Written evidence submitted by Loganair Limited (AIS0001)
Scottish Affairs Committee
Airports in Scotland - Call for Evidence
Submission by Loganair Limited
1.1 Loganair is the UK’s largest regional airline. Based in Glasgow, and the only airline headquartered in Scotland, we operate a fleet of 42 aircraft across 80 routes within the UK and serve 34 UK airports – more than every other airline combined. In addition to our extensive scheduled service route network, we also fly for major energy providers in the oil, gas and renewables sectors; support the Scottish Ambulance Service and operate the Royal Mail air network within Scotland.
1.2 19 of the 34 airports we serve are in Scotland. These range from major airports such as Aberdeen, Edinburgh and Glasgow via regional airports such as Inverness and Dundee to the smallest community airports including the beach airport at Barra and the six airfields in the north isles of Orkney. We believe we are uniquely placed to provide an overview of the topics covered by the Scottish Affairs Committee’s Call for Evidence.
1.3 We provide the majority of our air services on a purely commercial basis[1], even though major routes such as Glasgow-Stornoway, Edinburgh-Kirkwall and Aberdeen-Sumburgh are widely regarded as “lifeline air services” by the communities we serve. The Scottish Government’s Air Discount Scheme makes an important contribution to affordable travel costs for island residents. However, it is important to distinguish that this is a subsidy to the passenger and not directly to the airline. In extremis, if we carry no passengers, we receive no income.
1.4 A number of Loganair routes are operated under Public Service Obligation (PSO) arrangements designed to ensure adequate connectivity exists on routes where it cannot be otherwise provided by the market. Relevant to the scope of this Call for Evidence are Loganair services:
Overall, direct subsidy accounts for less than 5% of Loganair’s total income.
2.1 The impact of the pandemic on the aviation sector has been significant, and could reasonably be viewed as the greatest challenge ever faced by the industry. Scotland has been no less affected than other parts of the UK.
2.2 Indeed, the imposition of more restrictive quarantine and travel limitations during the early parts of the pandemic has led to some diversion of passenger journeys from the likes of Edinburgh and Glasgow to airports such as Manchester and Newcastle. More recently, it has been clear that the economic impact of such measures, without any corresponding protections or benefits to public health, has been recognised; the Scottish Government has now broadly aligned its travel policies with those of the rest of the UK.
2.3 Within Scotland, social restrictions on travel and the consequent reduction in passenger numbers meant that the continued provision of air services to island communities became impossible on a commercial basis. The need to maintain air services on routes to Shetland, Orkney, the Western Isles and Islay was immediately recognised by the Scottish Government, and an arrangement was reached between it and Loganair to maintain basic connectivity on these routes.[2]
2.4 A “skeleton schedule” was maintained in each area: for example, services to Orkney and Shetland continued from Aberdeen but the regular links from those destinations to Edinburgh, Glasgow and Inverness were suspended. The key routes served were largely those required to facilitate NHS patient travel and the carriage of mail. We also took steps to ensure that other essential services such as the carriage of radiotherapy material to the Western Isles Hospital could continue.
2.4 This arrangement operated throughout the first lockdown. Given concerns as to whether airports would remain open, we converted part of our aircraft hangar at Glasgow so that it could be used as a temporary passenger terminal if needed to assure basic facilities for essential island connectivity. In the event, Glasgow Airport remained open throughout the pandemic and so this was not required, although Loganair flights were often the only ones still operating at the height of the pandemic.
2.5 The skeleton schedule was rapidly re-introduced in December 2020 following the renewal of social restrictions. Routes such as Edinburgh-Sumburgh and Glasgow-Kirkwall, which had been re-opened on a commercial basis, were again suspended. Loganair has progressively resumed services on all of these routes from April 2021 onwards. The only routes yet to re-join the Loganair network are those linking Scotland with Norway; we plan to resume flights from Edinburgh and Sumburgh to Bergen and from Edinburgh to Stavanger in Spring 2022.
2.6 To generate income during the pandemic, we also opened up new markets including charter flights for ships’ crews to Poland and Latvia; rapidly converted two aircraft to become specialised air ambulances to carry Covid-19 patients for the Scottish Ambulance Service, flew extra freight services to carry Covid-19 test kits and undertook other unusual activities to bring in income, including a Loganair jet being used as an “extra” in filming at Prestwick of a Bollywood movie.
