rather than being less than helpful to them, as it is at present. The other way that regional airports could be helped is by building infrastructure. Very few airports in this country have direct links to high-speed trains or good public transport connections. Improving public transport to our regional airports at a cost to the public purse would therefore help in some way.

The biggest push that could be given to our major regional airports, such as Birmingham, Manchester and Glasgow—I do not think this really applies to other regional airports—would come from completely opening up the skies. The previous Government gave regional airports the ability to take flights, with their permission, with fifth freedoms, which meant that those flights could pick up passengers at those airports. That is an advantage, but it would be a much bigger advantage —I imagine this would appeal to a Conservative Government—if we completely opened up the skies around those airports, so that any aeroplane could fly in and out, pick up passengers and take them wherever they wanted. Historically, the only reason why that has not happened is the Government’s over-protectionist position towards British Airways and BAA.

Things can be done to help regional airports that go beyond what is being done at the moment, which is counter-productive. Incidentally, if air passenger duty is such a good idea, why do so few other countries in Europe have it? Only four other countries—Denmark, Norway, Malta and Holland—have it; some have tried it and got rid of it because it is so economically damaging. We have to test these things against what our competitors are doing to find out whether we should have them, and I do not think we should.

It is often said that there are environmental reasons for constraining traffic in the south-east. As my hon. Friend explained, however, when we look at the detail of what happens, it becomes clear that people do not stop flying because of constraints in the south-east system; they use other hubs, and the constraints imposed by air passenger duty reinforce that. Rather than taking a direct flight or using Heathrow, people from Manchester will fly to Schiphol, Copenhagen or wherever and fly onwards because it is cheaper. That saves them air passenger duty and it saves them going into the constrained south-east hub. As a result, there is at least twice the environmental damage, because aeroplanes produce most pollutants—carbon dioxide and other pollutants—when they take off. Someone going to, say, Tokyo may go via Copenhagen. There are not, therefore, good environmental reasons for such a view.

Regional airports are not an alternative, for the reasons that I have given. The former Labour Secretary of State, Lord Adonis, said Boris island was bonkers, and within five minutes of looking at it, we can see that it will never happen—for environmental and planning reasons, and because of the sheer cost and financing involved. When there were fewer environmental issues, it took Munich 25 years to develop a new airport, which opened in 1992. Something as huge as Boris island will simply not happen as an alternative.

I should like to make a number of other points, but other hon. Members want to speak, so I will sit down. There is, however, no real alternative to expanding Heathrow; we certainly cannot use Heathrow and Gatwick as one airport. The Government’s policies are hugely damaging to the aviation industry and the UK economy.