Airport capacity crisis? What crisis? AEF short briefing on future demand and capacity
The Aviation Environment Federation www.aef.org.uk has produced a short briefing on future demand for air travel and capacity. It shows how the government’s forecasts for future air passenger growth have steadily fallen from 2003, through 2007, and 2009 and 2011. It is anticipated that new forecasts will be produced by the DfT shortly, again showing a reduction. Even the latest forecasts are probably still too high because they assume a resumption in economic growth at around 2% pa or above and continuing indefinitely, which is very uncertain; also no increase in oil prices (despite evidence of increasing demand and increasingly difficult and expensive approaches to extraction), and a continuation of aviation’s tax exemptions (including no fuel tax and no VAT). Business travel is only perhaps 21% of UK air passengers.
Oct 17th 2012 (Aviation Environment Federation – AEF – http://www.aef.org.uk/)
Aviation and airports policy are all over the press at the moment. Alongside the Government’s own consultation and the new independent airports commission, the Davies Commission (its exact name is not yet established, nor its membership nor terms of reference) a number of organisations have launched their own inquiries into how the Government should be handling demands for increased airport capacity.
Unfortunately, the debate is dominated by assertions and hype, designed to support pre-conceived views about the need or location for more airport capacity.
AEF believes that the debate should be underpinned by evidence and logic.
AEF is the UK’s only specialist campaigning organisation tackling aviation and the environment. Alongside our formal consultation responses, we are producing a short series of briefing notes on some of the key issues.
Here is the first of these briefings, which addresses the issue of demand and capacity
Airport capacity crisis? What crisis?
Since the Government announced its policy of opposition to new runways at Heathrow, Gatwick and Stansted, the aviation industry has been working hard to put out the message that there is a crisis in airport capacity in the South East.
Perhaps as a result, much of the recent reporting and political discussion about airports has started from the assumption that we need new runways, asking “if not at Heathrow, then where?”
In fact, there is no evidence of a crisis in capacity and no urgent need for new runways.
New forecasts of passenger demand were published by the Government in August 2011. (See 2011 forecasts). These forecasts show a massive reduction in expected future levels of demand compared with the heady forecasts produced in 2003 (Key facts of ATWP 2003).
Those forecasts led to the Government’s 2003 ‘white paper’ which supported new runways at Heathrow and Stansted as well as a new runway in the Midlands and one in Scotland.
Even in 2007 (see 2007 forecasts) demand was predicted to be 495 million passengers per year (mppa) at 2030, but by 2011 the forecast had fallen to 343 mppa.
Even the latest forecasts are probably still too high because they assume:
- A resumption in economic growth at around 2% pa or above and continuing indefinitely, which is very uncertain
- No increase in oil prices (despite evidence of increasing demand and increasingly difficult and expensive approaches to extraction), and
- A continuation of aviation’s tax exemptions (including no fuel tax and no VAT)
More detail on the forecasts is given on our website (http://www.aef.org.uk/uploads/AEF_Passenger_Forecasts_analysis_1.pdf a detailed report by AEF of 24 pages).
The only airport in the entire country where there is a gap between demand and supply in terms of runway capacity, either now or any time soon, is Heathrow. And despite the recent hysteria about constraints at Heathrow, there is sufficient runway capacity serving London and SE England to continue to meet demand.
The Government forecasts show that passenger demand could be almost entirely met with existing infrastructure until 2030. Even if no new runways were built anywhere in the UK by then, less than 3% of potential air traffic would be squeezed out. (‘Constrained demand at 2030 is 335mppa, compared with unconstrained demand of 345mppa.)
Do we need to cater for more business travellers?
A key question is whether business travel would be squeezed out. The answer is almost certainly no.
CAA statistics indicate that only about 21% of air travel is for business (1). The great majority of the growth in demand is for leisure.
Business travel is very ‘inelastic’. This is entirely explicable – a highly paid business person wanting to travel to China to negotiate a multi-million pound deal is not going to be put off because he or she has to take a flight from one airport rather than another or because it is slightly more expensive.
Leisure travel is, by contrast, widely accepted as discretionary and highly ‘elastic’. If a particular trip is not convenient or becomes more expensive, people may chose to spend their money on something else.
For these reasons, the 3% of traffic that would be squeezed out by 2030 if no runways were built would be almost entirely leisure. There would be virtually no loss of business travel and therefore no loss of trade or loss to the UK economy.
There may well be benefit to certain airlines or airport operators if certain airports were expanded (eg Heathrow) or a new airport was built (eg Thames estuary). However, this is a completely different matter to benefits for UK passengers or economic benefits arising from business travel. The interests of the aviation industry are not necessarily the same as the interests of the UK as a whole – though their very effective lobbying makes it appear that is the case.
Can Government forecasts be trusted?
Government forecasts have recently come in for something of a battering. The aviation forecasts are certainly fallible and have been revised 4 times since 2003 – each time downwards. But they are rigorously produced and improvements to the assumptions have
been made over time so the official figures can serve as a useful check against the often wildly exaggerated forecasts by airports, produced to support business plans and please shareholders.
AEF considers that ultimately airports policy should not be determined solely by individuals’ demand for travel but also by society’s demands both for protection from unacceptable noise and air pollution, and for political action to tackle climate change.
But even if the Government imposed no new constraints on aviation for environmental reasons, there would be sufficient airport capacity to cater for all aviation demand until nearly 2030.
For more information, please contact:
Nic Ferriday, Air Transport Caseworker: nic@aef.org.uk
Cait Hewitt, Deputy Director: cait@aef.org.uk
Aviation Environment Federation, Broken Wharf House, 2 Broken Wharf, London EC4V 3DT
Key facts of ATWP 2003
DfT 2007 forecasts
DfT 2009 forecasts
DfT 2011 forecasts
(1). The CAA statistics on % of business travel are based on its annual passenger survey and it surveys only the largest airports every year – including Heathrow – whereas smaller regional airports are surveyed only every few years. Heathrow has a high % of business travel and so there’s an inbuilt bias in the CAA sampling which results in the business % being overstated. The 21% figure is derived by going back three years to get a wider sample of airports and then producing a weighted average.