A total of 32 million people flew in and out of UK airports in 1970. By 2002, according to the government, that number had soared to 189 million. By 2020, 460 million passengers per year are predicted to use British airports. In 2001, aviation accounted for 2 per cent of the country’s GDP. Sounds like business is booming.
No wonder then, that the Department of Transport’s white paper on aviation, published on 16 December 2003, called for up to three new runways at Stansted Airport, with the first to be operational by 2012; a new runway at Heathrow (where the construction of Terminal 5 is well under way), or at Gatwick if the Heathrow proposals breach current air-quality limits; and a third new runway at Birmingham.
How, then, can we explain the problems plaguing the airline companies themselves? For sure the industry took a heavy blow with the attacks in the US in September 2001: in the immediate wake of 9/11, British Airways (BA) cut 7,000 staff, Virgin Atlantic 1,200, BMI British
Midland 600 and Go-Ahead 700. (Exact figures for the knock-on effect on jobs in aviation support industries are harder to come by.) In the US things got so bad that by March 2003 senator Charles E Schumer had called for a provision in the war budget to save the country’s airlines from bankruptcy.
But even prior to 9/11, many airlines were planning cutbacks as they felt the pinch of rising oil prices and passenger numbers already declining with the global economic slowdown. And four years after 9/11, matters have improved little for the major air carriers: it was
only this April that passenger numbers returned to pre-9/11 levels. Giovanni Bisignani, chief executive of the International Air Transport Association, forecast that the global airline industry faced losses of $5.5 billion in 2005, bringing the industry’s total financial shortfall since 9/11 to a staggering $40 billion.
How can the industry remain viable in such a climate? Act like BA, perhaps. In May the company announced that pre-tax profits had risen to £415m for the last financial year, up from £230m.
How? Could it be because BA has cut a total of 13,000 staff since 9/11? Certainly the appointment of Willie Walsh as chief executive has only fuelled fears of further cost-cutting measures and redundancies. Walsh hauled Aer Lingus from the brink of insolvency with ruthless job cutting that saw the airline shed one third of its workforce, and drew criticism from Irish prime minister Bertie Ahern for his rough handling of the company.
But it is the budget airlines that have enjoyed the strongest resurgence in passenger numbers. Low-cost airlines presently account for 12 per cent of UK flights, and in the year ending in April 2005 saw a 30 percent rise in flights. Yet even for the budget end of the business, there are caveats. EasyJet scaled back its fleet-expansion plans in March as its percentage of seats filled dropped by 2.7 per cent in February. A month later Ryanair announced it would no longer allow staff to charge their mobile phones at the office; that followed decisions to make staff pay for their own uniforms, crew meals and training. At the end of July, budget carrier EU Jet declared it was suspending all flights and operations.
And whereas BAA, the company that operates Gatwick, Heathrow and Stansted, announced in June that UK passenger numbers were up 4.3 per cent on the same month one year earlier, they are now sure to fall following the recent terrorist attacks in London. Added to which, airlines are still dealing with the ever rising price of oil, which is likely to drive ticket prices up ever higher. Furthermore, BAA’s April announcement that it plans to invest £6.8 billion in Heathrow, Gatwick and Stansted over the next 10 years came the day after Boeing declared a 14 per cent drop in first-quarter earnings.
So while the government’s expansionist plans for aviation may be based upon predicted increases in air travel, they could equally be part of a wider initiative to support continued economic growth by encouraging spending. Chancellor Gordon Brown has been criticised for his optimistic predictions for the continued rate of growth of the UK economy, which he needs if his books are to balance. In this light, the huge injection of money into the airline industry fits Brown’s agenda of priming economic growth by using government policy to encourage spending in the private sector.
If this is the government’s agenda it faces stiff opposition from environmental groups like AirportWatch and Friends of the Earth. Air travel is a major contributor to climate change; aeroplanes produce not just carbon dioxide, but nitrogen oxides that become the greenhouse gas ozone in the troposphere (note: ozone is desirable in the stratosphere, but harmful in the troposphere.) In the UK, airlines pay no tax on their fuel – despite their high emission levels. Any increase in air travel, particularly on the scale envisioned in the white paper, would inevitably be accompanied by an increase in pollution, and environmentalists have declared their intention to fight the government and BAA’s plans in the courts.
BA chairman Martin Broughton addressed the environmental impact of his industry in a speech on 3 July, stating that aviation accounts for only 2-3 per cent of global carbon dioxide emissions. What Broughton did not mention was any of the other greenhouse gases released by airplanes, such as nitrogen oxides.
Broughton also announced that BA has joined a group formed by British air carriers called Sustainable Aviation. Predictably, Sustainable Aviation opposes fuel duty for airlines and supports the introduction of a system that would allow carriers to trade emissions quotas between each other. This is akin to president Bush’s proposal for carbon credit trading: an idea intended to free the US from having to reduce carbon emissions by simply buying credits from other countries that have not caused as much pollution as their quotas ‘allow’.
Sustainable Aviation sets out its targets on its website. They include ‘improving fuel efficiency and CO2 emissions by 50 per cent per seat kilometre by 2020 compared with 2000 levels’, and ‘reducing nitrogen oxide emissions by 80 per cent over the same period’. While reducing emissions per kilometre is undeniably desirable there is no target given for overall emission levels, and if the government’s white paper figures for growth in the airline industry are correct, CO2 emissions will approach 18 million tons in 2020.
Given these figures, how can the UK government reconcile its commitment to slowing climate change with encouraging the continued expansion of the airline industry? And more fundamentally, how does it plan to grow an industry that is dependent on cheap fuel when the price of oil is inexorably rising?
David West is a freelance journalist
This article first appeared in the Ecologist September 2005