Written evidence submitted by Airlines UK (AAS0034)
About Us: Airlines UK
Airlines UK is the trade association for UK airlines. Our members are 2Excel, AirTanker, British Airways, CargoLogicAir, Eastern Airways, easyJet, Jota Aviation, Jet2.com, Loganair, Ryanair, TUI Airways, Titan Airways and Virgin Atlantic.
We welcome this opportunity to provide evidence to the Transport Committee’s inquiry and would be glad to support with further written or oral evidence as needed.
Recovery of the UK aviation sector
The pandemic has had a devastating, immediate impact on UK airlines, alongside the wider UK travel and tourism industries. For aviation, the crisis is still not over; despite recent progress simplifying the UK system and reducing the testing regime, UK airlines are still not able to trade on pre-pandemic terms, with even fully vaccinated travellers subject to tests and extra costs, and much of the world either on a Red List or unable to take advantage of vaccine exemptions to travel to the UK without having to quarantine. First and foremost, further progress needs to be made on these points, if we are going to be able to fully recover.
To date, since the crisis began UK airlines alone have announced or consulted on over 30,000 job losses, and research suggests that across the industry some 5000 jobs have been lost across the sector each month since the crisis started. Many thousands more jobs remain under threat across the supply chain. Whilst we have seen few airline failures, many carriers are smaller, supporting fewer jobs, and reduced UK connectivity.
As can be seen in the data below on airport passenger traffic and flight numbers from September, Europe has shown the way to safely re-open travel and has seen a much faster recovery in international travel volumes and passenger numbers. Principally, this has been via eliminating all restrictions including all tests for fully vaccinated travellers – a move the UK has not mirrored. The UK has been left behind despite its world-beating vaccination programme:
In July, UK airport passenger traffic was down 81% compared to 2021, compared to 56% across the EU/EEA.
In August, UK airport passenger traffic was down 70%, compared to 49% across the EU/EEA.
Longer term, it is worth remembering that the UK pre-pandemic was home to one of the most dynamic and successful aviation sectors in the world, and had the 3rd largest global aviation network behind only the United States and China. This supported directly over half a million aviation jobs, and many more across the wider economy, particularly in tourism.
The danger is that the UK is unable to recover this status, and sees both jobs and connectivity lost to rivals, particularly to rival hubs in the continent and in the Middle-East. The pandemic saw London Heathrow lose its top spot among European airports last year, trailing both Istanbul’s new hub, and Paris Charles de Gaulle. Today, many travellers are bypassing the UK, because travel to other parts of the world and particularly into Europe is easier, and cheaper.
At the end of the summer air passenger transport services had the highest rates of jobs on furlough - 58% - during what was the height of the summer season, at levels considerably higher than any other part of the economy.
Furlough has been a huge help to carriers, but was only ever a part of the wider financial picture, that saw airlines take on significant debt to survive the pandemic whilst keeping aircraft maintained and staff trained, in anticipation of a lifting of restrictions and a recovery in demand.
Ultimately, now that furlough had ended, the strength of the recovery and the overall impact on jobs will depend on how much the recent easing of the UK’s travel rules help to generate demand and forward bookings, how much these can be built upon to ensure a strong booking window in the critical December/January bookings period, and how inbound travel restrictions across other key markets are eased subject to the progress of the pandemic. Undoubtedly, the recent announced changes to travel restrictions - including the removal of the pre-departure test and Day 2 PCR test (replaced with Lateral Flow Tests (LFT)) requirements for fully vaccinated arrivals (the latter from some point in October) – alongside the reopening of international travel to the United States for vaccinated UK citizens from November and significant reductions in the red list, are major breakthroughs which together represent a substantial reopening of UK aviation. The changes – subject to details on implementation - will provide a shot in the arm for a sector that until now has not been allowed to trade properly.
There is, however, more to be done – even with the changes, the insistence on keeping Day 2 post-arrival LF testing still leaves the UK as an outlier across Europe, given most EU countries long ago removed this as a requirement for vaccinated passengers. Private lateral flow tests can still cost upwards of £35 each – a considerable cost burden for families and one that most fully vaccinated European travellers are not having to bear. Consequently, we are calling for:
Lateral flow tests to be accepted from mid-October alongside the removal of Pre-Departure Tests, with notification of the introduction date confirmed as early as possible.