2.7 As of the date of this submission, passenger numbers on most Loganair routes have recovered to 75-80% of their expected levels. The largest single continuing impact comes from uncertainty around international travel. Although the vast majority of Loganair flights are domestic, up to 20% of our passengers are using a domestic flight to connect to an international onward journey, and we see that this international travel will take some time to recover. Loganair has partnerships with major carriers including British Airways, KLM, Emirates, Etihad and Qatar Airways.
2.8 The second constraint on the rate and pace of recovery is that some travel on intra-Scotland routes relates to healthcare journeys and the limitations on the type of surgery and examinations being undertaken due to the capacity challenges presently faced by the NHS means that many patient travel journeys are not taking place. We expect that this will recover by Spring 2022.
2.9 Although we see some evidence that there has been a “staycation” effect with consumers choosing to holiday in the UK rather than taking their traditional trips overseas, this has by no means been sufficient to counteract the loss of passenger journeys from the factors outlined in the preceding two paragraphs.
2.10 Moreover, we are seeing marked differences in the rate of recovery between specific markets. For instance, travel to and from Shetland has recovered to around 80% of its pre-pandemic levels, helped by a large ongoing construction programme, whereas travel to and from Orkney is only at 60% of pre-pandemic levels. The absence of international incoming tourism to Orkney is particularly keenly felt.
3.1 Loganair employs over 800 staff, of whom over 85% are based in Scotland. Around 170 of our team members are based in the Highlands and Islands where we have aircrew, aircraft engineering, ground handling and aircraft refuelling services. Where most other airlines contract out their ground handling to third party companies, this is simply not an option at the remote airports to which we fly. Loganair thus directly employs staff to accomplish these tasks, also working in partnership with airport operator HIAL at four of the smallest airport locations to deliver for our customers.
3.2 In addition to supporting Loganair’s own operation, we provide services to third parties ranging from ground handling at Sumburgh for helicopters flying out to North Sea oil rigs; aircraft refuelling at Benbecula; line maintenance for British Airways’ Airbus aircraft at Inverness; aircraft de-icing at several locations and handling for ad-hoc flights as diverse as ship’s crew changes to Royal Flight visits. The income from third-party work helps to cover the costs of maintaining both manpower and capital equipment required to fulfil these tasks.
3.3 The diversity of our income streams has also helped to ensure that we made no redundancies or cutbacks affecting our island-based teams through the Covid-19 pandemic.
3.4 We have aircraft maintenance hangars at Glasgow, Aberdeen and Kirkwall, where the majority of the maintenance work on Loganair’s aircraft is carried out, together with engineering stations at Inverness, Edinburgh, Sumburgh and Dundee. We expect to develop this capability by in-sourcing certain capabilities in the coming months, which will create new employment in Scotland.
3.5 Loganair also operates an engineering apprenticeship programme. We have a total of ten apprentices undergoing a three-year course to become a Licensed Aircraft Engineer. The extremely limited funding arrangements for apprenticeships in Scotland (which is different to that in other parts of the UK) means that we are unable to commit to further expansion of the apprentice programme despite a clear desire to do so.
3.6 In common with airports elsewhere in the UK, Scottish airports are significant contributors to the local employment market. In addition to the 800 directly employed by Loganair, we estimate that our supply chain including ground handling providers at larger airports like Glasgow, Edinburgh, Aberdeen and Inverness and other service providers including aircraft refuelling, catering and cleaning provides a further 600 jobs in Scotland.
3.7 Just as other airlines did, Loganair made extensive use of the CJRS “furlough” programme to support employment throughout the pandemic. Our employee groups also entered into a programme of agreed salary reductions from April 2020 through to August 2020 and again from November 2020 to September 2021, when we became the first major UK airline to restore full pay for our employees. The combined effect of these programmes was integral to the airline’s survival and ability to secure additional financing.
3.8 In September 2020, we initiated consultations with our employee groups which ultimately led to the loss of 85 jobs in Loganair – approximately 10% of our pre-pandemic workforce. We were amongst the last UK airlines to take this step;, the roles closed through redundancy were those that we simply could not foresee returning even after the pandemic given major and permanent changes to our business. Several of these redundancies were achieved through voluntary severance and early retirement, although many sadly were involuntary redundancies.
3.9 A potential need for further redundancies over Winter 2020/21 was averted through the extension of the furlough support, continued salary sacrifices on the part of every Loganair employee and a slow but steady improvement in trading conditions from May 2021 onwards, leading to the re-opening of routes that had been suspended during the pandemic.
