Written evidence from the Department for Transport (SMA0039)

 

 

Introduction

 

 

 

 

 

Summary

 

  1. For the purposes of this inquiry the Committee has helpfully clarified small airports as those handling fewer than five million passengers per year.  In the UK there are over 40 airports operating commercial passenger-carrying services that fall into this category, ranging from Newcastle Airport which handled 4.4 million passengers in 2013, to Lydd Airport which handled just 1,000 passengers (Civil Aviation Authority : Airport Statistics 2013). This category also includes Aberdeen, Prestwick and Inverness airports in Scotland (as well as airports in the Scottish Highlands & Islands); all three of Northern Ireland’s main airports (Belfast International, Belfast City and City of Derry); and Cardiff Airport in Wales.

 

  1. Data on these airports appears in Annex 1.  Not listed here, however, are the many other smaller airfields across the UK that support business and general aviation and other related activities.

 

  1. In policy terms the Government has made clear that airports across the UK make a vital contribution to the growth of the regional and local economies in which they are located.  This was confirmed in the Aviation Policy Framework[1], published in March 2013, which stressed that the UK’s airports help to encourage investment and exports by creating local jobs and fuelling opportunities for economic rebalancing in their wider region or area. New or more frequent international connections attract business activity, boosting regions’ economies and providing new opportunities and better access to new markets for existing businesses.

 

  1. Given its relatively small geographical size, the UK is well served with airports.  A map showing commercial airports handling fewer than 5 million passengers per year appears at Annex 2.  Many smaller airports act as focal points for local business development and employment by providing rapid delivery of products by air and convenient access to other national and international markets. Some also diversify into other aviation-related areas such as hosting on-site aircraft maintenance, repair and overhaul (MRO) companies and aviation training facilities, as well as non-aviation businesses.  Other airports develop aviation specialisms in addition to commercial passenger operations, such as East Midlands Airport (air cargo), Humberside, Norwich and Aberdeen airports (North Sea oil/gas helicopter operations), and Durham Tees Valley Airport (rescue and fire-fighting training, and support for military aviation operations). 

 

  1. The Aviation Policy Framework also recognised UK airports’ very important role in providing domestic and international connections. The availability of direct air services locally from these airports can reduce the need for air passengers and freight to travel long distances to reach larger UK airports.  For the more remote parts of the UK domestic services between small airports provide vital connectivity. For example, air connectivity has significantly greater importance to Northern Ireland because of its geographical separation from the remainder of the UK and mainland Europe. The same goes for Orkney, Shetland and the Hebridean Islands, whose communities and economies regard their air services as lifelines. 
  2. The Government has supported air connectivity from smaller airports through the establishment of the “Regional Air Connectivity Fund”, to maintain existing but threatened air services to London airports, and also to provide start-up aid for new routes from airports handling fewer than five million passengers per year. 

 

 

General issues affecting smaller airports

 

Economic downturn & recovery

 

  1. The Government recognises that recent economic conditions have been challenging for the UK’s aviation sector.  The economic recession damaged economic growth prospects and resulted in new trends, such as larger airlines scaling down shorter haul and domestic services in favour of long-haul, and increasingly consolidating these long-haul routes to a small number of dominant continental hubs. 

 

  1. Overall, the UK’s smaller airports grew substantially in the late 1990s and early 2000s. Fuelled by the growth of the low-cost short-haul sector, airports outside of London grew faster than those serving the capital, together growing at between 5-12% for each year between 1997 and 2005.

 

  1. Thereafter domestic UK air traffic (the lifeblood of smaller airports) began to decline between 2005 and 2007, however the recession accelerated this trend from 2008 onwards.  The Civil Aviation Authority’s airport statistics for the period 2008 to 2013 (Annex 1) show some quite significant reductions in passenger numbers at a large number of smaller airports.  For instance, Durham Tees Valley Airport saw passenger numbers fall by over 75% (largely due to the withdrawal of its Heathrow service in 2009), while Prestwick, Newquay and Dundee airports all saw reductions of over 50%. 

 

  1. Although total UK air passenger traffic began to recover from 2010 onwards, domestic UK air traffic flat-lined between 2010 and 2012, and has recovered much more slowly since then.  However, recent statistics have indicated an encouraging trend towards positive growth at smaller airports – see Annex 1.

 

  1. Against this trend, some airports have shown encouraging increases in passenger traffic during the same period, though these reflect very specific circumstances.  Southend Airport saw a very substantial increase of over 2,100% from a very low base, reflecting the owner’s decision to invest heavily in infrastructure improvements and EasyJet’s decision in 2011 to base aircraft and commence services from the airport.

 

  1. Despite the effects of the recession, few UK airports have closed – Plymouth, Penzance Heliport, and most recently, Manston.  There is currently also some uncertainty about Blackpool Airport’s future operation.  Though the circumstances behind each of these closures were different, essentially they come back to owners’ and/or airlines’ conclusions that services from these airports were no longer commercially viable.  Another airport, Coventry, lost its last commercial passenger service in 2009, though the airport continues in operation for business and general aviation traffic.

 

Limitations of smaller airports

 

  1. A frequent criticism levelled at some smaller airports is their limited range of services to only a small number of destinations.  Services from smaller airports diminished during the recession as the airline industry concentrated on the most profitable routes, and have only recently started to pick up again gradually.  Some smaller airports claim that they are reliant for their survival upon a small number of services provided by a few (sometimes only one) airlines.  Some airport operators have stated that airlines use their market power to force down the fees airports charge, which can mean the airports have to get by on very small margins from airline operations, and must diversify into other business activities in order to maintain their viability.

