Is the UK civil aviation sector in serious trouble?

[TheLocalYokel]

The number of passengers using UK airports has fallen for the past three years with 210 million people travelling in 2010. This is less than the 215 million in 2004. From a peak of 240 million in 2007 numbers dropped by 12.5% in the ensuing three years.

The government has revised its estimate of the number of passengers using UK airports in 2016 down from the 315 million it forecast just two years ago to 250 million. It estimated that Air Passenger Duty would bring in £3.6 billion in 2015/2016 - this year it is estimated at £2.2 billion. The projected shortfall in passenger numbers will leave a hole of up to half a billion pounds in the government's target figure for APD tax money by 2016 which it may well try to bridge by increasing APD to a far higher level than previously thought. This though may lead to fewer passengers with a consequent larger deficit in APD tax money which may lead to an even higher APD and even fewer passengers, and so the merry-go-round would continue until it disappeared up its own rear end.

Earlier this year the CAA issued a report on the fall in numbers of people using UK airports in the past few years and pointed out that the regional airport sector has proportionately been more adversely affected than the London airports.

The recession is longer lasting than most people anticipated and recovery is slower and longer lasting than many thought would be the case a couple of years ago. I remember in 2009 many people on aviation message boards were confidently predicting that 2010 would see a recovery in the sector. It didn't so 2011 became the target year. There is no strong evidence to suggest that things are suddenly much rosier this year so will it be 2012? I am much less confident about this than I was at the beginning of this year.

Apart from the direct effects of the recession aviation is strongly in thrall to the price of oil. High oil prices further hinder aviation's progress and are unlikely to fall significantly in the forseeable future - the demand from the new major economies is just too great. Domestic air travel in Britain has been on a downward curve for a number of years, not helped by APD in both directions of a return flight. The charter market too has diminished substantially in recent years.

Most UK regional airports are well behind their projected passenger numbers made in response to the then government's white paper on civil aviation published at the end of 2003.

So are there any bright spots on the horizon for the UK aviation industry or will continued near stagnation lead to unthinkable things such as the closure of some airports (Plymouth Airport seems doomed); airports reviewing expansion plans negatively; airlines not expanding or reducing in size, with more going out of business; significant job losses in the civil aviation sector?

I wonder if in fifty years time people will look back at the first decade of this century and opine that it really was the golden age of civil aviation in Britain when cheap air travel was brought to the masses by the low-cost sector from airports up and down the country, but it became unsustainable as the first half of the century unfolded.

 

[Aviador]

Good question LocalYokel. There is clearly a combination of overcapacity and excessive taxation here in the UK. We are lead to believe the tax is a 'green' tax which is a load of old bollocks of course.

The majority of 'new' flights that occurred during the boom years came from genuine low cost flights under more favorable economic conditions with low or no aviation taxation. Fuel costs were also relatively low in comparison with today's prices.

The very ideology of low-cost travel doesn't fit in with the governments taxation policy or the ever increasing fuel costs seen today. It may well be the low-cost airlines that will need to adapt to the challenge of high fuel charges and a high taxation transport policy.

Is there a glimmer of hope? I guess we can only hope that the government realises it's error of it's ways and they stabilise aviation taxation. I can't see the tax ever being removed now it's too late because it's making too much money for them now.

 

[Seasider]

There are too many airports chasing too few passengers at the moment hence one is closing and one or two others are getting near to it.
As I have stated before, why is someone trying to reopen Coventry to passenger services? In the present economic state I can't see any airline going there.