4.1 Loganair operates the only regular freight services into Scotland’s rural airports, flying dedicated freighter aircraft for Royal Mail daily except Sunday into Stornoway, Benbecula, Sumburgh and Kirkwall. We also carry Royal Mail on scheduled flights from Glasgow to Islay and Tiree, and within the Orkney Islands, maintaining the islands’ mail delivery systems.
4.2 Within Orkney, Loganair provides freight and mail services on inter-isles air services and during the winter months, when ferries are unable to regularly serve the island of North Ronaldsay, we remove the seats from our inter-isles aircraft to provide a weekly freighter service with foodstuffs for the island community.
4.3 We have the capability to deploy the Twin Otter aircraft routinely used on Barra, Campbeltown and Tiree PSO services in a part- or full-freighter configuration to provide urgent support to island communities in case of disruption to ferry services or other requirements. Our five dedicated freighter aircraft, with payload of between three and six tonnes, can also be deployed when not tasked for Royal Mail.
4.4 We believe that there is further scope to develop freighter capability into the islands. The economic viability of this is dependent, however, on filling the aircraft on both its outward and return legs by finding domestic or international export markets from the islands. We have worked on a number of such opportunities including flying high-value seafood products from islands directly to markets in the south of the UK, France, Spain and beyond.
4.5 However, despite promising developments such as the new fish market in Scalloway in Shetland, none has come to fruition – partly as a consequence of Brexit-related changes to export markets. A further constraint is the limited security screening capability at island airports; any such cargoes must be security screened to comply with DFT requirements and where our cargo security screening at Benbecula (for example) is accomplished by use of passenger baggage X-ray machines in between scheduled flights, this does impose a constraint when looking to export six tonnes of shellfish.
4.6 The ability to provide direct routes to key markets for time-sensitive products such as high-value seafood will be a significant economic enabler for island communities. We believe that there is scope for expansion and this requires a coordinated approach across producers, airports and airlines alike. Work by economic development agencies such as Highlands & Islands Enterprise could well help to realise this potential.
5.1 We have serious, and growing, concerns around one aspect of infrastructure at HIAL airports, to meet UK security regulations. Different regulatory requirements apply to aircraft of below 15 tonnes Maximum Take-Off Weight [MTOW] to those above 15 tonnes. Loganair’s Saab 340 aircraft are below the 15-tonne regulatory threshold, but all are over 30 years of age and as part of our fleet renewal programme to future-proof essential island air services, we are intending to progressively replace these aircraft between now and March 2023.
5.2 There are no appropriate commercial passenger aircraft below the 15 tonne limitation available as replacements for the Saab 340. The Saab 340s are instead being progressively replaced by ATR42 aircraft which seat 48 passengers and have a maximum take-off weight of 18 tonnes – above the regulatory threshold. The ATRs will form the backbone of Loganair’s fleet for the next decade at least, providing essential connectivity to the Scottish islands.
5.3 Present security regulations restrict us to having one aircraft over the 15 tonne threshold on the ground on scheduled passenger and/or cargo and mail services at the island airports at any time. As more of the ATR aircraft are introduced to take over from the Saab 340s, this imposes serious limitations on the number of flights we can provide at the likes of Sumburgh, Stornoway and Kirkwall. It especially restricts the timing of those flights – which is critical to ensure Royal Mail deliveries, NHS patient travel and connectivity to onward services.
5.4 This issue has the potential to seriously constrain island connectivity. Loganair has been working with HIAL and the DFT on this issue for over 18 months, but we urgently need to facilitate a change to the UK security regulations to permit simultaneous operation of larger aircraft at the HIAL airports operating under these limitations. As aviation security is a reserved matter, we would ask the Committee to consider the inclusion in its report of a recommendation to Ministers to this effect.
5.5 It should be noted that this is a precis of the situation; it is not appropriate for us to include security-sensitive information in a Call for Evidence response which will be publicly released.
5.6 The further area in which we believe that investment in infrastructure is urgently required is a cohesive strategy to improve public transport links to Scotland’s main airports. National rail lines are within view of the terminal buildings at Aberdeen, Edinburgh and Glasgow airports but for some inexplicable reason harking back to the 1960s, the airport terminal buildings were each constructed on the wrong side of the airport to link to the national rail network.
