Aviation

Jim Shannon Excerpts

Wednesday 4th July 2012 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

Thank you, Mr Dobbin, for calling me to speak.

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing this debate and bringing the issue to the House today. In four minutes, I quickly want to give the Northern Ireland angle. In particular, I want to mention a subject that is often talked about, and perhaps hated: air passenger duty. It is an issue that must be considered.

Recent press coverage of APD shows that the Government raise very little money from internal flights from Northern Ireland, and airlines actually take advantage of the tax and retain it when flights are not taken up, as they charge a fee and most people do not ask for the refund. That was not the intention with regard to the tax, and that is the first thing that must change if we are to boost competitiveness.

I spoke to the hon. Gentleman yesterday about this debate and I said very clearly that I wanted to put forward the Northern Ireland angle. With the Government committed to regional rebalancing in the UK, and an economy that is heavily reliant on the south-east, where better to start than with a change to APD? I understand that APD does not apply to flights to Scottish islands. If the Government are serious about rebalancing the UK economy, surely Northern Ireland should have the same treatment in relation to APD as the Scottish islands. Making that change would send a strong signal that the Government are serious about regional rebalancing.

As a frequent flier from Northern Ireland to the mainland UK, I am well aware of flight prices and the critical importance of having a good flight system and links. Having spoken to various airport managers, I know there are some central themes that continually emerge. I want to touch on those themes quickly.

The first is future national economic growth. The UK needs improved links to key emerging markets. I was surprised to learn that UK businesses trade 20 times as much with countries to which there are daily flights than with those countries with which we have a less frequent service, or no direct service at all. It is very clear that the more direct flights to countries we have, the more our economy will grow, the more employment will grow, and the more we all benefit. We must boost growth by increasing inward investment and exports. Improving international connectivity is critical if those things are to happen. That is one reason why competitiveness is an essential component of growth. We should have regular contact with the BRIC countries—Brazil, Russia, India and China—and we should open up more links with them, because that will boost our economy.

London is open for business, and so is Gatwick airport, in particular. However, although in the summer months Gatwick is at full peak capacity, at other parts of the year it is not. Sometimes it is operating only at 78% capacity. The hon. Member for Rochester and Strood spoke about that. There is potential for a further 11 million passengers to use Gatwick every year, which would represent a 25% increase on current levels. Gatwick has secured new direct routes to China, Hong Kong, South Korea, Vietnam and Nigeria. In each of these countries, there are opportunities for economic benefit, and the routes can only strengthen and enhance the possibilities.

The hon. Member for Cambridge (Dr Huppert) spoke about the need to improve rail surface access links to airports, and that is important, too. Millions of air passengers go on to use other transport infrastructure, such as rail lines. It is imperative that those lines are up to the standard that is expected of a thriving central business hub. That will encourage new flight-lines, which in turn will encourage competitiveness in the market. As soon as bmibaby pulled out of Belfast City airport last month, all the other airlines there upped their prices, and the reason was clear—they had less to compete with. Their flights were being almost filled at higher prices, which in the long term will affect businesses. A flight from Belfast can cost approximately £400 to £500. One can get a flight to the USA for £450. There has to be something wrong there, with regard to competitiveness.

The UK aviation industry provides about 352,000 jobs and more than £8.6 billion in tax each year, as well as contributing more than £50 billion to Britain’s gross domestic product. It is a major player in the economy of Great Britain, and when it comes to improving Britain’s international competitiveness, it is very important.

In conclusion, in a history class many moons ago, I was taught that the secret of the success of Great Britain was her mastery of the seas; that probably shows my age. That was not simply about having a good fishing fleet, or the Royal Navy; it was about having connections and building up trade all over the world. That must be an ingredient in our continuing success, and the key to true competitiveness.