Air Transport (Northern Ireland)

Naomi Long Excerpts

Thursday 27th June 2013 Westminster Hall

[Naomi Long (Belfast East) (Alliance)]

I am pleased to follow the hon. Member for Vauxhall (Kate Hoey). I thank the hon. Member for Tewkesbury (Mr Robertson) for his chairmanship of the Committee generally, and particularly for his interest in aviation and aviation policy. Such issues have consumed a lot of the Committee’s time, whether it is the aerospace industry, aviation strategy or APD, which reflects the importance of aviation to Northern Ireland’s economy.

As an island off an island, our peripherality can be countered only by having good, quick connections. The hon. Member for Vauxhall made the point well that those of us who have on occasion laboured by boat, train and car to make the same journey would not swap an hour-long flight for the alternative. We certainly could not do so if we were seriously going to do business in the House or anywhere else. As a form of business travel, flying is the only viable option for people from Northern Ireland to make contact with the south-east.

I recognise and welcome the Government’s analysis of the contribution and benefits of aviation to the UK economy. That is especially true in Northern Ireland, particularly in my constituency of Belfast East, where aerospace companies such as Bombardier and Thales directly employ many highly skilled workers. Their employment contributes to the rebalancing of the economy, which the hon. Member for Tewkesbury has said is a priority for the Committee and for the Northern Ireland Executive. I believe all of us who represent Northern Ireland want to see that happen. Aerospace is a particularly important marketplace for us to sustain growth.

The tourism industry, both inbound and outbound, relies heavily on aviation, as would be expected for an island economy. Due to the relatively small number of direct flights to other international destinations, our connectivity to other parts of the UK is crucial if we are to ensure our connectivity with international destinations. Such connectivity contributes heavily to UK economic activity, and passengers who pay APD on both parts of their journey are particularly affected.

APD has a detrimental effect on the continued development of a thriving tourism sector in Northern Ireland by placing a cost burden on business, not least because of our unique position of having a land border with another EU state, placing us in direct competition with a much lower-tax economy. We have to be cognisant of that when we make decisions, and I will elaborate on that later.

I will start by addressing connectivity to and through the UK hub airports, and I will then reflect on what the Committee says about connectivity to the airports within Northern Ireland. Airports are recognised as devolved but there may be things that the UK Government can do to encourage more work on connectivity within Northern Ireland.

The UK is one of the best-connected countries in the world, and the Government are right to state that the broader the range of destinations served and the higher the frequency of flights to and from those destinations, the better connected we will be. That is particularly crucial in the context of Northern Ireland. It is vital for us to get access to the south-east of England and, through the main hub airports, to the rest of the world. On connectivity to the south-east, the overall gross value added of Northern Ireland is only about 80% of the UK average. Successive Governments have nominally committed to a policy of regional convergence, but London and the south-east are still regarded—I argue, protected—as the main drivers of the UK economy. Only three UK regions are net contributors to the Treasury, and Northern Ireland is the most dependent of the remaining nine.

Clearly, an active regional policy by Government is necessary to promote a more even distribution of economic activity throughout the UK. In the interim, it is imperative to ensure that the regions have good access to London and the south-east to assist with economic competitiveness. Northern Ireland’s unique position means that aviation is essential to that connectivity. There are no other appropriate means of transport to access mainland UK or other onward destinations quickly and easily for business purposes. On onward connectivity, as we rebalance the Northern Ireland economy, it is vital that we encourage and support indigenous businesses to expand their exports, attract new foreign direct investment and so on. Ease of travel and the frequency and cost of flights are always factors in our ability to maximise potential. Direct access to the main hub airports in the south-east is vital.

I concur with the Chair when he said that the Committee was concerned about delays to do with the Heathrow issue, and I will elaborate on that. Demand for landing slots for international flights is placing pressure on national connections, which worries us, as one of the most affected regions. If Glasgow loses its landing slot, people at least have the option to step on a train, but if Belfast loses its landing slot, we are talking about a three-day hike, so the issue of our connectivity is much more serious. Future proposals need to be evaluated not in isolation, but in terms of the economic impact in Northern Ireland and other remote regions of the UK, because equitable access to London is crucial. The lack of a decision on an additional runway at Heathrow or of a new hub airport—I am fairly indifferent to which option is pursued—has an impact on landing slots, which is important for Northern Ireland passengers in two ways.