 

Overlapping passenger catchment areas

 

  1. An issue of concern to some smaller airports is `leakage’ of passengers to other / larger airports located close by.  Given that the UK has a relatively large number of airports within a fairly small geographical area, airports exist in close proximity to others.  There are more regional airports per head in the UK than in comparator EU Member States. For example two medium-sized airports – Liverpool John Lennon and Leeds-Bradford – are respectively approximately 30 and 60 miles distance from the much larger Manchester Airport (now the UK’s 3rd busiest).  Similarly Cardiff Airport is approximately 60 miles from Bristol Airport, and the two have considerable overlap in their catchment areas. 

 

  1. This means that airports are operating in an intensely competitive environment, competing for both passengers and airlines.  The majority of people have good access links to multiple airports, so this allows passengers to travel with reasonable ease to larger airport offering a wider range of services. 

 

Poor / lack of surface access to smaller airports

 

  1. Many UK airports (not just the smaller ones) were originally built in the 1920s-1930s and were developed further with hard runways during the Second World War.  Little priority was given to surface access when these airfields were originally constructed, and in some cases their chosen location was a considerable distance from the cities they were meant to serve – for example Belfast International Airport is over 13 miles from Belfast city centre. 

 

  1. Also, in the years after the Second World War some newer airports have been established at former military air bases – for example Durham Tees Valley Airport (formerly RAF Middleton St George), East Midlands Airport (formerly RAF Castle Donington, Inverness (formerly RAF Dalcross), and more recently Newquay Cornwall (formerly RAF St Mawgan) and Robin Hood Doncaster-Sheffield (formerly RAF Finningley).  In their original form these airfields had been constructed purely for strategic military purposes away from conurbations, with the legacy that in some cases access by private vehicle is along inadequate roads, and access by public transport remains poor or non-existent.  For example, Durham Tees Valley Airport is situated adjacent to the Darlington-Middlesbrough railway line but the Teesside airport station on the line is poorly served with only one weekly train service. 

 

  1. Attempts to improve public transport access to airports have had variable results.  While East Midlands Airport has frequent bus services to Leicester, Derby, Loughborough and Nottingham, a shuttle bus service linking the nearest railway station (East Midlands Parkway – 4 miles distance) to the airport ceased several years ago, and the only way to travel between the station and the airport is by advance-booked taxi.  Similarly, MPs and business leaders in Yorkshire have for some years criticised surface access to Leeds-Bradford Airport, leading the Government to commission a feasibility study into improving surface connectivity [see Paragraph 29].  However, other airports such as Southampton and, latterly, Southend, have benefitted from having adjacent stations on nearby rail lines and good road connections, and have excellent surface connectivity.

 

 

Specific issues of interest to the Committee

 

 

Issue 1 : The strategic importance of smaller airports and the extent to which smaller airports meet the needs of regional economies and provide efficient and effective services for the local communities in which they sit, and their impact on regional economic development and regeneration;

 

  1. For the most part airports are highly valued by their local communities.  They attract business and leisure traffic to their areas, and provide connectivity and travel opportunities for local people through direct links to locations, or links to a larger airport providing onward connections. They generate economic benefits through investment and employment, and support the wider UK air service sector.

 

  1. Earlier this year the Airport Operators Association (AOA), the UK airports’ representative trade body, produced a report – Airports in the Community[2] – which concluded that the UK’s airports play a vital role in supporting the wider economy, and act as a hub for local business and enterprise, as well as a source of local pride.  A strong and well-connected airport can be a crucial element in the success of local businesses by helping people find jobs – either on site or in businesses that support the airport’s commercial aviation activities.  Airports also provide a socially important role through grants provided to small community-led organisations; helping fund local health charities; instigating initiatives focussing on inspiring children and young people.

 

  1. Examples of smaller airports’ activities cited in the AOA’s report include :

 

-          Aberdeen International Airport provides 2,000 jobs on site and supports a further 4,000 Scottish jobs. In addition to its important role as a base for helicopter operations in connection with North Sea oil and gas exploration, its network of direct connections across the UK and Europe allow international oil industry to travel to and from the city, and plays a key role in helping to sell courses to the 1,700 overseas students who attend Aberdeen Business School.

 

-          Liverpool John Lennon Airport provides employment for over 2,000 people on or near the airport site, and is a significant driver of prosperity in the Liverpool city region, contributing £170 million to the local economy.

 

-          London City Airport has routes to over 40 destinations across the UK, Europe and the United States and nearly 3.5 million passengers pass through its doors every year.  It is a convenient arrival / departure point for high-value City of London financial sector businesses.  In contrast, the airport has developed an award-winning programme to help tackle high unemployment rates in the local community of Newham, giving local unemployed residents two weeks of airport-specific employability training followed by a two-week work placement. Since its inception the scheme has helped over 350 people into work.

 

-          Newcastle International Airport plays a vital economic role in North East England, contributing over 3,000 jobs on site and supporting 8,000 in the North East region, to which it makes a £650 million economic contribution.  Since 2006 the value of exports flown through the airport has risen from under £20 million to over £250 million, with most of them carried by Emirates to Dubai and beyond.  The airport has also adopted the city’s Maggie’s Centre charity at Freeman Hospital, which opened in May 2013 for people with cancer.  The airport also sponsors local football and cricket teams, as well as local environmental groups.

