General News
Below are links to stories of general interest in relation to aviation and airports.
Osborne delays launch of government aviation consultation to “summer”
In his Budget speech, George Osborne said: "I also believe this country must confront the lack of airport capacity in the South East of England – we cannot cut ourselves off from the fastest growing cities in the world. The Transport Secretary will set out Government thinking later this summer." The aviation consultation that had been intended to start sometime between the Budget and the end of March appears now to have been postponed, to an unspecified date - probably some time after May. This appears to have taken the DfT themselves by surprise. It is speculated that the reason has been disagreement between George Osborne and the Lib Dems, on the desirability of future aviation expansion. The Budget states that Air Passenger Duty (APD) rates will rise from April 2012, as had been set out in the Autumn Statement 2011. APD rates for 2013-14 will rise by the RPI from 1 April 2013. The aviation industry campaign to try and get APD reduced or removed has cut no ice with the Chancellor.
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Third runway plan for Hong Kong gets green light – and risk to rare pink dolphins
Hong Kong’s Executive Council has, in principle, endorsed the construction of a third runway at Hong Kong International, according to the official Hong Kong government website. This means the airport authority can proceed with an environmental impact assessment, plan design details and financial arrangements. The EIA needs to look at marine ecology, noise and air quality and is expected to take two years. "The government wants the authority to complete the assessment, design and financial options by the end of 2014 so the runway can be built by 2023." The runway is expected to cost $136 billion and involve the reclamation of 650 hectares of land from the sea.
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Why have oil prices gone up, and how is jet fuel affected?
IATA expects the price of oil to rise this year. The price of jet fuel is about $139 per barrel at present, and has been around $124 to $140 over the past 12 months. There is speculation about what is causing the current increase in the price of oil, and to what extent this is caused by difficulty in pumping much more crude oil. Partly due to the recession since 2008 the amount of oil pumped worldwide has not risen much over the past 5 years, with slight fluctuations. Even the International Energy Agency said last year that production of conventional crude oil will decline slightly to "around 68 mb/d by 2035. To compensate for declining crude oil production at existing fields, 47 mb/d of gross capacity additions are required, twice the current total oil production of all OPEC countries in the Middle East."
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IATA expects the price of oil this year to dip global aviation profit to $3 billion
IATA says it is downgrading its profit forecast for the global aviation industry this year to $3.0 billion for a 0.5% margin. This is $500 million lower than it forecast in December, due to the increasing price of oil. IATA expects the average price of oil to be $115 per barrel this year, up from its earlier forecast of $99 for Brent crude. This will push fuel to 34% of average operating costs and see the overall industry fuel bill rise to $213 billion. If Iran closes the Strait of Hormuz, oil could spike to $150 per barrel. Airline performance is closely tied to global GDP growth. Historically, when GDP growth drops below 2.0%, the global airline industry returns a collective loss. Global passenger demand is now expected to be 4.2% in 2012. IATA says European airlines are expected to make a $600 million net loss.
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David Cameron says Britain needs bigger airport for London
Mr Cameron's comments came in a speech in London shortly after a meeting of the so-called Quad of senior Tory and Liberal Democrat ministers to put the final touches to Wednesday's Budget. He said:"I'm not blind to the need to increase airport capacity, particularly in the south-east." "We need to retain our status as a key global hub for air travel, not just a feeder route to bigger airports elsewhere, in Frankfurt, Amsterdam or Dubai." "Yes, this will be controversial. We will need to take decisions for the long-term - and we will be bringing forward options in our aviation strategy which will include an examination of the pros and cons of a new airport in the Thames estuary." "The aviation paper that we will be producing will look at a range of options and possibilities, scope the whole issue but also look at what the estuary options are - obviously there is more than one." Hints at expansion at Gatwick.