Action, for example a price cap, should be taken to ensure LF test costs are fair and competitive.
Further increases in the number of countries whose vaccination programme is recognised, ensuring more passengers are able to travel without the unnecessary burden of numerous PCR tests.
Moreover, despite the progress made, we have clearly not reached the end point of restrictions. We believe the review points need to continue until we have returned to 2019 travel conditions, and would have expected the next review to be held by 1 November. A review must be held before the end of the year, so consumers have clarity before the crucial Christmas and January booking period:
With the key booking period being Christmas and January, a further checkpoint should be scheduled before the end of this year to maximise the chances of a strong recovery in 2022.
That review should focus on: removing the requirement for any testing for fully vaccinated passengers and those from low-risk countries; further simplification of the PLF; and moving away from hotel quarantine for Red country travellers.
These measures will help the UK compete and recover more quickly in the context of a European recovery in air travel that has so far been faster and stronger compared to a UK system which, despite progress, remains more costly and burdensome compared to its EU counterparts.
Government communications is also important. For much of the past 18 months ministers have cautioned against travel, even when restriction or barriers are being lifted. A more proactive, a positive communications campaign, promoting travel as the restrictions fall away, would further support our recovery.
UK aviation is a significant generator of well-paid, skilled jobs across the nations and regions of the UK. Data shows that pre-pandemic, the aviation industry supported over 536,000 direct jobs across every region and nation of Great Britain. These jobs are vital to local communities, with one in four Westminster constituencies estimated to have more than 1,000 people employed in the sector, with salaries between 22% – 60% above the national average. Many communities are heavily reliant on aviation, with 5,000 or more residents employed in the sector within airlines, airports or aerospace manufacturers and their suppliers. A further 60% of constituencies in Britain have 500 or more residents working in aviation, demonstrating the wide reach and importance of aviation as a generator of jobs across the whole country.
The wider economic impact of the UK’s loss of aviation connectivity has been significant. Research has estimated that in 2020 the UK economy was losing £32m every day as result of no airbridge with the US alone, which in normal times was the recipient of £121bn in UK exports and which supported £417bn in Foreign Direct Investment, and generated for the UK £3.5bn from tourism spend and business travellers. These losses continued into 2021.
Further research conducted for Airlines UK showed the economic prize of meaningfully reopening UK aviation to the world and to key markets like the EU and US, worth some £47.6bn, and helping secure more than a million UK jobs – worth some £200m a day to our economy.
The potential merits of Government (a) financial, (b) regulatory and (c) other support to the aviation sector;
We have consistently said that allowing a reopening of aviation would be the best way to support our recovery and mitigate any need for further financial support, most notably furlough support for which the UK air transport sector was by some margin the greatest recipient across all UK economic sectors at the end of the summer. Nonetheless, the outlook for aviation remains uncertain and restrictions remain in place, and so subject to the development of the pandemic and the extent to which aviation remains restricted in its ability to trade, further direct financial support, though measures like furlough, should be kept under review.
Earlier this year UK Government consulted on changes to Air Passenger Duty (APD). UK airlines strongly supported the government’s initial policy position that the effective rate of APD for domestic air travel should be reduced, which would address a long-standing tax anomaly and support intra-UK connectivity, with associated economic and social benefits. The correction to APD which removes the double counting on domestic flights would support the government’s wider policy objectives of levelling up underdeveloped economic regions of the UK, and should confirmed at the upcoming, autumn Budget, and implemented as soon as possible.
UK airlines have overwhelmingly to date supported the pragmatic approach taken to amend the 80:20 slot usage rule, currently up to and including the winter 2021 season. This was necessary to protect future connectivity, discourage inefficient slot use, and to support the financial resilience of the sector. The waivers granted have proved to be the right measures to deal with the current reduction in air services and Government restrictions, and we will be responding to the anticipated consultation on summer 2022 in due course.