Issue 2 : The steps the Government is taking or could take to support smaller airports and aid diversification to ensure their longer-term viability;

 

Planning issues

 

  1. The UK’s aviation policy and regulation is largely a reserved matter, resting with the Department for Transport and the Civil Aviation Authority (CAA). Reserved matters include safety regulation, economic regulation, aviation security, competition issues, and international aviation policy aspects.
  2. The Devolved Administrations in Northern Ireland, Scotland and Wales have devolved responsibility for certain matters pertaining to land-use planning and airport surface access issues.

 

  1. The UK’s airports are largely privately-owned (though some are part-owned by local authorities to various levels, and in recent years two smaller commercial airports – Cardiff and Prestwick – have been acquired from private owners by, respectively, the Welsh and Scottish Devolved Administrations) and operate in a competitive market.  The Government supports competition as an effective way to meet the interests of air passengers and other users, and welcomes continued private sector investment in airport infrastructure across the country.

 

  1. The Aviation Policy Framework sets out the Government’s objectives and principles to guide plans and decisions at the local and regional level, to the extent that it is relevant to that area. In this regard it supports airports' aspirations to expand their business through infrastructure developments, and confirms that it is for airport operators to submit development proposals through the normal local authority planning processes.  All such proposals must include how the airport will ensure effective surface access for passengers, increase the use of public transport by passengers to access the airport, minimise traffic congestion and mitigate other environmental impacts, including noise.

 

  1. The general position for existing airports is that developers should pay the costs of upgrading or enhancing road, rail or other transport networks or services where there is a need to cope with additional passengers travelling to and from expanded or growing airports.  Where an airport development scheme has wider beneficiaries the Government will consider, along with other relevant stakeholders, the need for additional public funding on a case-by­case basis.

Growth Deals

 

  1. Growth Deals provide funds to Local Enterprise Partnerships (LEPs – partnerships between local authorities and businesses) for projects that benefit the local area and economy. In July 2014 the Government announced £6bn for the first wave of Growth Deals.  Transport is an integral part of Growth Deals and is by some way the largest local transport funding announcement for over a decade – around £3bn of Government funding for new local transport schemes in total.

 

  1. As part of the Growth Deal process LEPs were asked to produce Strategic Economic Plans that set out their priorities for their respective areas.  The priorities identified covered the full range of transport projects including some schemes that benefit smaller airports. A number of these were successful in securing funding in the July announcement.  Details of these appear at Annex 3.

 

Supporting improved surface access to airports

 

  1. In addition to support for smaller airports through Growth Deals and Enterprise Zones, the Government is also responding to calls for improvements to surface access to smaller airports.  An example is the ongoing Leeds-Bradford Airport Surface Access Study, commissioned earlier this year in response to the Treasury’s Investing in Britain’s Future document (published in June 2013), which identified a number of road congestion `hotspots’, including between the Leeds and Bradford conurbations and Leeds-Bradford International Airport.  In the light of this, the Government commissioned a feasibility study into improving surface connectivity to Leeds Bradford International Airport with a view to considering problems and identifying potential solutions. The study will consider access to the airport by all modes and is due to be completed during the autumn, after which the Government will consider its recommendations before announcing a way forward.

 

Supporting air connectivity from smaller airports

 

  1. Capacity constraints at Heathrow have affected domestic air connectivity to the airport. While airport hubs in Northern Europe (eg: Amsterdam-Schiphol; Paris Charles De Gaulle) are attracting more transfer traffic from the UK, Heathrow remains a key access point to international and long-haul travel for many passengers from other UK airports. However, the number of domestic UK destinations served from Heathrow has steadily declined over a number of years.  Currently the only UK airports handling fewer than 5 million passengers per year with an existing air route to Heathrow are Aberdeen, Belfast City, Leeds-Bradford and Newcastle.

 

  1. The Airports Commission’s Interim Report (December 2013)[3] identified that connections to other European airport hubs and beyond are a welcome addition to the connectivity available from the UK’s regional airports, but they are not generally considered to be a replacement for links to Heathrow.  Heathrow offers strong connectivity to a number of important markets, particularly in North America, which is hard to replicate elsewhere.
  2. The Government has responded to some regions’ fears of losing existing and important air connections between smaller airports and London, by making funds available via the “Regional Air Connectivity Fund” to maintain regional air access to London through establishment of Public Service Obligations (PSOs).  The Department for Transport published guidance[4] last year on how the Government interprets the EU guidelines when assessing PSO applications to protect regional services to London

 

(Note: For the purposes of establishing a PSO a London airport will include any airport that can access London’s transport zone 1 within 60 minutes by rail.  DfT considers that the following airports have sufficient access – Gatwick, Heathrow, London City, Luton, Southend and Stansted.  To remain consistent with the position adopted by the European Commission [Commission Decision 94/291/EC] when assessing whether a PSO can be imposed on a route, it is necessary to consider the adequacy of the link provided between two cities or regions, not between a city or region and a specific airport.  Therefore if an airport loses its link to Heathrow but still has a service to another London airport, then it will not be possible to consider a PSO on the Heathrow route)

 

  1. In addition, the Government has more recently broadened the Regional Air Connectivity Fund to allow start-up aid for new routes from regional airports which handle fewer than five million passengers per year, providing applications for new routes meet European Community aviation State aid guidelines.  More details are set out in Paragraphs 42-45 below.