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Heathrow welcomes China’s largest airline, and a new trade route to Guangzhou
China Southern, the largest Chinese airline, has now been able to get take off and landing slots at Heathrow for 3 flights a week to Guangzhou. This is the first direct flight to Guanzhou from the UK, though there are many other flights to Beijing, Shanghai and Hong Kong, from where connecting flights can be made to all the regional Chinese cities. BAA complains that it is limited in how many flights it can provide to China, that its European rivals have more, and that they have more direct routes. BAA says Paris, Frankfurt or Amsterdam airports will boast direct flights to Chengdu, Hangzhou, Wuhan, Xiamen, Nanjing, Shenyang and Qingdao this year. However, Heathrow manages around 21 flights per day to Miami, and large numbers to other non-business but profitable routes. Heathrow appears to have many more passengers each year travelling to China (Beijing, Shanghai and Hong Kong) than Frankfurt, Paris or Schiphol.
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BA and UK leading airlines warn Government of impending chaos during Olympics and ask for ‘urgent action’
BA, easyJet, BMI and Virgin have warned Justine Greening that they expect delays and disruption to air traffic around London during the Olympics, unless measures are taken to improve management of air space. They say the major airlines and air traffic controller bosses had together come up with a list of potential solutions to the expected air chaos caused by the extra traffic during the Olympic period – particularly the three days before the Games, the period of the men's 100 metres final, and the period immediately after the closing ceremony. They want temporary permissions to be given to airlines, airports and NATS to work differently during the games, to avoid delays and reputational failure of the UK. The airlines and air traffic controllers have been calling for more flexibility to prioritise the bigger airports such as Heathrow and Gatwick over smaller airports such as Farnborough in Surrey during times of highest demand.
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UK Air Transport Movements in 2011 up a bit on 2010, but lower than any other year since 2003
Overall for the UK in 2011, the number of Air Transport Movements (commercial movements, not including hobby flying, general aviation etc) rose by +2.18% compared to 2010. The number of ATMs in 2011 was down 15% from the peak of over 2.4 million in 2007.At Heathrow, the number was very slightly higher than the previous peak, in 2007, and more significantly higher than more recent years. At Gatwick, the number of ATMs is lower than it was in 2005, to 2009. At Manchester, ATMs were slightly up on 2010, but very substantially lower than in earlier years. At Stansted, they were the lowest for the past 10 years. At Edinburgh the number was lower in 2011 than in 2004 to 2009. At Birmingham they were the lowest for 10 years. At Luton they were lower than in 2005, 2006, 2007, 2008 or 2009. And so on.
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More stories on the airlines’ publicity push to get APD reduced or scrapped …
This goes on and on. The aviation industry complains that they cannot pay tax, or else they will not be able to grow and prosper, and they need to keep their low tax status. They also make out, repeatedly, (and incorrectly) that the UK economy is dependent on having growing air travel, in order to prosper. This week Virgin Atlantic has again joined forces with easyJet, IAG and Ryanair to demand the Government commissions an independent study of the economic effects of Air Passenger Duty. They say it is "fantasy economics to continue to impose such an uncompetitive tax without any analysis of its impact." Sigh. This again conveniently omits the fact that air travel pays no VAT and no fuel duty, so the overall effective annual subsidy, even taking account of the new rates of APD starting on 1st April, is around £8.5 billion per year. That's money not paid to the UK treasury for public services etc.
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Environmental regulations set to be slashed
Scores of environmental regulations are to be slashed under government plans to be announced on Monday 19th. The rules affected include controls on asbestos, invasive species and industrial air pollution; protection for wildlife and common lands; as well as restrictions on noise nuisance and deadly animal traps. Ministers are expected to say the cutting of red tape will save businesses £1bn, but the move has shocked campaigners, who argue that the government's search for economic growth is mistakenly targeting the environment. The impending announcement follows intense pressure from David Cameron and George Osborne to remove what the chancellor has called the "ridiculous costs" of "endless social and environmental goals". 174 regulations that will be scrapped, merged, liberalised or simplified.