(c) Other support to the aviation sector;
We await an aviation recovery plan from Government. The immediate priority is of course the recovery of international travel to pre-pandemic levels, both inbound and outbound. However, any plans must also see Government looking cross-Whitehall at how aviation can be a “strategic asset” for UK Plc, helping the Government to meet its core policy priorities around Global Britain and Levelling Up. This means all interested departments and agencies joined up on a future aviation strategy out to 2030 and beyond, in a way that we have not seen during this pandemic. It means working with Government on policies to ensure the sector meets its 2050 net zero commitment, giving aviation our “license to grow” to meet future passenger demand, and policies from Government to meet this demand; not just from passengers, but also exporters - which requires the right international connectivity and links to countries where currently we do not have direct access.
Policy and investment to support a more sustainable future for our sector, and help drive a UK aviation recovery in the short and medium term, is a central priority. We set out later in this response what specific support the sector is calling for to help deliver a net zero UK aviation sector, as well as support thousands of new green aviation jobs and economic opportunities for the UK.
The traffic light system for international travel
Overall, the ‘traffic light’ system failed to achieve the sustained and meaningful restart to international travel that was intended, leaving the sector in a precarious situation and in a worse state compared to our neighbours particularly in Europe.
Flight and passenger number data referenced above clearly show how much the UK is lagging behind in terms of its aviation recovery. This is not surprising when looking at how the UK traffic light system was and has been implemented. Soon after its inception, the decision to remove Portugal from the green list, closely followed by the Balearics, with both changes being made less than a month after initial inclusion on the green list, at the time brought travel purchasing back to the same fraught position as the year before, despite the hope the traffic light system would support a sustained recovery. We then had France added to an ‘amber plus’ list just two days after the latest, ‘official’ RAG list update cycle had been announced, a decision which with hindsight appears to have been premature and unwarranted by the data. These are examples of the frustrating, last-minute and opaque decision-making that has been a mainstay of the system so far, alongside a refusal until recently – but still not decisively - to make more proportionate travel restrictions from low-risk countries and for the fully vaccinated, even as nightclubs opened in England without any restrictions. The cumulative impact of the France decision and how the system in general has operated cannot be under-estimated, with the risks - even if fully jabbed - associated with travelling to amber countries during the summer (and being forced to self-isolate and pay for more expensive tests on return to the UK) paramount in people’s minds.
By contrast, for fully vaccinated travellers across most of Europe, there have for some time been no tests and associated costs, putting those travellers and carriers at a major advantage and helping drive customer confidence.
UK airlines and airports have accepted tough measures because public health must come first. However, increasingly the traffic light system made no sense given an evidence-based assessment of risk. For example, there is no evidence that today international travel from the significant majority of countries is currently presenting a specific public health risk to the UK, or is a vector for the introduction of dangerous variants:
• From 22nd July - 11th August, the ONS Infection Survey reported an infection rate of 1.36% of the population in England - higher than the positivity rate reported by travellers arriving from Amber destinations (1.3%) and Green destinations (0.7%).
• Since 22nd July, zero very high priority VOCs/VUIs or High priority VOCs/VUIs e.g., Beta, Gamma have been picked up via the traveller testing regime.
• Only a minority of positive cases are actually being sequenced – as low as 5% of all positive cases in July – representing just 0.03% of tests from Green country arrivals.
We have recently seen Germany remove all countries from its equivalent ‘Red list’ (the UK has 50+) and Ireland has announced the abolition of its own hotel quarantine policy. The UK’s system had, in short, remained consistently behind and out of step with our competitors, with consequences for the recovery of our sector, and UK jobs and connectivity.
The cost of international travel
At the time of writing, the UK is still applying significantly more restrictive and costly measures to travel from locations with lower levels of Covid-19 than the UK. Families and business travellers, even fully vaccinated, remain at the mercy of a dysfunctional private PCR testing regime, subject to investigation by the CMA. Data showed that the cost of testing of around £100 for vaccinated people this summer was as high as five times the cost of a return flight. The effect on demand of this is clearly significant. However, it is not only the cost of testing. The testing regime has been complex, burdensome and, particularly when it comes to mandatory pre-departure tests to return to the UK, has stopped people from travelling for fear of being stranded abroad. The results can be seen in the travel data, and numbers of passengers flying from and to the UK compared to our near neighbours, which are not subjecting equivalent, fully vaccinated travellers to testing costs.