 

Issue 3 : The effect of current local, regional, national and EU policy and regulations on the future of smaller airports, including policy on (a) air passenger duty, (b) route subsidies (e.g. use of public service obligations to maintain particular routes and other state aid, the Regional Air Connectivity Fund, etc.) and (c) housing and enterprise zones

 

(a) Air Passenger Duty

 

  1. Air Passenger Duty (APD) is an excise duty which is due on chargeable passengers being carried from a UK airport on a chargeable aircraft. .

 

  1. Smaller airports have made strong representations to Government on what they consider to be APD’s disproportionate effect on their ability to attract more airline services, particularly domestic ones.  The airports’ contention is that APD is double-charged for domestic services since it is a departure tax, so is in effect charged twice for domestic return flights.  Airports have pressed for changes to reduce APD’s impact, such as regional variations with lower rates for regional airports; devolution of APD to Devolved Administrations to allow them to set their own rates; and APD “holidays”.

 

  1. In response, the Government – though recognising that recent economic conditions have been challenging for the UK’s aviation sector – has maintained that it views APD as a relatively efficient and non-regressive tax that makes an important contribution to the public finances.  The Government considers it is important that that the aviation sector plays its part in helping to bring down the deficit.  The sector pays no tax on the fuel used in international and nearly all domestic flights. Furthermore, there is no VAT on international flights, and, unlike many countries, the UK does not charge VAT on domestic flights.

 

  1. Notwithstanding this, the Government has limited the rise in APD to inflation over the period 2010-2016.  From 1 April 2015, the number of destination bands is being reduced from four to two by merging bands B, C and D. This means that all long-haul flights will carry the same band B rate that passengers now pay to fly to the United States.  This will cut the tax on flights to emerging economies such as China, India and Brazil, and to countries with close ties to the UK including in the Caribbean and South Asia.

 

  1. It would not be possible under EU law to have a different APD rate on domestic flights from that on flights from the UK to other EU destinations.  The European Commission made this clear in their 1998 ruling against the previous APD exemption on the return legs of domestic journeys.

 

  1. Following the Scottish Referendum result last month, the question of devolution of taxation powers – including APD –has again arisen.  An independent process, to be led by Lord Smith of Kelvin, will determine what further powers will be devolved to Scotland.  This process is expected to look closely at all of the areas set out for devolution by the parties that argued for Scotland to remain as part of the United Kingdom.  It will reach final conclusions on the best available evidence on the basis of cross-party consensus.

 

(b) Route subsidies – supporting air connectivity

 

  1. Smaller airport operators and regional transport and business partnerships across the UK have in recent years voiced concerns to Government about the commercial pressures on airlines to use constrained and valuable slots at the busiest London airports for highly-profitable long-haul flights, with the consequence that less profitable (but still considered essential by the regions) domestic UK air services using smaller aircraft are edged out.  This, coupled with the reduction in the number of airlines willing to step in to operate domestic services threatened with withdrawal, has for some regions increased the possibility that a valued air connection with London might disappear. 

 

  1. For example, regional and local stakeholder groups and MPs in North East Scotland raised concerns at British Airways’ recent decision to withdraw its Aberdeen-London City service, citing the importance of the energy sector to Aberdeen and the surrounding area, and the economic imperative to ensure effective transport connectivity so that the sector’s supply chain remains unbroken throughout the UK and beyond, and Aberdeen’s geographical distance from other centres which means there are no practical transport alternatives to good air connections for energy sector businesses (In this instance the commercial aviation market mechanisms worked, and Flybe announced in July that it would commence operations on the route from 27 October, directly after BA’s planned withdrawal.  This supports competition by increasing the number of carriers operating the London-Aberdeen market).

 

  1. The scope for Government to influence airlines’ decision-making is extremely limited, as airlines make commercially-based decisions about which routes they fly, and to which airports, based on their own assessment of routes’ viability.  However, in response to concerns about possible loss of some air routes, the Government announced in last year’s Spending Round that central funds totalling £20million would be made available over two years to 2016 to maintain regional air access to London through establishment of a Public Service Obligation (PSO) where there was the probability that an existing air service might be lost.  This funding stream has been given the title Regional Air Connectivity Fund. 

 

  1. In June 2014 the Government announced support from this fund for maintaining the air link between Dundee Airport and London for the next two years via a PSO agreed with Dundee City Council; and Cornwall Council has submitted a tender for an airline to continue the Newquay-London air link once the existing commercial carrier withdraws from the route from October 2014.

 

NB There are already 20 existing PSO-supported air services in the UK – 19 in Scotland and 1 in Wales – funded by local authorities or Devolved Administrations. 

 

  1. The Government announced in Budget 2014 that the Regional Air Connectivity Fund would be doubled and, significantly, also broadened in scope to allow start-up aid for new routes from regional airports which handle fewer than five million passengers per year, providing applications for new routes meet European Community aviation State aid guidelines.  The funding extension will ensure that the UK is able not only maintain its existing regional air links to London, but also provide the opportunity for airports outside the south east to improve connectivity and stimulate further economic growth in the regions.

