General News
Below are links to stories of general interest in relation to aviation and airports.
Ryanair uses new €8.5 Norwegian air passenger tax as excuse to cut Oslo capacity
On 1st June, Norway introduced a small charge per air passenger, of around €8.50. Now because of the tax, Ryanair, in bullying and blackmailing mode, says it is to close its base at the low cost Rygge airport at Oslo on 29th October, and reduce its Norwegian traffic by half. The Norwegian government expects to raise an additional €107 million or so, from the tax, during 2016. But Ryanair fears losing money from the tax, which is calls (?) "environmentally unfriendly”. Ryanair says it would mean the loss of 900,000 air passengers per year to Norway, (the country's population is only 5.2 million, but there were around 53 million air journeys in 2015) and 1,000 jobs at the Rygge airport. Ryanair is, in terms of air passengers, a distant 4th in Norway, behind SAS, Norwegian and Wideroe. The low cost airlines fear reduced profits, and inevitably higher fees - though the increase is tiny. Ryanair's commercial officer said the €8.5 tax would destroy the "cost competitiveness of the privately owned Oslo Rygge Airport in favour of the state-owned Avinor." Anna Aero reported in January that Ryanair actually did not do well in Norway in 2015, and cut its available capacity by 8.6%. The tax may be an excuse to get out. Norway’s centre-right prime minister, said last week: “This government will not be blackmailed by Ryanair.”
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Norwegian government introduces approx €8.5 tax per air passenger on all flights
The Norwegian government will introduce an Air Passenger Tax, starting on 1st June 2016. It will be at the rate of a 80 Krone charge (around €8.64, £6.59, US$9.67) per person for both domestic and international flights. Exceptions of the tax include those under two years old and those transiting flights on the same airline. The airlines have, predictably, reacted with fury at being "defied" by the government. They say this tiny tax "threatens to reduce demand by 5%, equal to 1.2 million passengers a year," and they say it could mean airlines might lose €150 million per year as a result. The airline lobby group, "Airlines 4 Europe" (whose members include EasyJet, Ryanair, Lufthansa, Norwegian Air Shuttle and International Airlines Group) is lobbying hard. They all completely ignore the inconvenient fact that air travel demand is artificially high, as it pays no VAT and no fuel duty. Those together amount to a massive annual subsidy (in the UK this is a net annual loss to the Treasury, even including takings from APD, of perhaps £9 blllion per year). Several European countries do have a ticket tax, with the UK levels being the highest (Brits also fly more than most others). There are small charges in France, Germany and Austria. Ireland and the Netherlands scrapped theirs, due to airline pressure.
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Leaders of 3 main London councils set out why they know better about Heathrow impacts than MPs hundreds of miles away
Mark Menzies (MP for Fylde near Blackpool) is one of the MPs with constituencies a long way from London, who have been persuaded by Heathrow to back its 3rd runway. He has accepted, without much consideration of the local impacts, the alleged benefits of a larger Heathrow, from the airport's publicity. Now the leaders of some of the London boroughs that are the worst affected by Heathrow have written in "Conservative Home" to express their exasperation with this sort of attitude, by MPs whose own constituencies will suffer no local adverse impacts. Ravi Govindia, Nicholas True and Ray Puddifoot - the Leaders of Wandsworth, Richmond and Hillingdon respectively - say the 3rd runway would result in an extra 320,000 people subject to noise impact, new flight paths affecting their communities for the first time, 750 homes destroyed, and all in an area that already exceeds air quality legal limits. Many of their residents voted Conservative because of David Cameron's firm promise in 2009 - “no ifs, no buts, no third runway at Heathrow”. They note that Mr Menzies is well known for backing localism – giving local councils the power to act in the best interests of their residents – not having something imposed on them. "He will therefore understand our views."