First, the focus of the airports on through passengers is intensifying, because of constrained capacity, and both Heathrow and Gatwick now levy charges on passengers who arrive in those airports as their final destination from other UK airports, which adds to the cost of travel. Such charges might be relatively small at the point of introduction, but they will have an effect, because, as the pressure increases, the charges will increase. Furthermore, we often find that charges will increase as people’s tolerance of them increases. The charge is applied to transit passengers, but Northern Ireland has few through carriers, so most people arrive there as a destination, then have to change flights completely—they are not technically transit passengers, so they end up having to pay the charge.

Secondly, as others have mentioned, the flight connections between Belfast and London, and their frequency, are placed at risk as the pressure for landing slots—at Heathrow in particular—grows; they are at risk of being replaced by more lucrative long-haul routes. The Chair of the Select Committee has already reflected on the evidence given by Willie Walsh of IAG, but his twin reasons for the continued need for regional flights were to feed the passenger capacity of onward internationals and because of a lack of a fleet of international jets ready to take on the extra slots. That was not an option therefore, certainly in the short term. The reality is that the frequency with which the airline would want to fly between Belfast and London would be based more on its onward connections than on the convenience of those who travel for business and other purposes.

We heard good evidence about the possible constraints from the CBI, the Federation of Small Businesses, the Northern Ireland Assembly and Business Trust, and so on. We heard that frequency is almost as important as capacity for flights between London and Belfast, so that people can have more flexible travel arrangements. As already mentioned, Members from Northern Ireland will often struggle still to be in the House for the close of business at the end of the day, because the last flights leave so early. Not to join the bandwagon, but easyJet is one of the latest flights to leave and one of the few to allow us, for example, to vote in the House on a Wednesday night and still get back to Northern Ireland on a Wednesday night. There is an issue about the routes and, although we understand about public service obligations, it may need to be looked at in future. Any threat might not be imminent, but if the matter of Heathrow and capacity in the south-east is not resolved as a matter of urgency, the pressure on slots for flights to Northern Ireland will continue to increase.

I hope that something will be done as a matter of urgency. Given that the need for resolution is of acute importance to Northern Ireland residents, I regret the apparent lack of urgency in the approach taken. I have read the Government response to our first recommendation, and I understand the need for an evidence base and the reference to the Airports Commission, but the response goes on to mention that any decision will be “highly contentious” and that the decisions have been under discussion since the early 1990s. I suspect that the contentious nature of the decisions has had more impact on the time frame than the lack of an evidence base. Most people in Northern Ireland feel that that has been more the guiding factor, rather than the difficulty of the decisions to do with the airport.

Connectivity to airports within Northern Ireland is also important. Those are largely devolved issues, which was reflected in the Government response to the report, but that context is important. We are pleased to see commitment to creating lower-carbon methods of reaching airports in Great Britain, which we hope will be encouraged in the devolved Administrations. The Northern Ireland Administration do not have a climate change action plan, unlike the rest of the UK: Scotland has its own plans, and England and Wales are covered by what happens in Westminster. Northern Ireland sits outside those arrangements, and some impetus to drive something through the Assembly would be good.

Northern Ireland will obviously not benefit directly from high-speed rail. In case the Minister does not already know, I voted in favour of high-speed rail, which I hope will make him slightly more sympathetic to my other points. Investment in public transport is good and wise investment, and I say that as someone who comes from an engineering background. High-speed rail will not directly benefit us, but in Northern Ireland, by contrast, all our airports are within one mile of an existing rail line, and yet none has a direct connection to that railway. Someone arriving at Belfast City airport terminal can see the railway, but cannot reach it directly; people have to leave the airport site and walk across a dual-carriageway bridge and through some streets to get there. Relatively modest investment by the Northern Ireland Executive, therefore, could enable connectivity between the rail network in Northern Ireland, limited though it is, and air travel. We want to see the Government and the Department for Regional Development in Northern Ireland work on developing such access to identify funding and other opportunities.

The lack of ease of access to Belfast International airport in particular remains a problem, and one that has received attention as a result of the Northern Ireland Affairs Committee’s aviation inquiry. The road network serving the airport fails to meet the needs of Northern Ireland in pursuing inbound tourism and international investment as key drivers. We need to have an adequate and well-maintained road infrastructure to have onward connectivity within Northern Ireland and with the rest of the island, which is our main economic partner in terms of exports and other things. Improved infrastructure could attract more customers and international carriers to the International airport, improving our connectivity with the rest of the world. Road access to Belfast International is extremely poor in places, as the hon. Member for Vauxhall, who uses it regularly, is aware. Travelling from Belfast and after leaving the M2 motorway, one must proceed along seven miles of two-lane single carriageway, passing through a small town to reach the airport. The road is relatively straight and safe, but high traffic volumes during peak periods result in delays and an increased chance of accidents. No proposals or meaningful discussions have been forthcoming about upgrading the road. In our discussions with the devolved Administration, we have stressed that it should be examined.