 

  1. The Government has developed a protocol that sets out how the European Community’s aviation state aid guidelines will be interpreted.  This has been submitted to the European Commission and upon clearance will allow the UK to provide start-up aid to airports handling fewer than 3 million passengers per annum without further notification.

 

(c) Housing and Enterprise Zones

 

  1. Enterprise Zones are specific geographical areas within Local Enterprise Partnerships’ boundaries.   They offer a range of incentives for businesses to start up or expand, such as business rate discounts (extended to March 2018 in Budget 2014), simplified local authority planning, enhanced capital allowances in some zones, or tax relief for investments in equipment.

 

  1. In 2012 the coalition government designated 24 new Enterprise Zones in England.  The largest airport-located Enterprise Zone – Airport City at Manchester Airport – includes a range of diverse businesses but is outside this Inquiry’s scope, however Aerohub Newquay Cornwall Airport is the UK’s only aerospace-focused Enterprise Zones based at an operational civilian airport.  Aerohub comprises three airside development zones, an adjacent business park, and two economic zones.  Aviation organisations based at Aerohub include :

 

-            The National Aeronautical Centre – in partnership with West Wales Airport, forms a centre of excellence for testing, demonstration, and training facilities for unmanned aerial systems can be carried out in a safe environment.

 

-            Apple Aviation – a Civil Aviation Authority and European Aviation Safety Agency approved base-and-line aircraft maintenance and overhaul specialist, also actively involved in parting out life-expired aircraft.

 

-            Bristow Helicopters – will provide search and rescue operations from Aerohub under contract from early 2017.

 

-            British International Helicopters – specialises in offshore operations, including military support contracts with the Ministry of Defence and Royal Navy.

 

-            Classic Air Force – restores, maintains and operates a unique collection of airworthy post-war UK-built aircraft.

 

-            Skybus – operates regular scheduled flights to the Isles of Scilly from Land’s End, Newquay, Exeter, Bristol and Southampton airports.

 

-            Cornwall Air Ambulance Trust – provides a vital, year-round helicopter emergency service to Cornwall residents and visitors.

 

  1. The Department for Communities & Local Government has asked Enterprise Zones to submit their own responses on smaller airports directly to the Committee’s inquiry.

 

  1. Pressure to release land supply for housing and other development purposes – particularly in the south east – remains a concern for some smaller airport operators and General Aviation airfield owners (see also Paragraph 65).  Reflecting market pressures, the likelihood that airfields might close for residential development appears greater when they are located close to large conurbations, and where land values are higher.  Recent examples include :

 

-            The former British Aerospace airfield at Filton (Bristol), latterly used for general aviation – closed in late 2012 and subsequently sold for £120 million to Bridgehouse Capital, a property developer who intend to build 2,500 homes on the site. 

 

-            Manston Airport – sold in September 2014 to a regeneration partnership that plans to develop the site for manufacturing, housing and schools.

 

-            Panshanger airfield in Hertfordshire – closed to flying in September 2014 following the expiry of the landowner’s lease.  Local reports have suggested that the landowner may wish to redesignate the land for other purposes.

 

Issue 4 : Competitiveness, rationalisation and commercial viability affecting smaller airports, including the importance of smaller airports in serving niche leisure and business markets and flight training and education ('general aviation') and providing dedicated capacity for cargo services, and the role that partners and airlines play in the delivery of such services;

 

Airport competitiveness and specialisation

 

  1. The Aviation Policy Framework confirmed the Government’s belief that its role should be to facilitate the competitive aviation market within a proportionate international and domestic regulatory framework to ensure a level playing field and the maintenance of high standards of safety and security.

 

  1. The UK’s aviation sector (airlines, airports and support providers) is largely privatised and operates in competitive national and international markets. The Government supports competition as an effective way to meet the interests of air passengers and other users, and welcomes the continued significant levels of private sector investment in airport infrastructure across the country and the establishment of new routes to developed and emerging markets.

 

  1. In this regard the Government welcomes the UK aviation industry’s ability to innovate and diversify into business activities that support commercial passenger operations and contribute to local and regional economies by providing investment and employment opportunities. 

 

  1. Many smaller airports act as focal points for local business development and employment by providing rapid delivery of products by air and convenient access to other national and international markets. Some also use their on-site building space and infrastructure to diversify into other aviation-related areas such as hosting on-site aircraft maintenance, repair and overhaul (MRO) companies, aviation training facilities, as well as non-aviation businesses – all of which can provide welcome sources of rental income. 

 

  1. Examples of smaller airports’ diversification include the following (this list is not exhaustive) :

 

-          London City Airport specialises in short-haul European business travel and provides passengers with the opportunity to choose an airport that most suits their needs and preferences.

 

-          Besides its commercial passenger operations, East Midlands Airport acts as a major UK hub for air cargo (second only to Heathrow), with three of the four global express air freight integrators (DHL, UPS and TNT) and Royal Mail maintaining major operations from the site.

 

-          As well as successfully developing its commercial passenger operations in recent years, Southend Airport has a range of aviation maintenance, repair and overhaul (MRO) companies based on site, providing engineering services to national and international aviation customers.  Biggin Hill, Bournemouth and Durham Tees Valley airports also have a significant MRO presence.

 

-          Several airports are bases for airlines’ maintenance facilities: Cardiff (British Airways heavy maintenance and flight training); Norwich (KLM), Exeter (Flybe).

 

-          Cambridge Airport is the long-established base for Marshalls Aerospace which provides global engineering support for civil and military aviation customers.