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Gatwick touring the regions to try to drum up support for 2nd runway (Heathrow also touring …)
As Heathrow has been putting itself about across the regions, trying to "sell" its runway, Gatwick is doing the same. Gatwick staff have begun a UK tour campaign, trying to get some backing for their 2nd runway. In reality, Gatwick does not have a lot to offer. It has very little air cargo, if what companies in the regions is looking for is a way to export products. Gatwick is on the wrong side of London for anyone north of Heathrow, and it is almost exclusively an airport for low cost leisure travel. It has few long haul routes, and none to influential places not served by airports such as Birmingham or Manchester. But Gatwick is hoping to persuade that another runway would provide cheaper flights to and from the south east. That is a bit hard to believe, as the cost of the runway would mean ticket prices would have to rise by at least £15 - 18 or even up to £23, (one way). Gatwick's tour includes Manchester, Belfast, Birmingham, Bristol, Edinburgh and Newcastle. Heathrow is, at the same time, having "launch events" in Liverpool, Yorkshire, the Midlands and the Thames Valley, to try to persuade how their 3rd runway would provide huge benefits etc etc etc. The Airports Commission appreciated that, being a tourism airport, Gatwick just boosts the UK tourism deficit, as Brits take their money out of the country on cheap trips. More and more spin ....
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Heathrow sets out vague, unenforceable, offers to boost links to regions with 3rd runway (with easyJet’s help?)
Heathrow is trying to put more heavy pressure on the government, to back its 3rd runway plans, if there is an announcement in the next few months (EU referendum permitting). Heathrow are aware that it is not considered likely that the regions will get much benefit from a 3rd runway, so it now says it will "improve connectivity, with better air, rail and bus connections from Heathrow to every major town and city - North, East, South and West." No details, and not things done by Heathrow itself. It says its runway means the creation of "up to 180,000 new jobs and 10,000 apprenticeships across the UK" (no time scale given, so pretty useless statement). And that: "A third runway will boost the economy by up to £211 billion, with the benefits spread across the country." The £211 billion claim is very suspect. Even the Airports Commission's most optimistic (criticised by its own advisors) was a maximum of £147 - and that is up to 2080, so over 60 years. Heathrow says it will increase flights to airports like Liverpool, Humberside and Newquay, if it got a new runway. And it might create a "new £10 million Route Development Fund which will provide start-up support for any potential new domestic destinations." The Airports Commission realised that unless government subsidises (taxpayers' money) domestic routes from Heathrow, the number would end up being lower than the number now.
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Sunday Times obtains details of £10.4 million bonus scheme, in stages, for Heathrow execs if they get 3rd runway
It emerged on 16th May that Heathrow executives were in line for large bonuses, if they managed to get a 3rd runway. Now the Sunday Times has details. They say eight executives could share a £10 million bonus pool. It appears they have already achieved £414,000 of the bonus, by getting the Airports Commission to select Heathrow in July 2015. Details of the bonus scheme are that the sums increase, based on the success of the executives’ lobbying. The next bonus payout would be, between the eight, £622,000 if they “create a climate of political support that enables the government to give its backing to expansion”. ie. if there is a government announcement this summer or autumn. Then they would get £829,000 if Heathrow is judged to be “on course to win planning approval” for its runway. There would be another £829,000 of the bonus if Heathrow can get the CAA to allow Heathrow much higher landing charges in future, to pay for the runway (the CAA controls its charges). The whole £10.4 million bonus is the airport's "share in success" incentive, and includes other measures not related to a 3rd runway. It is to be paid out in 2019. The existence of the bonus scheme was initially denied by the airport. But it creates strong personal gain motives for senior staff, in pushing through the runway, regardless of its adverse impacts.