First impressions are hugely important, and our public transport connectivity creates a generally poor impression, although we might have benefited slightly over G8—no one could actually get to Enniskillen, certainly by public transport, even had anyone wanted to go there to protest. It is something that needs to be addressed.

I next want to touch on air passenger duty, because we cannot discuss aviation strategy without looking at APD, which has a disproportionate effect on Northern Ireland passengers. The Committee spent considerable time discussing the issue, and some changes have happened, in respect of the International airport in particular, on the back of one of our previous reports. People frequently gave us evidence about the impact of APD. If we are to rebalance Northern Ireland’s economy, it will primarily be not by cutting the public sector, but by growing the private sector. In my view and that of a growing number of people, the APD regime is a significant obstacle to that. It is a commercial challenge to Northern Ireland businesses and conflicts directly with the positive measures that are being taken to boost tourism and related employment to encourage foreign direct investment and so on. It adds to the cost of indigenous businesses, particularly those seeking to grow their export markets.

The Committee received evidence from a large fish processor in Northern Ireland who exports to the far east, and finds APD a huge burden on his business. Being able to take his product to international markets and build relationships with those markets and clients is crucial for him in growing his export base. But in his evidence, Mr Rooney said that APD effectively consumes part of the budget he sets aside for travel, so the number of his mission journeys is limited by APD. If it did not exist, or were lower, he could travel more frequently to sell his products. He is very successful at getting them into the market when he has made those connections.

At best, APD adds to the cost base and, at worst, it could jeopardise connectivity between Northern Ireland and other UK and international markets, impeding our efforts. The levy was originally relatively affordable, but it has increased significantly, particularly on long-haul flights. Since 2007, the increases have been very steep—up to 260% for short-haul flights—and between 2008 and 2011 the number of passengers carried by Virgin Atlantic, for example, decreased by between 7% and 8%, but the amount of APD paid by its passengers increased by more than 45%.

Hon. Members will be aware that since I have been in Parliament I have raised the issue frequently—the Treasury would say relentlessly. I apologise that much of what I am saying today has been heard before, but until it is acknowledged and dealt with it bears repeating. I want to focus on what happens in Northern Ireland because of its uniqueness. It is an effective demonstration in microcosm of APD’s impact more widely throughout the UK.

When I have raised the issue with Treasury Ministers, I was scolded for not acknowledging the Government’s work on direct long-haul flights. I will not make that mistake again. I acknowledge that that was real progress, and I am glad the Government moved to devolve that and in the first instance to reduce it so that we retained the United Continental flight as our only long-haul direct route. Of the 600,000 passengers it carried in the last six years or so before the decision, 40% were inbound tourists and business visitors, so it was crucial to retain that connection to north America.

The route’s success is a tangible demonstration to others. The hon. Member for Vauxhall mentioned direct flights to Canada. We had those seasonally, but have since lost them. It would be good if they were restored, given the huge diaspora to Canada. It provides a good evidence base for other airlines to consider direct flights from Belfast. APD placed the direct flight in jeopardy simply because the rates are so much lower in Dublin, which is less than two hours away and, in contrast, has good road links. That is a challenge that we must face in developing our infrastructure.

I give credit to the Government for responding to the work of Northern Ireland MPs, the Northern Ireland Assembly and its Ministers, businesses and the Northern Ireland Affairs Committee’s report on APD by reducing the levy on direct long-haul flights and for devolving the matter to the Assembly. That change was important and very welcome, but affects around 2% of Northern Ireland passengers. It does not help with the unfair burden on Northern Ireland of APD more generally; for example, on regional flights, or because of the double duty that is paid because our access to main UK hubs often requires separate flights due to the limited number of through carriers. We pay short-haul to get to London and we pay long-haul to go from London. If we had a through carrier, we would simply pay long-haul, even if we stopped in London, but because we do not have seamless ticketing, we end up paying more and that should be looked at from the perspective of fairness.

The case for reviewing APD is strong throughout the UK. For island nations, connectivity and aviation are crucial. The situation is more acute in Northern Ireland because we have a land border with another EU member state and the price-sensitive advantage in the Republic of Ireland has directly affected Northern Ireland. It was initially a bigger issue with international long-haul flights because the extra time needed to get to the airport made it worth while, but when flying on even a moderate flight of, for example, four hours it is almost as quick for many people to go to Dublin as to International airport or elsewhere to pick up their flight. The savings may make it sensible financially to make that slightly longer journey, and that will be an increasing challenge.