The move to abolish the mandatory pre departure test for the fully vaccinated is positive, and will reduce costs but also uncertainty. The announced removal of PCR tests, to be replaced by a Day 2 lateral flow test, is also positive. However, whereas a PCR test might cost around £70, a lateral flow test can still cost around £35. This remains a significant additional cost particularly for a family wishing to go on holiday, and is again out of step with what is happening in countries across Europe, for whom travel with the EU Digital COVID Certificate, if fully vaccinated, means no arrivals tests.
UK airlines have supported a Red list, and hotel quarantine when the policy was introduced, as part of a risk-based set of measures to protect UK public health. However, today, given the success of the vaccine rollout, UK domestic policy around covid-management, the nature of the Delta variant as the predominant global variant and the reported low levels of positive cases being brought into the UK, even from Red countries, we would question the ongoing need for such as extensive Red list, and for hotel quarantine, particularly for the fully vaccinated when alternative options like home quarantine with compliance checks offer a proportionate alternative.
An ongoing concern for airlines throughout this pandemic has been the complex layering of checks that carriers are required to administer, which have added significant time to the check-in/boarding process. The process, exemplified by the Passenger Locator Form (PLF) has improved over time, with greater levels of automation, an improved and less complex PLF form and the use of apps (e.g., for vaccine certification). Nonetheless, the system remains sub-optimal, and carriers today continue to face punitive fines for any passenger that arrives in the UK without the required credentials:
Carriers need clarity as part of restart that the short-term, emergency measures and associated fines and liabilities for carriers will be removed, with the regulatory stance moving away from a ‘punishment’ position, especially as volumes increase. Rather, as with others areas, compliance with requirements should be based on a systemic assessment or via thresholds, rather than on a passenger-by-passenger basis.
We understand that the PLF forms an important part of the track and trace system, contributing to a robust set of border measures that manage the risk of covid-19 importation. However, the need for a PLF should not be ‘baked in’ for the longer term. There needs to be a justifiable reason for the PLF to be in place for as long as it remains, with a clear rationale that can be assessed and, if circumstances change, allow for its removal. Our concern is that even if the epidemiological situation improves, legacy measures remain that will make travel to and from the UK more burdensome than it need to be. For as long as the PLF is required, the aim for it should be to provide a clear, automated and single ‘go’ or ‘no go’ signal for carriers.
Regional and global connectivity
Earlier this year UK Government consulted on changes to Air Passenger Duty (APD). UK airlines strongly supported the government’s initial policy position that the effective rate of APD for domestic air travel should be reduced, which would address a long-standing tax anomaly and support intra-UK connectivity, with associated economic and social benefits.
APD adds a significant amount to the price of tickets, making it harder for airlines to maintain and grow routes. The impact is made worse for domestic UK operators because the charge is levied twice, on both the outbound and return journeys - £26 on a return ticket – where an equivalent UK-Europe flight only attracts a duty of £13.
The policy is significantly disadvantageous to the UK regions in particular. There has been a material loss of connectivity at UK regional airports since this was introduced in 2006 with the tally of UK domestic air routes served falling by 27%. The number of passengers using domestic air services has dropped from 26.1 million in 2005 to 22.4 million in 2019 despite strong economic growth over the same period. These domestic links foster important business partnerships and links between UK residents.
Reducing the burden of APD is also entirely consistent with the aviation industry’s commitment to achieve net zero carbon emissions. Domestic UK aviation will be amongst the first to benefit from the full range of low-carbon technologies that will be coming on-stream including sustainable aviation fuels, hydrogen and electric aircraft.
The best way to re-establish global connectivity again is to enable UK airlines to operate on pre-pandemic conditions. The most recent checkpoint introduced some significant and welcome steps forward. The planned removal of the PCR test requirement for non-red country arrivals was a long-standing ask of our industry and we are very pleased this has been achieved. Along with the abolition of the pre-departure test and the simplification of the travel lists, these changes should see a further reopening this coming autumn and winter season.
It is clear however that whilst this is important progress, even these changes will not see aviation return to normal commercial levels this autumn. We will still be losing significant revenue compared to a pre-pandemic operational environment. Alongside the removal, as soon as possible, of remaining travel restrictions, including the requirement to test at all for the fully vaccinated, it is essential that Government develops a policy and fiscal environment that will enable and promote UK aviation’s full and speedy recovery.
