Action Briefing Feb 2003 - Mar 2004
	The Newsletter of Birmingham Friends of the Earth

Airports: A right plane in the Brum!

The Government forecasts that air transport will nearly treble over the next thirty years. Airport expansion threatens scores of communities across the country but the recent Aviation White Paper fails to grant communities or their local authorities the powers they need to manage local airport impacts.

There is still no sign of an independent and publicly accountable authority to monitor and report on aircraft noise and pollution. Instead, noise and pollution are to be tackled by airlines and air traffic managers voluntarily applying more stringent technical standards to limit emissions and noise at source, and by adopting new technology. This could cut emissions by 1% a year but the gain will be more than offset by the forecast growth rate of 4-6% a year.

Aircraft have become quieter but also larger, which means noise levels stay the same while the industry reaps the profits of bigger planes carrying more passengers. With no major new technical breakthroughs anticipated the Paper predicts a “deterioration in the noise climate as growth in air traffic overtakes the rate of technological advance”. Considering that the Department for Transport (DfT) underestimates the extent of noise disturbance, at least by World Health Organisation standards, the future for airport communities looks grim.

Counting the cost
There is little sign that the Government understands the rising costs of air travel to society at large. By generating noise, pollution and congestion, aviation imposes social costs which are not reflected in airfares. Environmental and social costs can either be regarded as the production of a ‘bad’ that has negative utility or as a loss of a ‘good’ e.g. undisturbed sleep, clean air or time. But the market cannot place a price on these goods because by their nature they are not traded.

In March 2003, the DfT and HM Treasury estimated that local air quality costs for all passengers at UK airports in 2000 were in the range £119-£236 million a year, while noise costs at all UK airports in 2000 were estimated at £25 million a year. In 2003, Friends of the Earth’s conservative estimate put the overall costs of aviation to society at between £2.3 and £6.8 billion a year, rising by 2030 to between £5.8 and £18.7 billion a year, depending on how much expansion is allowed.

Crucially, the White Paper fails to identify the need to remove aviation’s tax benefits even though, according to the DfT’s own computer model, this approach would make new runways and airports unnecessary. Hidden subsidies to air transport in the form of tax exemptions on fuel and tickets cost the country an estimated £9.2 billion. Every person on the average wage (£25,000 per annum) paying £557 a year for aviation before they get anywhere near an airport (or before an airport gets anywhere near them).

Such a large (and rising) sum of money would be far better spent on meeting the UK’s more pressing transport needs, such as safer routes to school and rail and bus services, than on indulging a luxury like air travel. That flying should be VAT-free, classed as a social necessity, along with food, books and buses, is absurd. The UK takes on Presidency of the European Union in 2005 and should use this position to press for a Europe-wide tax on aviation fuel and an emissions charge.

Economy class
The Government has never been able to confirm a link between air transport and productivity growth in the UK economy. In a mature economy like the UK’s with an already well-developed transport network, new infrastructure does not significantly raise economic performance, in fact it may even have the reverse effect.

The White Paper states that the air transport sector accounts for 2% (£13 billion) of the UK Gross Domestic Product (GDP) but gives no indication as to how this figure has been reached. In 2000, the then DETR was relying on an estimate of aviation’s GDP contribution that wrongly included retail and catering at airports, spending that would take place elsewhere and so cannot be attributed to aviation. At that time, the air transport sector actually accounted for just 1.2% of GDP, between agriculture and legal services. Aviation was between legal services and agriculture, not even in the top twenty-five most important sectors. It was about half the size of the UK’s garages, slightly less important to the economy than sewage and sanitary ware.

Legitimate concerns about outbound tourism’s negative effect on the domestic economy are casually dismissed by the White Paper despite the fact that, as the UK’s regional economies outside London and the South East rely on UK holidaymakers for their tourist income, cheap air travel is undermining traditional UK resorts by facilitating more overseas breaks and second home ownership.

UK residents holidaying abroad will reduce the tourism industry’s total contribution to the economy. The total amount that UK residents spend on tourism abroad is effectively an import of goods and services and so acts to lower GDP. Foreign visitors to the UK are still spending less than British tourists are overseas, creating a record ‘tourism deficit’ of £15.2 billion in 2002. Furthermore, if fare payments by UK residents to overseas carriers are taken account of, then estimates of tourism’s net contributions to the UK economy would be lower still.

