Policy

Economic Contribution | Social Value | Tax and Subsidy | Environmental

UK airlines seek to balance their delivery of good air services with a responsible and considered approach to dealing with the environmental impacts of aviation. The following sections provide information on the economic and social contributions of air travel together with the environmental impacts and how they are being addressed.

Most of us are now consumers of air transport services

In the last year 50% of UK adults flew at least once.
Air travel is no longer the preserve of the elite. Whilst people in the highest income groups fly the most, a significant proportion (37%) of those in the lowest income group (income less than £13,500) reported they had flown at least once in the course of the year
The biggest area of growth in air travel for UK residents has been in flights to visit friends and family abroad
Air freight enables goods to be shipped quickly and efficiently over long distances and plays an important role in supporting UK businesses engaged in high value sectors of the economy.

(Source: Chapter 5, Regulating Air Transport Consultation, Department for Transport, December 2009)

The Economic Contribution of Aviation to the UK

Aviation is a major UK industry in its own right, due to its size as a sector and the wider economic benefits it generates. The industry:

contributes £18.4 billion a year to UK GDP;
raises £7.8 billion a year for the Government, with nearly £2 billion from Air Passenger Duty (APD) alone;
provides employment for 234,000 people;
represents 1.5% of the UK economy;
acts as a catalyst for growth in tourism and knowledge based industries;
attracts direct foreign inward investment.

Aviation supports UK businesses and underpins UK competiveness in the following ways:

Employees in aviation are more productive than employees in the economy as a whole, generating a third more output (£62,000 compared with £46,000 nationally).
Aviation’s tax contribution is 54.5% of the wealth it generates (as a percentage of Gross Value Added or GVA), significantly higher than the total UK economy equivalent of 32.1%.
The tax burden faced by the UK aviation sector is already currently higher than that faced in other European countries.

(Source: “What is the contribution of aviation to the UK economy?”, Oxera/AOA, November 2009)

Air travel also provides significant social benefits to the population at large.

In 2008, 36.74 million holiday visits abroad by UK residents were undertaken on aircraft. In 1998, this figure was 22.94 million.
In 2008, around half of the UK population took at least one trip by air, with more than one in ten flying abroad three or more times a year.
Over 80% of all overseas visits made by UK residents in 2008 were made by air.
Inward tourism by air accounts for nearly 79% of foreign visitor spending and all visits by air directly contribute over £14 billion to the UK economy annually.
The social profile of passengers has changed as the real cost of air travel has reduced.
The majority of air journeys (over 60% in 2008) are taken by people in the C, D and E socio-economic groups.
Air travel is not merely a leisure or business activity, with between a quarter and a half of all passengers at our major airports travelling to visit friends and relatives.

Tax and Subsidy

The air travel industry is often accused by its opponents of being subsidised or under-taxed. The actual tax and subsidy position of aviation in the UK is as follows:

Tax

Air Passenger Duty (APD)

This tax is unique to air travel in the UK, raising nearly £2bn a year (£1.862 billion in 2008/9) and since its introduction in 1994 it has raised over £14.5bn for the Treasury.
By paying APD (even at the lower rates applied before November 2009) UK aviation and air travellers more than cover the climate change cost of flying by at least £100m.
No income from this tax is used to address environmental challenges and it is viewed by many as a very inefficient and ineffective approach to dealing with climate change and other impacts.

VAT

Air travel, like all other forms of public transport in the UK, is zero-rated for VAT.

Fuel Tax

Aviation pays no fuel tax and other public transport modes are treated in a similar way.
The Bus Services Operators Grant (BSOG) is a payment made to bus operators by the DfT that offsets a high proportion of the fuel duty paid on fuel consumed.
Likewise train operators can use “red” or rebated diesel, which attracts a much smaller rate of fuel duty, for their diesel locomotives.

Subsidy

Air travel in the UK pays for its own infrastructure – on the ground and in the air.

Aviation receives no subsidy from the taxpayer, with the exception of small amounts of assistance to support ‘lifeline’ flights connecting the more remote parts of the country, such as the Highlands and Islands services in the north of Scotland.

Other modes of public transport receive billions of pounds worth of subsidies each year, with rail receiving £6 billion in 2007/8 and bus operators receiving around £1.13 billion in 2008/9. Additionally, subsidies for concessionary bus fares totalled nearly £1bn in England alone during 2007/8.

Environmental Impacts

The industry’s sustainable development objective is to meet the challenges set by the environmental impacts of the industry whilst maintaining the undoubted economic and social benefits of air travel.

The following summarises the facts surrounding aviation’s environmental impact, its past performance and the UK airlines’ approach to these challenges. These issues are covered in more detail in the UK aviation industry’s world-leading sustainability strategy, Sustainable Aviation, which was launched in 2005. Subsequent progress reports and other related papers can be found at www.sustainableaviation.co.uk.