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Britain had £16.9 billion Tourism Deficit in 2015 – which is 17.6% of UK total balance of payments deficit
Data from the ONS shows that in 2015, the Tourism Deficit (the difference between how much overseas visitors spend on their trips to the UK, and how much Brits spend on their trips abroad) rose to the 2nd highest level ever. The deficit was £16.9 billion in 2015, and £20.5 in 2008, but it fell during the years of the recession. It was around £13.7 billion in each year, 2012, 2013 and 2014. It has now increased again very significantly - by over £3 billion in one year. That makes up a large slice (17.6%) of the UK's overall balance of payments deficit of £96.2 billion in 2015.The number of trips by UK residents abroad increased by 9.4% last year, the largest rise since 1998, according to the Office for National Statistics (ONS). In 2015, UK residents took 65.7 million foreign holidays or business trips (business trips were only 10.9% of the total, while back in 2005 they were 12.9% of the total). In 2015 the number of trips by foreign visitors to the UK rose by 5.1%, to a record high of 36.1 million. But while foreigners spent £22.1 billion on visits to the UK, Brits spent £39 billion abroad. The French were the biggest visitors to the UK, with 4 million trips. Spain was the country with most visits by UK residents - with 13 million trips, nearly 20% of UK travel.
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HACAN new briefing shows how a 3rd Heathrow runway will not deliver for the regions
Heathrow has made repeated claims that its 3rd runway would be essential for the UK economy, and indeed, that it would be a vital boost to the economies of the regions. HACAN has set out, in a short briefing and in a video, how the claims are not justified. In reality, another Heathrow runway would have negative impacts on regional airports - not to mention huge costs for taxpayers across the country. HACAN says of Heathrow's various promises that they are not guaranteed: ✈ Better connections are not guaranteed. ✈ Instead, ever more resources will be concentrated in London and the South East. ✈ Heathrow expansion may preclude aviation growth elsewhere. ✈ A 3rd Runway may be undeliverable. The Airports Commission itself found that, rather than reversing the decline in domestic flights between Heathrow and the regions, these will fall (from 7 now to 4 with a 3rd runway) unless they are subsidised, which could breach EU regulations. Due the cap on UK aviation carbon emissions, if a Heathrow runway is built (and it has to be used extensively, largely for high carbon long-haul flights)it is likely to mean restriction of the growth of flights from regional airports. A totally dominant Heathrow, eclipsing other UK airports, would make it difficult for long haul routes from the regions to be profitable.
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Assessment of proposal to cut APD by 50% in Scotland shows likely overall fall in revenue
An assessment of the Scottish Government's plans to cut the rate of Air Passenger Duty (APD) shows that the aviation industry’s analysis has not accounted for the impact of a fall in domestic tourism. The 50% cut in APD proposed would have the effect of damaging the Scottish economy and reducing funding for public services. The report "APD Cut: A Flighty Economic Case" challenges claims that reducing APD by 50% will lead to sufficient economic growth to cover the short-fall in revenue from the tax cut. In reality, cheaper tickets will encourage more Scots to take cheap foreign trips. The amount of money they take out of Scotland on these extra trips is likely to be larger than the amount brought in. The inbound tourists with greater spending power than typical domestic tourists are the least likely to be sensitive to airline ticket prices. In a buoyant economy, the increase in outbound trips is likely to exceed the increase in inbound trips. The case for business growth due to an APD cut appears particularly weak as business flights are driven by need and time pressures rather than price. They are known to be price insensitive. There could also be a reduction in domestic tourism by Scottish people, who instead take cheap foreign breaks, so reducing employment in Scottish tourism.
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ICAO aviation offset market talks yield little progress, but backtracking on previous agreement
ICAO has concluded 3 days of talks to try to achieve a deal on a market-based offsetting mechanism for international aviation emissions from 2020. It has not made much progress. The industry has expressed the hope of "carbon neutral growth" after 2020, which means continuing to grow and emit more carbon, but buying offsets from other sectors that actually do cut CO2 emissions. Unless this is done, the prospect of the world achieving a limit of global temperature of 2 degrees C is remote. However, there are difficult issues to be resolved, of how to divide up the offsetting responsibilities between fast-growing airlines in emerging economies, and established carriers often with older, less fuel-efficient fleets and based in the industrialised world. Neither side will accept being disadvantaged. There have been proposals to try out a "pilot" scheme, and delay the 2020 date. Either way, the ICAO scheme only intends to cover international flights, not domestic - which form a large proportion in countries like the USA and China. That means only about 62% of the total aviation CO2, assuming the EU counts as a single bloc (more like 40% otherwise). Airlines do not want a patchwork of different systems in different parts of the world.