The jobs myth
Much is made of the total employment that is directly or indirectly dependent upon aviation but this consideration is irrelevant to the issue of whether or not to increase capacity; airports will continue to exist and will continue to employ people. Obviously, if future demand were constrained, a number of jobs would not arise in the aviation sector that would otherwise have done so. But these jobs do not represent a net loss of jobs in the UK.

It is frequently omitted from discussion of airports and jobs that the amount of employment in a sector is determined partly by the level of demand for the sector’s output and partly by the level of real wages. The higher the real wage an employer has to pay, the fewer employees they will take on. This means that, in the long term, the overall level of employment is determined more by the supply of workers looking for a job than the level of demand from a particular industry.

So if demand for air travel is growing strongly and the industry responds by expanding and taking on more labour, it will do so by bidding jobs away from other potentially more important and less polluting uses. There would not be more or better jobs in the economy, just a larger proportion of workers employed in aviation.

Conversely, if airport capacity is set at a level where, at current airfares, demand begins to exceed supply, then airfares will rise until that excess demand is choked off. But as prices rise, people who would previously have flown will not just let their disposable income “burn a hole in their pockets”; they will spend money in other sectors, supporting and generating jobs in the process. Air industry jobs would decline but other jobs would arise from the new pattern of expenditure. Furthermore, owing to automation, and technological, market and organisational changes, jobs in the aviation sector have become highly labour productive and therefore expensive to create. The low-cost airlines like EasyJet and Ryanair have reduced the levels of employees per passenger even further, forcing the established airlines such as BA to shed jobs (10,000 over the last three years with 4,000 more threatened this year). As increased productivity cancels out many of the new jobs predicted in aviation, investment in sectors with less labour productivity would secure more long term employment than airport expansion.

Still, the White Paper paints a pessimistic picture of “damage [to] the economy and national prosperity” if more airport capacity is not provided, warning of airport congestion, higher fares, lost economic growth, reduced “competitiveness” with other EU countries. Nowhere does the Paper even entertain the alternative scenario in which the growth forecasts are not met, either owing to fuel becoming too expensive, or pollution levels becoming intolerable, or the EU intervening to remove aviation’s tax concessions.

Nor are the implications of an economic downturn explored. The air industry is pro-cyclical, it moves with the economy, but its movements are more radical than that of the normal business cycle. When the economy is doing well, the air industry experiences rapid growth and full capacity but as soon as the economy turns into a recession, the industry is one of the hardest to be hit.

The rail thing
The White Paper is grudging about the potential of rail services to replace short-haul air travel, even for internal flights in the UK, while playing down the potential impacts of increased road traffic resulting from airport expansion and the associated developments. “Current and future enhancements to the long-distance rail network” are viewed only as helping to “meet some future demand for travel on certain routes”, not as viable alternatives to short-haul air travel.

Barring a massive shift to public transport, expansion at Birmingham Airport will inevitably lead to more road building, beginning with the widening of the M42 motorway but soon to be followed by new access roads and other road widening schemes within the West midlands conurbation. Airports contribute to local pollution as much from the additional road traffic they generate as from the aircraft themselves and 90% of journeys to UK airports are currently by car and this is unlikely to change. The Paper admits that “compliance with mandatory air quality standards” will be “particularly challenging at very busy airports served and surrounded by high levels of road traffic”.

Yet we are told that according to the Strategic Rail Authority, improvements to the West and East Coast Main Lines “are not expected to affect future passenger demand at the most crowded airports by more than a few percentage points”. Providing new rail infrastructure will not in itself reduce demand for air travel while the price of air travel remains artificially low. The low-cost carriers have created an appetite for cut-price plane tickets in the UK making it impossible for the rail network to compete.

We will only see environmental benefits if the aviation industry is prevented from making use of the capacity freed up by rail to operate new air services. In mainland Europe governments work to eliminate rather than accommodate the need for flights. When the French national railway introduced a three-hour train service on the 789km route from Paris to Marseille in 2000, for example, the airlines virtually gave up on that route. When Germany rolled out high-speed trains, Lufthansa closed its Hanover-Frankfurt route.

In the UK, 18% of flights are domestic and there are 7,000 daily air passengers between Heathrow and Manchester despite the two cities being a mere two hours from each other by rail. Putting VAT and aircraft fuel tax on domestic flights and increasing Air Passenger Duty would have corrected this anomaly, but it seems that, with regard to air travel, demand management is almost an heretical thought at the DfT.

James Botham