Climate Change

Aviation’s contribution

In 2007, global air travel represented about 2.4% of man made carbon dioxide (CO₂) emissions. (Source: Meeting the UK Aviation Target – Options for Reducing Emissions to 2050, UK Committee on Climate Change (CCC), December 2009)
Domestic and international flights from UK airports accounted for 5% of the UK total greenhouse gas emissions in 2007, or 0.1% of global CO₂. (Source: Meeting the UK Aviation Target – Options for Reducing Emissions to 2050, UK Committee on Climate Change (CCC), December 2009)
In 2008, UK emissions from international aviation fuel use were estimated to be 34.4 million tonnes carbon dioxide equivalent. This was 3.7% lower than the 2007 figure of 35.8 million tonnes. However, between 1990 and 2008 the level of these emissions has more than doubled. (Source: 2008 Greenhouse Gas Emissions, Final Figures, National Statistics/Department for Energy & Climate Change, February 2010)
Between 2007 and 2008, CO₂ emissions from UK domestic aviation also decreased, by 5%. Between 1990 and 2008, emissions from this sector increased by 62.5%. (Source: 2008 Greenhouse Gas Emissions, Final Figures, National Statistics/Department for Energy & Climate Change, February 2010)
Emissions from UK aviation grew by around 35% in the decade from 1998 to 2008. (Source: 2008 Greenhouse Gas Emissions, Final Figures, Inventory Data Tables 3 and 8, National Statistics/Department for Energy & Climate Change/National Atmospheric Emissions Inventory, February 2010)
According to the Intergovernmental Panel on Climate Change, aviation’s global contribution to climate change is estimated to grow to around 5% by 2050. (Source: Aviation & the Global Atmosphere, A Special Report of the IPCC, 1999)

Role of Technology and Operating Efficiency

Fuel efficiency has improved substantially since the beginning of the jet era in the 1960’s and in the 3 decades between 1970 and 2000 total energy intensity was reduced by more than 60%.
The Advisory Council for Aeronautics Research in Europe (ACARE) research target for new aircraft in 2020 is a further 50% improvement on the 2000 level of fuel efficiency, including up to 10% from Air Traffic Management and operating efficiencies.

Sustainable Alternative Fuels

Significant progress is being made on the development of a variety of sustainable alternatives to aviation kerosene. Further information is available from the ATAG (Air Transport Action Group) website at www.enviro.aero.
The drop-in alternatives need to be from sources that do not compete with food production or for water and have a significantly lower carbon footprint than jet fuel produced from fossil fuels.
The technical certification of these sources of aviation fuel is also progressing with several milestones expected during 2010 and 2011.
We expect sustainable alternative fuel to constitute at least 10% of the aviation fuel mix by 2030. See the Sustainable Aviation website at www.sustainableaviation.co.uk for more information.

UK Aviation Emissions Limit

The UK Government set a CO₂ limit for UK aviation in January 2009 which requires emissions in 2050 to be no higher than those in 2005. This target incorporates emissions from both domestic and international aviation. In 2008, these emissions were 3.7% below 2005 levels. (Source: 2008 Greenhouse Gas Emissions, Final Figures, National Statistics/Department for Energy & Climate Change, February 2010).
In December 2009, the Committee on Climate Change (CCC) reported to the UK Government on how this target could be met. The Committee found that this limit will be met and that technical and other developments would allow a growth in demand for air travel of 60% above 2005 levels. The CCC report can be found at www.theccc.org.uk. (Source: Meeting the UK Aviation Target – Options for Reducing Emissions to 2050, UK Committee on Climate Change (CCC), December 2009).

Market Mechanisms and a Global Approach

We believe that aviation should be part of international mechanisms that manage greenhouse gas emissions within global targets. Measures should be environmentally effective and cost efficient.

With the system of cap and trade for managing emissions, airlines and their customers will have to cut emissions or pay for reductions elsewhere.

We support the inclusion of aviation in the EU emissions cap and trade scheme (EU ETS) from 2012 as a step towards a global sectoral scheme for world aviation.

We support the international aviation industry plan for such a global arrangement (see www.enviro.aero). Unilateral action such as the UK’s unique national tax on air travellers, Air Passenger Duty (APD), seriously damages UK competitiveness with negligible impact on emissions.

Non-CO₂ Effects

Non-CO₂ atmospheric effects may also be important but further research is needed. For further information see the November 2008 briefing paper ‘Non-CO₂ Effects of Climate Change Emissions’ at www.sustainableaviation.co.uk.

High Speed Rail

BATA welcomes the current debate about the future development of High Speed Rail (HSR) in the UK.
We see HSR as a complementary mode of travel rather than a replacement for domestic and short haul air travel. Indeed, we strongly support a modern integrated transport infrastructure for the UK which encompasses all modes of transport, including rail and air.
However, we believe, even if a comprehensive HSR network was built, air travel will still remain the best, most practical choice for many passengers and a necessity for many long distance and ‘over water’ journeys within the British Isles.
Over 80% of domestic routes, carrying 60% of passengers are either over water or involve locations that cannot or will not realistically be served by HSR.
At Heathrow 60% of passengers on domestic routes are transferring to another flight.
70% of passengers on the air services between Manchester and Heathrow are not simply travelling to London, but are changing planes at Heathrow for their onward journey.

Local Impacts

The local impacts of aviation are predominantly concerned with noise and local air quality. Nitrogen Oxides (NOx) are the main pollutants affecting local air quality.

Track record

The noise energy from aircraft has been reduced by over 50% over the last 30 years.
The noise contour area around London’s Heathrow airport has shrunk, reducing the population exposed to significant disturbance by over 50% in the period 1988 to 2008.

Future technology and operations

ACARE has set a target for a further 50% reduction of noise energy from new aircraft in 2020 compared to the level in 2000.
The ACARE target relating to local air quality is to improve NOx efficiency for new aircraft by 80% by 2020 compared to that of 2000. More information about ACARE’s goals and work can be found at www.acare4europe.com.
Airlines are committed to develop and expand the use of best-practice operational techniques (such as Continuous Descent Approach) to minimise the noise impact around airports.
Airlines are playing their full part in ensuring airports and their neighbourhoods meet air quality standards.