Economics lobbying reports in run-up to strategy consulation

20th March, 2012

Three aviation industry reports have recently been published in time for the budget and the aviation strategy consultation. Purporting to be serious reports, they are actually thinly veiled lobbying for even more tax breaks and other favours to the industry.Oxford Economics (a private consultancy unconnected with Oxford University) has published a report called The value of aviation connectivity to the UK economy. But it is actually about Heathrow and was sponsored by BAA. This has happened at a time of wholescale lobbying for a third runway.

The World Travel and Tourism Council (WTTC) has also published a report written by Oxford Economics, which claims economic and job losses due to taxes on aviation. This is being used to back up calls for aviation, which is already greatly under-taxed, to have even more tax exemptions.

The WTTC web site quotes figures of job and economic costs arising frm tax. The figure are spurious and misleading because they hide two critical factors:
* Revenue on taxes from aviation will generate jobs and economic activity in whatever sector the tax revenue is spent
* If aviation were taxed at a fairer – ie higher – rate, it would allow taxes in other sectors of the economy to be cut. This would help job creation and economic activity in the other sectors.      

International body the Air Transport Action Group (ATAG) has now published a glossy new report: Aviation – benefits beyond borders, once again with input from Oxford Economics. ATAG is “The global network of commercial aircraft operators, airports, air navigation service providers and the manufacturers of aircraft and their components”.

Like other aviation industry reports, it is full of hype and cherry-picked miscellaneous statistics which are used to try and demonstrate huge economic benefits from aviation. It claims, for example, that “aviation activities deliver to the global economy” $2.2 trillion.  But the figure is not derived from a proper economic analysis; it appears to be produced by totting up a number of statistics, some of which overlap or are irrelevant.