APD also affects tourism because it reduces the cost for people flying into Dublin, and when they do so as inbound tourists it is very difficult to get them to cross the border to spend time and stay overnight in Northern Ireland. We are trying to grow our tourism, and the tourism offer has improved dramatically in recent years, but it is still difficult to get people who have flown into another jurisdiction to come north and spend time in Northern Ireland, which is what I really want them to do. Getting people to Belfast in the first place is hugely important.

When APD was first introduced, it was a means of taxing aviation to try to reflect the environmental impact. I have no objection to aviation paying its fair share in that regard. It is important that it does and that tax takes account of issues such as climate change and seeks to effect behavioural change. However, there is no realistic alternative in this case so it has become punitive for travellers.

I recognise the importance of addressing the deficit and do not dismiss it in the slightest, but international evidence suggests that tax on aviation is such a constraint on other revenue that it outweighs the benefits economically. The hon. Member for Vauxhall referred to that. The Irish Government committed to abolishing the tax equivalent of APD because it viewed it as a barrier to growth and tourism, despite it being set at €3. Most significantly, the tax in band B of APD covers flights of 2,000-4,000 miles at around £60 and £120 for economy and business-class passengers respectively. Comparing that with the zero charges that the Irish Republic is introducing shows the difference that it can make to the cost of a flight.

A PricewaterhouseCoopers study earlier this year indicated that significant economic benefits could be reaped from the abolition of APD. It estimated that APD would boost GDP by 0.46% in the first year, and amount to about £16 billion in the first three years and create almost 60,000 jobs in the UK in the long term. One of the most interesting facts in the report was that the abolition of APD would pay for itself because the increased revenue from income tax, VAT and higher employment and business growth would outweigh its loss. That is without the peripheral benefits, including more tourists coming to the UK and airlines expanding their networks within the UK. It suggests that in the first two years, the Government would gain increased revenue of about £500 million and about £250 million each year thereafter until 2020.

That study builds on previous studies by Oxford Economics, which suggested that abolishing APD would raise gross value added by between £1.8 billion and £2.9 billion because of the boost in the aviation and tourism sectors from increased passenger numbers, and would create 40,000 to 60,000 new jobs. The extra income available for consumers from lower airline ticket prices would also provide a stimulus to consumer spending, so additional spin-offs were predicted. To date, the Government have not accepted those studies so the answer is for the Treasury to commission its own independent cost-benefit analysis, as the hon. Member for Vauxhall suggested, to look at the impact of APD in the light of research.

I will not try to draw the Minister too far. I have frequently tried to do so in correspondence, and he has resisted effectively. I am sure he will do so again today, and I respect his deference to the Treasury, but I hope that he will take the opportunity to reflect on the fact that for most of us APD has been by far the biggest issue in aviation and connectivity, and pass that on to the Treasury.

I want to raise one more issue: the impact on the environment and people of having an airport nearby, particularly the impact of noise. I welcome the recognition of the need for a fair balance between the negative impacts of noise and the economic benefits of flights, but I am concerned that the main mechanisms for addressing those issues seem to be about engagement between airports and local communities. That is extremely valuable in building relationships and aiding understanding, but it does not necessarily improve the situation.

We would like to see independent monitoring of noise contours, with an independent body able to make decisions on how aircraft noise should be controlled in highly populated areas. The introduction of an independent body would increase public confidence and ensure that the existing noise monitoring undertaken by airports has a degree of independence, which it is currently not perceived to have. That would also provide a more robust approach and give additional transparency, as those who are making the decisions about monitoring and about the frequency and timing of aircraft movements would be removed from having commercial interests in the decisions.

The mapping and monitoring of noise exposure at designated airports is very helpful, but it should be considered for extension to airports with any significant neighbouring residential population, so that anyone living with aircraft noise is aware of the impact on their health. In particular, when there are schools nearby, that needs to be carefully considered. In my constituency, the George Best Belfast City airport is a hugely important economic driver: it is a good employer, employing more than 1,000 people, both directly and indirectly, and it creates jobs and opportunities for the city of Belfast. There is no doubt about that, but those who live close to the airport, under the flight path, find it difficult to deal with the effects. There are issues relating to how those effects, and the environmental impact, are monitored at a UK level, and it would be helpful for us to consider those in light of evidence that the Committee received. I thank the Minister for his attention to what we have said, and I look forward to hearing his response.