UK Aviation
The UK'S aviation landscape could be shaped for decades by imminent government decisions, says Rob Gill
The next 12 months could be truly pivotal for the UK’S airport sector, with the impending final decision on Heathrow’s third runway and also crucial negotiations about how the aviation sector will operate following Brexit.
If that wasn’t enough to be getting on with, there’s the government’s new wide-ranging aviation strategy report that aims to set out the future for the sector up to 2050.
Runway rundown The most pressing issue is airport expansion in the South East – the government backs Heathrow’s third runway but the project still needs to get the approval of the House of Commons. A vote is due to take place imminently (by the end of June, according to Transport Secretary Chris Grayling) and it’s by no means a foregone conclusion with vocal opponents to Heathrow expansion such as Foreign Secretary Boris Johnson. It is possible, or in fact likely, according to some sources, that the ultimate verdict will be pushed back until after the UK'S post-brexit position is clearer.
While it waits for a final decision, Heathrow is ploughing on with preparations for a new runway. The airport says it cut £2.5billion off the cost of the project – taking it down to a mere £14billion – by extending existing terminals instead of building a new facility.
Heathrow’s CEO John Holland-kaye has been busy selling the benefits of the third runway as a way of increasing connectivity from UK regional airports and has suggested that airports such as Newquay, Liverpool and Humberside could be in line for routes to the UK hub airport if expansion goes ahead.
“Without expansion what we’re likely to see is a continual reduction in regional and UK domestic routes as they are replaced by long-haul,” he warns. “We have to make sure all of the UK benefits from increased connectivity. It’s important not just for London but the whole of the UK.”
Holland-kaye adds that a new runway will also allow the introduction of “more routes to secondary cities in China and the Americas than we would have without expansion”.
Gatwick has not given up hope of being allowed to build a second runway, insisting that it is “ready to deliver” on expansion should Heathrow’s third runway run into political problems. Gatwick has also been looking at how to make more of its existing facilities, such as potentially using its emergency runway to boost capacity.
The airport is also pressing its case by emphasising growth in long-haul routes, particularly across the Atlantic, where passenger numbers rose by 19% to 3.4 million for the 12 months to the end of March 2018.
CEO Stewart Wingate says: “Gatwick is playing an increasingly important role for the country on the world stage, providing global connectivity at a time when the UK really needs it. We have exciting plans for growth at the airport, maximising the use of our existing facilities while continuing to offer the country the prospect of a financeable and deliverable new runway scheme.”
Leaving the club How UK aviation will continue to operate when the country leaves the European Union has been one of the biggest questions hanging over the travel industry since the referendum in 2016.
While most in the industry – with the notable exception of Ryanair – have chosen to play down fears that flights could be grounded from March 2019 onwards, the situation is a long way from being resolved.
A positive step forward has been the agreement between the UK government and the EU on having an “implementation” or transitional period running from March 2019
to the end of 2020, during which the UK will continue to be part of the European Aviation Safety Agency (EASA) allowing the status quo in aviation to continue – although this only buys time to find a longer-term solution.
Aviation groups have welcomed the “reassurance” that this implementation period brings to the industry. Karen Dee, Chief Executive of the Airport Operators Association (AOA), says: “The transition period provides the aviation industry and its passengers some certainty over air travel in the coming years.
“Airports across the EU would like to see an agreement that matches as closely as possible today’s arrangements to maintain a competitive aviation market across Europe.”
Tim Alderslade, Chief Executive of Airlines UK, adds: “We welcome that aviation is a priority in the negotiations and look forward to discussions on future market access beginning as soon as possible. We are confident there will be a deal that secures open and liberal aviation arrangements beyond 2020.”
While there a lot of positive noises from all sides about the post-brexit aviation landscape, there will still be an anxious wait before long-term arrangements can be agreed and put into place.
Aviation examined Another major plank in the government’s post-brexit thinking about aviation is the new Future of UK Aviation document, which was published in April, and sets out “the longterm direction” of UK aviation up to and beyond 2050. This tackles all sorts of issues such as new UK border arrangements, compensation for delays and cancelled flights, and even how to reduce drunken behaviour by passengers.
The government says it has six key goals to the strategy: helping the aviation industry to work for its customers; ensuring a safe and secure way to travel; building a “global and connected UK”; encouraging competitive markets; supporting growth while tackling emissions; and developing innovation, technology and skills.
Much of the 93-page document is fairly vague – the government promises to look at the impact of Air Passenger Duty (APD), for example, although it claims the aviation industry would be “relatively under-taxed” if APD was scrapped completely. At the same time, the industry is being invited to come up with ideas as to how the tax “could be reformed to support regional airports”.
The government will also review whether a “single dominant carrier at airports could harm consumer interests in the future”, and cites British Airways’ position at Heathrow, where it operates 52% of slots, as well as the dominance of easyjet and Ryanair at
How UK aviation will operate when the country leaves the EU has been one of the biggest questions since the referendum in 2016”
Gatwick and Stansted airports respectively. “Concerns were raised around the ability of airlines to acquire slots, particularly at congested airports, and whether the existing slot regulations incentivise behaviour that could harm the interests of passengers when new capacity is due to be allocated,” says the report. The government will start consulting later this year, with plans to draw up a final aviation strategy early in 2019.
Magic numbers
While the government considers the longterm view, the majority of the UK’S airports continue to set new records for passenger numbers on an almost monthly basis.
Away from the South East, Manchester airport saw its passenger numbers reach almost 28 million for the year to the end of March 2018 – a 6.4% rise year-on-year.
The airport is nearly one year into the construction phase of its £1billion renovation project which will double the size of Terminal 2 including the building of two new security halls and 50 extra shops and dining outlets.
Long-haul routes have been at the cornerstone of Manchester’s growth with services to Beijing, Hong Kong, Boston, Houston, Los Angeles, San Francisco and Muscat all being introduced over the past three years, with routes to Mumbai and Addis Ababa taking off later this year.
Other airports are also benefiting from more long-haul routes, with Chinese carriers proving particularly active this year. Hainan Airlines launches a route from Beijing to both Edinburgh and Dublin in June, while Heathrow is being boosted by new services to Xian (Tianjin Airlines), Changsha (Hainan Airlines) and Wuhan (China Southern).
Danish low-cost carrier Primera Air has also introduced long-haul services from the UK, namely Birmingham to New York Newark and Toronto, as well as flights from Stansted to Newark, Toronto and Boston.
Norwegian, meanwhile, has continued to expand its transatlantic options from Gatwick with the addition of more US destinations – Austin and Chicago – as well as introducing flights to Buenos Aires and Singapore.
Cardiff Airport and Gatwick are both welcoming new services to Doha with Qatar Airways, but it’s not been all good news for airports with Etihad Airways due to drop its Edinburgh-abu Dhabi service from October.
All this growth is inevitably putting pressure on existing UK airport infrastructure which is only likely to get more intense with passenger demand forecast to grow from 268 million in 2016 to 410 million by 2050.
AOA’S Karen Dee says this is a challenge the government has to meet through the development of the new aviation strategy. “Airports stand ready to meet this growing demand – more than £8billion of investments are already being delivered over the next five years,” says Dee. “The aviation strategy must urgently set out a clear framework for how the industry can grow beyond these existing plans.”
A good first step in this process would be finally deciding on that new runway in the South East – perhaps we will know the answer to this one soon.