THE BLOG

Message to Government: Support Aviation With Lower Taxes and Positive Policies for Growth

11/01/2013 11:00 GMT | Updated 12/03/2013 09:12 GMT

Aviation is crucial to the UK's economy. Not only is it responsible for about one million jobs, £50 billion in GDP and £8 billion in tax revenues, it provides the infrastructure vital to the country's ability to function as an internationally connected and growing trading nation.

Three quarters of inbound tourists fly to the UK; 40% of the nation's exports (by value) is transported by air; and it is aviation which enables links with historic and existing markets to thrive and for new ones with emerging markets in places like China and Brazil to develop. So you would have thought the Coalition Government would be actively and unambiguously supporting this vital sector. Yet in terms of aviation policy-making we have had more than two years of drift.

After the 2010 General Election, policy-making on aviation was effectively put on hold whilst the Government worked out how it wanted to proceed and tried to navigate the politics of any decision. Readers will be astonished to hear that there is literally no planning regime for airports wishing to grow beyond 10 million passengers a year, whilst any decision on hub capacity will not be made until after the 2015 General Election. Add to this the fact that the Government is currently crippling aviation with the highest tax regime in the world - Air Passenger Duty (APD) went up again in last year's Autumn Statement, and has risen by between 160% and 360% since 2007 - and it is easy to see why so many both within the sector and beyond are concerned about the lack of Government support.

APD is regularly cited by our airport members as a principle reason why airlines have taken the decision to reduce flight frequency or cease flying altogether. Gatwick Airport says that Air Asia X stopped their route to Kuala Lumpar in March 2012 specifically because of the rising levels of APD. Southampton Airport reports that domestic routes (on which APD is levied twice - for outbound and inbound journeys) have been adversely impacted by APD - including routes to Leeds-Bradford Airport, Glasgow Airport and Edinburgh Airport; and that APD has contributed to a loss of services to Brussels. Bristol Airport says APD was one of the main reasons Continental Airlines service to the US was stopped. There are numerous further examples.

APD is not the only problem. Lack of decision-making on aviation policy is crippling the sector's ability to plan, grow and deliver the network of vibrant point-to-point airports and the world-class hub capacity that the UK so desperately needs. It is vital we have this air connectivity to link regional economies and to enable UK companies to compete across the world; and it is not an either or choice

In its 2011 National Infrastructure Plan, the Treasury signalled real support towards aviation for the first time, mentioning aviation 114 times. Yet, the Government has given no impetus to this support, effectively kicking the issues into the long grass until 2015, when the recently set-up Sir Howard Davies Airport Commission will belatedly present its recommendations on airport growth - and even then there is no guarantee that the government of the day will implement them. Meanwhile, we have had three Transport Secretaries, two Aviation Ministers, and three Economic Secretaries (responsible for APD) since the summer of 2010! It is no wonder UK aviation policy has been regarded as something of a shambles both here in the UK and abroad.

The AOA's view is clear. We would like the Government to get behind UK aviation as a matter of urgency. It should conduct a study of the impact high levels of APD are having on the whole of the economy, and refrain from further increases until this takes place. The Department for Communities and Local Government should provide a supportive national policy statement on aviation to enable the sector to grow. And the Transport Secretary and Prime Minister, and the three political parties, should commit to acting on the recommendations of the Davies Commission - whatever they are - in advance of its Final Report in 2015, so that the opportunity to get aviation moving is not wasted, as has so often been the case in the past, once it has considered all the options for aviation capacity.

These are incredibly tough economic times. The UK needs every weapon to deliver jobs, growth and inward investment, across every region and community in the country - and infrastructure, as the Government readily recognises, is crucial to all this. Few sectors can help deliver all this like aviation which, as a bonus, is also privately funded. A more positive Government attitude towards aviation - with lower taxes and timely, supportive policy-making on the sector's ability to grow - would not just aid the sector, it would provide a timely boost to the UK's long-term economic prospects too.