AEF questions economic benefits of increasing aviation connectivity
Expanding UK aviation connectivity may not translate into economic benefit, argues AEF in response to the Airport Commission’s paper Aviation connectivity and the economy. While in the past the aviation industry has quoted large figures in relation to alleged direct economic benefits of expansion (based on estimates, for example, of travel time savings for business people), the drop in predicted GDP growth, combined with higher than expected oil prices, means that these traditional indices no longer generate convincingly high numbers.
It is perhaps for this reason that in recent years the focus of industry lobbying has been the notion that aviation provides essential ‘connectivity’ which acts as a conduit for trade, and that more aviation (and more runways) will therefore help the UK out of recession.
AEF argues, however, that:
- As the number of jobs required per air passenger has – with the rise of low-cost carriers and increased mechanisation at airports – been falling over time, the sector’s future role in generating employment should not be overstated.
- Investment in aviation is not always sound, with no guarantee of good returns; many regional airports are currently struggling with heavy losses, despite having previously benefitted from public subsidies designed to help boost sales.
- As well as helping money to come in to the UK, aviation helps it to leave. Every year, British holiday makers spend more money abroad than foreign visitors spend in Britain.
- Despite the impression given by aviation lobbyists that business people are desperate for more flights to emerging economies, the proportion of business travel at each of London’s main airports has in fact fallen over the past decade, with the drop being most pronounced at Heathrow. There is evidence, meanwhile, to suggest a long-term shift among large companies towards alternative means of connectivity such as telecommunications and videoconferencing.
- As business travellers are much less price sensitive than leisure travellers, it would be holiday makers who, if faced with higher ticket prices as a result of airport capacity constraints, would be most likely to decide not to travel or to travel by other means, suggesting a very limited impact on UK trade.
AEF’s response also refers to a recently published report by consultancy CE Delft, which finds that among the various studies identifying a correlation between connectivity and economic activity, none provides convincing evidence that increasing the number of air connections generates trade, as opposed to simply resulting from increased trade as dictated by demand.