 

-          Exeter Airport is home to Flybe’s £13 million Flying Training Academy which provides international vocational training for the airline industry and travel-related companies.

 

-          The formerly Government-owned aviation research and development airfield at Farnborough has now become the successful Farnborough Business Airport, with a new terminal and facilities to handle high-end business and corporate aviation flights.  The airport promotes its proximity (1 hour by train) to London for business customers.  Biggin Hill and Oxford airports also specialise in business aviation.

 

-          Aberdeen, Humberside and Norwich airports host helicopter operations in connection with the important North Sea oil/gas exploration industry.

 

-          Durham Tees Valley Airport hosts a specialist aviation rescue and fire-fighting training centre which provides trained fire-fighters for airports across the country.  It is also an operating base for Cobham Aviation Services whose aircraft provide electronic countermeasures and target acquisition training for the Royal Air Force, Royal Navy and other NATO air forces.

 

-          Kemble Airport, a general aviation airport in Gloucestershire, has seen the establishment of companies involved in storage and parting-out (dismantling) of life-expired aircraft and sale of valuable components for reconditioning and re-use.

 

  1. In July 2014 the Government confirmed eight coastal airfield locations which are under consideration as a base for the UK’s first spaceport.  The announcement followed the findings of a Civil Aviation Authority report highlighting the possible airfields that could host a spaceport and the economic opportunities it could open up for the UK, provide a focus for regional and international investment for growth and establish the UK as a leader in the rapidly-expanding space market.

 

  1. The coastal locations that could be used for a spaceport include:

 

-            Campbeltown Airport                             (Scotland)

-            Glasgow Prestwick Airport               (Scotland)

-            Llanbedr Airport                                           (Wales)

-            Newquay Cornwall Airport               (England)

-            Kinloss Barracks                                           (Scotland)

-            RAF Leuchars                                           (Scotland)

-            RAF Lossiemouth                             (Scotland)

-            Stornoway Airport                             (Scotland)

 

  1. The Department for Transport will consult on the criteria the Civil Aviation Authority has identified that will make a location suitable for a spaceport. In addition to meteorological, environmental and economic factors, these include:

 

-            an existing runway which is, or is capable of being extended to, over 3000 metres in length;

-            the ability to accommodate dedicated segregated airspace to manage spaceflights safely;

-            a reasonable distance from densely populated areas in order to minimise impact on the uninvolved general public.

 

  1. Following the consultation further work will be done to develop locations which remain on the shortlist.

 

General Aviation

 

  1. General Aviation plays a significant and very important part in the UK’s aviation sector.  It trains the next generation of pilots and engineers; supports highly-skilled jobs; and provides opportunities for leisure flying. 

 

  1. Around 95% of the UK’s aircraft are involved in what could be described as General Aviation activities. A 2006 study estimated the value of the General Aviation sector to the UK economy to be in the region of £1.4bn per year.  The sector currently directly employs around 50,000 people and plays an active part in providing opportunities for the development of future pilots, and engineers which also has a direct benefit on the commercial aviation sector.

 

  1. General Aviation connects many UK and international destinations that do not have, and are unlikely to develop, scheduled air services or other direct transport links.  General Aviation aerodromes can also complement commercial air transport and provide increased connectivity at important hubs such as London.  These links are particularly important for local businesses – ninety-six per cent of city pairs served by business aviation have no scheduled connection.

 

  1. The General Aviation sector is reliant on a network of airports of varying sizes at which aircraft can take off and land.  There has been an increase in the number of smaller airfields which have closed in recent years, for example because the sites have been redeveloped for housing. This restricts the connectivity of General Aviation users to travel between different parts of the country as well as the potential economic contribution of the sector.  It is important that the network of airfields is maintained, and the Government has acknowledged in the Aviation Policy Framework that maintaining access to such a national network is vital to the continuing success of the sector. 

 

  1. The Government is committed to working with the General Aviation sector to ensure that regulation is proportionate, and to create an environment in which the sector can thrive.  The General Aviation Red Tape Challenge in early 2013 received almost 500 responses.  In response, Ministers established an independent General Aviation Challenge Panel, to operate as a “critical friend” to the Civil Aviation Authority as it worked to change its approach to the regulation of General Aviation. 

 

  1. The Challenge Panel provided the Government with both an interim and final report which included a number of recommendations for consideration.  The Government published a response to the Panel’s findings in October committing itself to deliver a programme of work to support the General Aviation sector, including undertaking economic research to assess the current value and contribution of the General Aviation sector to the UK economy.  This will inform knowledge of where the Government’s policy initiatives could go further to support a vibrant General Aviation sector, as well as providing analysis of the contribution which the network of General Aviation airfields make to the UK economy.  The Government will look again at planning issues in relation to airfields once the economic research has been undertaken.

 

Issue 5: The role of local authorities and Local Enterprise Partnerships (LEPs) in ensuring smaller airports improve connectivity

 

  1. Local authorities and LEPs have an important role in promoting and assessing bids for supporting existing air services from smaller airports through PSOs :

 

-       Dundee City Council provided evidence that the air route from Dundee Airport to London Stansted met the criteria for PSO support set out in EU regulations.

 

-       Cornwall Council began a tender process in June for an airline to operate a service from Newquay Airport to a London airport, and has assessed the received bids for submission to the Department for Transport to support the route.