UK aviation remains committed to achieving net zero emissions by 2050. On the 4th February 2020 UK aviation were the first national aviation group globally to commit to be net Zero by 2050. A Decarbonisation Road-Map published alongside the pledge sets out a plan to achieve this by working with the Government to do four things: Commercialise sustainable aviation fuels (SAF); invest in cleaner aircraft and engine technology; introduce smarter flight operations; and develop high-quality carbon offsets and removals
Then in July this year, the industry announced further interim targets on the pathway to net zero 2050.
Industry is targeting at least an overall 15% reduction in net emissions relative to 2019 by 2030, and a 40% net reduction by 2040, with the pace of decarbonisation ramping up as game-changing sustainable aviation fuels (SAF), permanent carbon removals, and new low and zero-carbon technologies – such as electric and hydrogen-powered aircraft – become mainstream in the 2030s.
Image: Graphic showing changes in UK aviation emissions from 2016 - 2050
Decarbonising aviation is a huge challenge, with significant technology and policy barriers that need to be overcome this decade. With the right support, it can and will be achieved, maintaining the major economic and social benefits of the UK’s air links to the world, and generating new opportunities for tomorrow’s engineers through highly skilled green aviation jobs.
We welcome the Government’s ambition to accelerate the progress towards aviation decarbonisation, for example through the recent establishment of the Jet Zero Council. This is a good example of the kinds of strengthened partnerships between industry and Government that are going to be essential to delivering jet zero, not least given the current financial challenges facing the sector, and the urgency of action over the next few critical years.
Sustainable Aviation Fuels
In a net zero world, the country that commercialises SAF technology first will capture the jobs and wider supply chain benefits. Government action and commitment to SAF will need to be accelerated over the upcoming 12 months if the UK is to avoid being be left behind, which would be a huge missed opportunity given the inherent geographical and industrial advantages the UK has over other nations when it comes to SAF production and expertise.
Developing zero emission flight in the UK
Increased investment in the Aerospace Technology Institute is needed, to enable the technological innovations that will make net zero flight a reality. Hydrogen power has the potential to make huge strides towards decarbonising regional and medium-range commercial flights, but the UK needs a robust hydrogen policy and strategy that enables the production of green hydrogen in the volumes required by the industry.
Government sponsorship of airspace modernisation is also now helping to focus attention clearly on the benefits this can deliver, which accounts for 5% of the sector commitment to 2050 but more than 20% of the in sector emission savings projected for this decade. However, the financial impact of Covid-19 has put the programme at risk meaning a key part of the UK’s transport infrastructure could deteriorate further. The Airspace Change Organising Group (ACOG) has called on the Government for short term funding that would progress this through the Airspace Masterplan. We strongly support this request to ensure the airspace modernisation programme stays on track.
Government is right to seek a strategy that will deliver the urgent requirement to decarbonise aviation whilst allowing the UK sector to remain internationally competitive and thrive, recognising the economic and societal benefits that aviation brings to communities across the UK. However, in practice this must mean not laying on additional costs on UK airlines and our customers that are not being borne by our international competitors.
There is a huge economic ‘prize’ to be gained by leading the world in the development and export of new, low and zero carbon aviation technologies. A UK sustainable aviation fuels (SAF) industry could deliver around £3 billion in GVA and 20,200 jobs (see Figure 1, below), with UK production saving 3.6 million tonnes of CO2 annually by 2038 – an essential contributor to UK aviation reaching net-zero carbon emissions by 2050 and supporting post-COVID UK recovery.
Any strategy for Jet Zero aviation must include decisive policy and investment commitments to match the proposed level of ambition and the urgency of delivering aviation decarbonisation within the timeframes needed - and whilst the sector begins to recover from the worst crisis in its history, resulting from the global Covid pandemic.
To date, Government investment, particularly outside of the established ATI framework and including with respect to Sustainable Aviation Fuels, has been limited compared to some of our international peers. This will need to change if the UK is to take full advantage of the huge potential to lead the world in green aviation technologies.