UK urged to use aviation to drive economic growth

The International Air Transport Association (IATA) encouraged the UK government to use the opportunity of the national aviation policy consultation to enable aviation to generate more economic growth and jobs. Specifically, IATA asked the government to address high taxes and severe capacity constraints while developing policies to support the industry’s commitments on climate change. “The UK is the world’s second largest market for international air travel, bringing enormous benefits to the economy. Aviation in the UK is at the centre of over GBP 90 billion of economic activity and supports the livelihoods of nearly 1.8 million people. The connectivity provided by aviation enables London to function as a global financial centre, to be a global hub of culture and to host the Olympics. Great Britain is an island. Aviation connects it to the global community and global economy. Government policies must recognize and nurture that important role,”said Tony Tyler, IATA’s Director General and CEO in a speech to the UK Aviation Club. According to IATA, aviation’s future capability to be a pillar supporting the UK economy is jeopardized, however, by a regulatory approach that constrains the growth of the UK’s only hub airport (Heathrow) and a fiscal policy that burdens the industry with heavy taxes. IATA encouraged the government to address these issues in a national aviation policy that will follow from the ongoing consultation process. IATA supported the further development of Heathrow over other proposals to provide hub capacity in the south east of the UK. Heathrow, a vital component of the UK’s economy supporting 220,000 jobs and GBP 11 billion in economic activity, is operating at 99% of its capacity. New capacity is urgently needed to support the needs of London as a global capital of finance and culture. “The UK is falling behind in connectivity. London has less frequent links to 27 emerging market destinations than the daily connections offered from continental European hubs. If the UK wants to do business with these developing markets, air connectivity is the enabler,”said Tyler. He noted that London has no non-stop services to some developing markets such as Manila, Jakarta, Santiago and the Chinese cities of Chengdu, Shenyang and Guangzhou, although daily services exist from continental European hubs. The national policy must also reduce the UK’s high tax burden on aviation. “Chancellor George Osborne’s proposal to reduce corporate taxes from 28% to 22% by 2014 is welcome relief, but it is not a comprehensive solution. The high cost of doing business in the UK must also be addressed,”Tyler said. “The ever increasing Air Passenger Duty (APD) is a GBP 2.9 billion annual burden on UK businesses reliant on connectivity. And passenger demand is growing more slowly than at other European hubs because the APD is pricing air travel out of the range that consumers can bear.”IATA estimates the planned increase in the APD will result in the loss of 7,000 UK jobs on top of the damage that it is already doing to the economy.