 

  1. Local authorities administer the planning processes through which smaller airport operators submit applications for infrastructure and other developments that will enhance their provision of services.  Southend-on-Sea Borough Council granted approval in January 2010 for Southend Airport’s planning application to extend the airport’s single runway to increase its usable length to allow operations by newer, medium-capacity airliners.  Approval was granted subject to the airport agreeing to restrictions on aircraft noise, night flights (cut from 900 to 120 per month), air cargo flights, and take-off / landing direction.  This, and the later planning approvals for the new passenger terminal, allowed easyJet to establish a significant operating presence at the airport from 2011, with four based aircraft and a network of 14 scheduled and seasonal routes

 

  1. Local authorities work with smaller airports to agree appropriate aircraft noise management controls, for example by means of track-keeping and noise monitors.  Airports report to local authorities and local residents through Airport Consultative Committees and via Noise Action Plan reporting process.  Local authorities can also consider whether to set aircraft noise controls as a planning condition on new developments at smaller airports. 

 

  1. Local authorities are also promoters of major schemes which might have direct or indirect benefits for regional airports.  At least three such major schemes have recently opened or are currently under construction:

 

-          East of Exeter Access Improvements - opened in November 2012, it consists of junction and bus improvements in part to improve access to the expanding of Exeter Airport. Department for Transport contributed £10.4m towards a total scheme cost of £14.4m.

 

-          Mersey Gateway Bridge – currently under construction.  Though not directly related to Liverpool John Lennon Airport, it could help improve surface access to the airport as it will provide a second bridge over the Mersey at Halton, where the existing Silver Jubilee Bridge is congested.

 

-          A45 South Bridge – This involves replacement of the southbound bridge over the main West Coast railway line on the A45 to the south of Birmingham Airport.  Failure to replace the 150 year old bridge would have severe implications for local and strategic traffic, including the M42, the A45 being a key access route to Birmingham Airport as well as the adjacent National Exhibition Centre. It is important enough to the airport’s operator that they are providing £1.6m towards the total cost of £11.9m.

 

  1. Another scheme in the majors programme that will improve airport access to a smaller airport is awaiting approval.  This is the Norwich Northern Distributor Road, a £111million scheme to the north of Norwich which would also improve access to Norwich Airport.

 

  1. Finally, some smaller airports are owned or part-owned by local authorities : 

 

-          Newquay Airport is owned by Cornwall Council and managed by Cornwall Airport Limited (CAL), a Private Limited Company, wholly owned by Cornwall Council.  CAL is responsible for all airport operations including CAA licensing, customer services, commercial development, route development and marketing.  The airport receives a subsidy from the council in the region of £3million per year.

 

-          Newcastle Airport is owned by a joint Public-Private Partnership comprising the six Tyne and Wear local authorities and Northumberland County Council (jointly holding 51%) and Australian investment company AMP Capital (49%).

 

  1. As explained in Paragraph 27, Local Enterprise Partnerships have produced Strategic Economic Plans setting out their priorities for their respective areas.  The priorities identified covered the full range of transport projects including some schemes that benefit smaller airports. Details of schemes that were successful in securing funding in the July 2014 announcement appear at Annex 3.

 

 

October 2014

 

 

 


ANNEX 1

 


ANNEX 2

 

C:\Users\glatham\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\1274TD9J\140923 - Less than 5 million PAX airports 2013 Map.jpg

ANNEX 3

 

Growth Deals – schemes that may benefit smaller airports

 

 

Humberside – The Humberside Airport Access Improvements scheme – funded by non-competitive Local Growth Fund of £1.73m involves upgrading the existing priority access into the Airport to provide a new roundabout junction, the introduction of a improved roundabout junction on the A18 to the west of the airport and the widening of Caister Road along the eastern boundary of the site to open up the eastern flank for future development.  Together these improvements will help to improve the A18 route from the M180 motorway to the airport, critically opening up land for new development and also improving the safety of the route.

 

Sheffield City Region - The Sheffield City Region Deal includes the Gateway to the Sheffield City region scheme, which includes construction of the last section of the link road to Robin Hood Doncaster Sheffield Airport.  This will provide a 2.1km road from the A638 into the airport site, providing the last link of the route from the M18 (LGF £9.1m, 2015-16 start).   The first section (the Finningley and Rossington Relief Road Scheme - FARRRS), a link road between Junction 3 of the M18 to the A638, has been funded through the Regional Growth Fund (RGF) and is currently under construction for completion by 2016 (RGF £18m, total cost £55m).  Both schemes are being taken forward by Doncaster Council and will also open up land for housing and employment use. 

 

Tees Valley - received funding for an access road at Durham Tees Valley Airport.  This is primarily about opening up land on the airport site for other development, to allow the airport to develop another income stream.

 

Leeds City Region LEP - In terms of Local Enterprise Partnership support, the Strategic Economic Plan included a bid for Local Growth Funding and earnback to support the West Yorkshire Transport Fund, which includes funding for a new link road to Leeds-Bradford Airport, and development money to look further at the provision of a form of rail/tram-train/rail link.  The Local Growth Fund bid was successful and although they did not get an earnback deal they got a promise of more money post 2021 subject to performance and the current schemes showing they were delivering growth.

