13th June, 2014
The Airports Commission’s latest call for evidence – published this week – considers possible means to promote more effective use of regional airports. The work comes in the context of the Government’s broad support for the growth of regional airports, as set out in the Aviation Policy Framework, alongside the Commission’s recommendations for South East expansion. Both domestic travel and the route networks served by regional airports have been waning, the paper notes, and many regional airports have failed to deliver anything like the levels of growth they formerly anticipated. But while the Commission maintains its firm support for a new South East runway to bolster the UK’s connectivity to emerging markets, it would not, this new paper suggests, be opposed to some scaling back in capacity elsewhere.
A shift towards a more centralised airports system?
The Commission’s vision appears to be of an increasingly centralised airports system focussed on London. Despite reductions in domestic travel and route networks, people remain well served in terms of air connections around the UK, the paper argues, and:
“some consolidation of the market may be absorbed without causing significant diminution of connectivity to either individual regions or the UK as a whole. Indeed, it may be argued that consolidation of the UK’s regional airports into fewer, larger airports could enhance regional connectivity, as larger airports serving bigger catchment areas could attract a wider range of services, enhancing route networks and other services.”
Separate consideration is given to airports supporting London and the South East, with an overall conclusion that while some surface access improvements are desirable, particularly to Stansted, there is considerable scope for expansion along the lines set out by the airports themselves.
In terms of economic contribution, the Commission appears to challenge claims from some regional airports that they significantly benefit the wider UK economy. Noting that regional airports predominantly – and increasingly – cater to tourist travellers, the Commission argues that “aviation connectivity… facilitates outbound tourism, as well as inbound, so the net impact is unclear.” The paper takes a cautious approach to the possible benefit of Government subsidies, for example questioning whether the recently-announced Regional Air Connectivity Fund (with the first route being awarded recently between Dundee and Stansted) will be able to provide sufficient financial contribution to the setting up of new air routes to affect their viability. And despite lobbying from some airports for tax relief through differential application of Air Passenger Duty, the Commission does not consider this an effective measure.
Decline in regional airports may be structural and long term
While capacity constraints may have had some impact on the loss of domestic routes, the Commission argues, fundamentally it is lack of demand that has led to the loss of these services:
“Ultimately, the ‘squeezing out’ of domestic routes at capacity constrained airports is a product not just of airports’ charging policies, but of insufficient domestic demand to warrant the use of larger planes. There is nothing intrinsic to domestic services which require them to use smaller planes.”
Therefore, the Commission argues, there is a need to identify “what factors affect the underlying demand for domestic air services, and how these may have shifted in recent years.”
Since reduced demand both preceded the recession and has not picked up after it to the extent that other parts of the aviation market have, and since the drop off also predated the APD increase, the explanation is unlikely to be clearly economic, argues the Commission. In fact it may relate as much to competition from improved rail services including facilities such as wifi and access to phone networks, the development of long haul routes from regional airports (such that passengers have no need to hub through London), and the relative attractiveness of overseas hubs.
Regional airports in the context of a carbon cap
The Airports Commission made an early commitment to work within the constraints of the Climate Change Act, and the Committee on Climate Change (which advises on delivery of the Act) has made clear that aviation emissions can only be kept to levels compatible with the long term climate target if demand is constrained. The Airports Commission’s interim report argued that demand in the South East will be strong enough to justify a new runway even if a carbon cap is applied, but while this has never been spelled out, a significant expansion of South East demand would be possible only at the expense of regional airports.
If the Commission’s final recommendation is to be a significant scaling back in activity at regional airports in order to allow growth in London, it can expect to face major obstacles. Many regional airports have significant room to grow, and Master Plans that set out ambitious expansion plans. Allowing for some drop off in demand from historic highs may be one thing, but as forthcoming analysis by AEF will show, the growth plans of many regional airports would in fact need to be actively – and significantly – curtailed to allow for an increase in CO2 emissions from a new runway. For the Government to impose retrospective restrictions on regional airport activity in order to allow SE airport expansion while remaining within carbon limits could have significant economic consequences for the affected airports.
Image credit: Tim Green via Flickr