AVIATION'S ECONOMIC RED HERRINGS

Here we answer some of the most frequent claims made about aviation and the economy

The UK will lose investment and jobs unless airports expand

Decisions on investment and jobs are based on many factors. There is no evidence that national or regional airport capacity is a major factor - especially since most flights are for holidays. NE England has no direct flights to Japan but has attracted significant investment and jobs from Japan over the years. The same is true of other regions outside the South East.

Many overseas businessmen land at Heathrow to make a connecting flight outside the UK. The fact that they can get to London more quickly than to their final business destination does not cause them to change their plans and do business in London.

London is a major financial centre for many reasons that have nothing to do with the location or size of London's airports (e.g. the pre-eminence of English as the international business language). Luxemburg and Switzerland are major international financial centres, but have much less airport capacity than London.

Businessmen need to fly as part of their business

Only one air passenger in five travels on business. Business demand is not the cause of the alleged airport under-capacity.

Most international business is done by instant electronic communications: telephone, video-conferencing, e-mail and fax.

The drop in business air travel after the terrorist attack on New York did not paralyse international business.

Some business flying is necessary. There is more than enough capacity to meet this demand. Much business flying is more a perk than a necessity, particularly if the journey is by business class to an exotic location.

The tourist industry depends on flying

Less international tourism would not close down the UK tourist industry. It would mean more local demand for UK tourism.

British tourists spend much more overseas - £17 billion per year - than overseas tourists spend in the UK - £9 billion per year. This represents a net loss of £8 billion to the UK tourist industry and national economy.

The UK tourist industry and the national economy would benefit if Britons spent more of their money on visiting parts of the UK and less on short haul weekends to Berlin, etc.

Amsterdam, Frankfurt and Paris are overtaking Heathrow

London has six international airports, not one: Heathrow, Gatwick, Stansted, Luton, City and Southend. It is misleading to make international comparisons only with Heathrow.

In 2000 116 million passengers used the six London airports. Passenger numbers for Amsterdam, Frankfurt and Paris were 39 million, 49 million and 73 million respectively.

Terminal 5 will enable another 35 million passengers to use Heathrow, keeping the London's capacity well ahead of its so-called "competitors" in Amsterdam, Frankfurt and Paris.

Many Heathrow flights are to Amsterdam, Frankfurt and Paris. It is difficult to see where they would land if those airports had not expanded. Poeple might have travelled by train.

Amsterdam, Frankfurt and Paris airports have expanded primarily in response to local demand, not in order to "compete" with Heathrow. It would be ludicrous to expect the passengers who use those airports to travel to first travel to Heathrow in order to fly somewhere else.

Air transport is a fact of economic life

Then let air transport pay its way. Flying has a role to play. But that is no reason to require the taxpayer and the environment to prop up an artificial level of demand that is not sustainable in the long run economically, socially or environmentally.

If aviation is the essential economic activity that the industry and its supporters claim, then it should be able to pay its own way. It should not need support from the taxpayer and it should be able to meet the costs of its environmental and social impacts.

Aviation pays its dues via APD

Airport Passenger Duty (APD) accounts for only a fraction of the subsidies enjoyed by air transport. APD is not designed to meet external environmental and social costs.

Last year APD raised under £1 billion. The total value of tax exemptions was over £9 billion, leaving the Treasury to find the "missing" £8 billion from taxpayers. See Aviation, the economy and taxation.

International agreements mean aviation fuel cannot be taxed

The fuel tax exemption may have been justified in the early days of air transport to stimulate demand, but not today. The industry is now well established, but exemptions from fuel and other taxes have remained, creating an unsustainable level of demand that is not in society's long-term interest.

The international agreements need to be amended. There is no reason why 'bilateral' agreeements between countries cannot be agreed. Alternatively, taxes could readily devised which are a substitute for a tax on fuel, eg higher APD or landing charges.

Fuel used for internal domestic flights is outside the international agreements and could readily be taxed, as some other countries already do.

The fact that there fuel for trains and ships is not taxed misses the point. Two wrongs do not make a right. On public policy grounds, trains should not be taxed so that people are encouraged to use them instead of cars and aircraft for movement within the UK and for short hops to mainland Europe.

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