 

Newquay Airport – the Aerohub Newquay Cornwall Airport Enterprise Zone is adjacent to the airport, and part of the development of the Enterprise Zone has involved better surface access. The Growth Deal also provides further support to this Enterprise Zone through delivery of transport improvements along the Newquay Strategic Route

 

Liverpool City Region – Two schemes were included in the Growth Deal :

 

i) The A5300 Knowsley Expressway will address a congestion pinch point on a key route to Liverpool John Lennon Airport (and will also link to the new Mersey Gateway Bridge which will also support improved access to Liverpool John Lennon Airport);

 

ii) The Halton Curve will reintroduce direct rail services from West Cheshire and North Wales to Liverpool South Parkway Station, and hence to Liverpool John Lennon Airport.  A newly published 30 year rail strategy includes proposals to improve rail access to the airport with a fixed rail link.

 

West Lancashire – Blackpool Airport is not directly benefitting from Growth Deal investment, although the M55 St Annes Link Road will open up employment and housing land adjacent to the airport. Local authorities are looking at options for upgrading the railway line from Preston to Blackpool South (Fylde Coast) which includes a station close to the airport, though as yet there are no firm proposals.

 

 


ANNEX 3

 

 

Northern Ireland Devolved Administration’s submission to the Transport Select Committee inquiry

 

 

All three of Northern Ireland’s main airports fall within the scope of the Parliamentary Transport Select Committee’s short inquiry into smaller airports.

 

AIRPORT

NUMBER OF PASSENGERS in 2014  (000)

Belfast International Airport

4,210.4

George Best Belfast City Airport

2,670

City of Derry Airport

355

 

When conducting a national inquiry into performance of airports it is important to consider Northern Ireland’s unique and unchangeable reliance on aviation. Our Airports are key components of Northern Ireland’s economic and transport infrastructure and are gateways to the rest of the UK and further afield.

 

Air connectivity is particularly important to Northern Ireland because of our location on an island, off an island off the mainland of Europe.  Being part of an island, airports are of fundamental importance to the region. The ease, timeliness, reliability and cost of transporting goods and people, impacts upon the competitiveness of local exports as well as the ability of the region to attract inward investment and tourists.

 

The service that our airports provide to Northern Ireland also impacts upon the attractiveness of the region to investors and our ability to compete for inward investment.  Similarly, tourists take account of the ease and cost of travelling to, from and within Northern Ireland when deciding whether to visit the region. The movement of goods and people is important for the future growth of the economy and internal connectivity to the airports is a key infrastructure component to achieving that objective.

 

Our airports, as well as being key gateways to the region make significant contributions to the regional economy both directly and indirectly.  Our three airports are places of employment for around 6,000 people.  Annually, they facilitate the movement of around 7 million passengers and this sustains employment in the hospitality and service industries.

 

NI Context

 

It is essential that any consideration of small airports and UK regional air connectivity takes account of Northern Ireland’s unique and unchangeable reliance on aviation.  Northern Ireland cannot be considered on an equal basis with the rest of the UK.  Unlike other countries and regions of the UK, NI does not, and cannot, rely upon land-based options to access the rest of the UK.

 

Any consideration of UK regional air connectivity must take account of:

 

(i)            the absence of direct road and rail links between NI and the rest of the UK, NI’s airports are therefore fundamental to providing access to the rest of the UK and also the rest of the world;

(ii)          direct access to key markets, especially international markets is essential for the rebalancing of the NI economy.  For both NI residents and visitors travelling to NI for business and tourism, good air connectivity is essential;

(iii)        the network of air services from NI is not as developed as other regions of the UK.  It is important that NI’s competitiveness is improved by developing links with international markets through new air links that would ultimately benefit the promotion of business linkages, enterprise development and in-bound tourism; and have a demonstrable net economic benefit to the local economy;

(iv)        the proximity and growth of Dublin Airport is becoming an increasingly challenging factor in respect of NI air access and the ‘leakage’ of NI residents using Dublin Airport; and

(v)          it is essential that NI has continued access to Heathrow, as the UK’s hub airport.  Northern Ireland’s small population limits the range of direct international air links that can be sustained from here.  Therefore NI’s connectivity to global business and inward tourism markets means that it is dependent on high frequency, economic and easy to use connections to international flights through a hub airport. Continued access to the UK’s hub airport is essential in respect of NI air connectivity.

 

Scope for Intervention

 

The scope for Government to influence airline decision making is extremely limited.  However, the recent changes to the EU state aid guidelines on assistance for airports and airlines provide the opportunity for regions such as NI to provide important support to airlines via NI air route development funding.

 

However it will be important that all of NI’s airports are able to avail of any proposed NI air route development funding, such as that proposed by the UK Regional Air Connectivity Fund.  A key issue for Northern Ireland is the definition in the revised Commission Guidelines of ‘duly substantiated exceptional cases’ in respect of airports in the 3 to 5 million passenger category.  At present the NI airport profile is Belfast International Airport - 4 million passengers, Belfast City Airport - 2.5 million passengers and City of Derry Airport  - 370k passengers. 

 

It is essential that all NI airports should be eligible for NI air route development funding, not least because:

 

 

[1] https://www.gov.uk/government/publications/aviation-policy-framework

[2] http://www.aoa.org.uk/wp-content/uploads/2014/06/AOA-AIRPORTS-IN-THE-COMMUNITY1.pdf

[3] https://www.gov.uk/government/publications/airports-commission-interim-report

[4] https://www.gov.uk/government/publications/public-service-obligation-regional-air-access-to-london