5.7 We believe that there would be considerable benefits to customers and local economies alike if a coherent plan to provide links – such as using unmanned pod vehicles on dedicated tracks – between airport terminals and rail stations could be accomplished. Airports such as Dusseldorf and London Luton have recognised the benefits of such schemes, following the lead of airports like Amsterdam Schiphol which is the epitome of integrated transport with its own mainline rail station under the terminal building.
5.8 The levels of investment required to accomplish this are realistically beyond the capability of individual airport operators who are already struggling with the burden of debt imposed by the Covid-19 pandemic. This is an area which requires Government intervention. We should note, however, the planned opening of the Inverness Airport Parkway station next year and warmly welcome this development.
6.1 In our view, airspace modernisation – and the proposed introduction of new air traffic control technology at island airports in particular – will provide substantial benefits for Scottish airports. The ability to route directly from point A to point B under Air Traffic Control supervision will reduce flight times, cut carbon emissions and add extra layers of safety oversight versus those available today.
6.2 The proposed changes to air traffic control at airports like Sumburgh, Kirkwall and Stornoway will bring particular benefits. The introduction of radar oversight at Kirkwall and Stornoway will reduce the need for “procedural approaches” which extend flight times and generate unnecessary carbon emissions through added fuel burn on every flight. The technology is already deployed at other airports including London City, which dispatches aircraft into some of the most complex airspace in Europe; we categorically do not share concerns which have been expressed around the safety and integrity of the technology.
6.3 We genuinely believe that the core issue behind the opposition to the proposals to modernise air traffic control at the HIAL airports is an economic one, despite efforts in certain quarters to envelop this in safety or other issues. The move of local jobs from island economies to Inverness will have an impact, yet there must be economic solutions to economic issues which should not be allowed to stand in the way of de-carbonisation and safety enhancements.
7.1 In June 2021, Loganair introduced its GreenSkies environmental programme. The airline has committed to being fully carbon neutral by 2040 and as the technologies such as hydrogen and electrical powered aircraft are under development, we have introduced a programme to fully offset the carbon emissions from each and every Loganair flight in the meantime. A levy of £1 per passenger journey was introduced from 1 July 2021 to fund this carbon offset programme.
7.2 Loganair is working with new technology providers including Ampaire (electrically-powered aircraft); ZeroAvia (hydrogen) and Cranfield Aerospace Solutions’ Project Fresson to develop the new technologies required for zero-carbon regional aviation. Although the use of Sustainable Aviation Fuel [SAF] is being widely considered, we believe that this primarily will be used to abate carbon emissions for long-haul flights where the deployment of electrical or hydrogen power is unlikely based on current and emerging technologies.
7.3 Loganair is also targeting other forms of emissions including those from vehicles, where we are progressively replacing diesel vehicles and equipment with electrical alternatives. We have worked together with HIAL at its airports to introduce mobile boarding ramps, improving accessibility for customers with reduced mobility, which are powered by solar energy instead of the traditional diesel motors. A new aircraft washing process has been introduced to eliminate contaminants in run-off water; we have invested in new technology to improve fuel efficiency and reduce weight on our aircraft
7.4 At the same time, Loganair’s aircraft re-fleeting programme, replacing older generation Saab turboprop aircraft with ATR42 and ATR72s, is contributing to a very significant improvement in carbon emissions per passenger. The 70-seat ATR72 aircraft have replaced the 50-seat Saab 2000 aircraft in Loganair service, and the CO2 emissions per passenger on a typical Aberdeen-Sumburgh flight are up to 40% less.
7.5 It is important to also view these emissions in the context of the high and ongoing level of emissions from ferry travel, which is the only viable alternative for such journeys and where studies indicate that emissions from a car & ferry journey can be up to eight times higher than an equivalent Loganair flight.
7.6 It is against this background that, as the present-day most carbon-efficient means of travel to and from the Scottish islands, Loganair strongly believes that the waiver of Air Passenger Duty on flights from the Highlands & Islands should be reciprocated to also apply to flights to the Highlands and Islands. Aviation fulfils a role in Scotland equivalent to that of rail or road travel in the Home Counties; recognising this through the tax system will properly reflect the importance of the connectivity maintained through Scottish airports.
Jonathan Hinkles
Chief Executive
Loganair Limited
October 2021
[1] The exceptional impact of the Covid-19 pandemic on key commercial air routes is covered in a later section within this response.
[2] Services to Barra, Campbeltown and Tiree are already supported by a PSO and so no emergency provisions were required to maintain flights to these destinations through the pandemic.