[Relevant documents: Second Report of the Transport Committee, The impact of the coronavirus pandemic on the aviation sector, HC 268; and the Government Response, HC 745.]
That this House has considered the future of the aviation industry.
It is a great pleasure to serve under your chairmanship, Sir Edward. Before I start my remarks, I offer my congratulations to the Minister on his recent appointment. He was a very good member of the Select Committee and he is a very welcome addition to this role, even if the challenges he faces in it are pretty big at the moment. I wish him well.
The aviation industry is a vital part of our economy. It employs—or rather it did employ—hundreds of thousands of people around the country. It is an essential part of regional economies, which is why we see colleagues from around the United Kingdom here today, and it provides vital connections from the United Kingdom around the world. Today, it is a sector on its knees. Last weekend, I cast a quick glance at the Plane Finder app that some of us have on our phones. That afternoon, there were three aircraft in the air over the south of England—just three aircraft, and one of those was en route from France to the United States.
That is a disaster for this country. It is a disaster for all the staff and airline personnel who have lost their jobs, a disaster for the airport services companies and all their people, and a disaster for the suppliers to the industry, such as the catering services firms and the construction workers, who should be preparing to work on capital investment projects at our airports in the coming months but capital budgets have evaporated. They now face a bleak year ahead. The entire future of individual UK airlines is now under threat, and of course there is the broader issue of the impact on the aerospace sector as a whole.
We all accept that there was no way this pandemic could have passed without a major impact on aviation, but taking every step we can to mitigate that impact has been, should be, and must now be a national priority. However, as a loyal supporter of the Government who is sympathetic to them about the challenge they are trying to deal with, I must say that it does not feel like that at the moment. Public Health England, for example, produced what can only be described as highly questionable figures to justify the current restrictions. Only a couple of weeks ago, a Government Minister told the House of Lords that it is the view of the chief medical officer that travel is not a priority.
Although I really do understand the huge challenges that our medical community are facing, and they are doing a fantastic job in dealing with this pandemic, I fundamentally disagree with their view on this point about the sector. I urge the Government to change tack, to make at least the start of the reopening of our aviation sector an absolute priority and to use all the tools at their disposal to do so. That does not mean a mass opening of borders overnight, nor an instant return to mass holidays, but it does mean making a rapid move to restart key economic routes and to allow the return of travel without unnecessary restrictions to low-risk destinations.
Order. A lot of people are trying to take part, so I am afraid we will have to start with a four-minute limit. We should probably avoid interventions otherwise some people will not get in.
2:40 pm
Paul Girvan (South Antrim) (DUP)
It is a pleasure to take part in this debate under your chairmanship, Sir Edward. I thank the right hon. Member for Epsom and Ewell (Chris Grayling) for bringing this topic to the floor today.
I would like to focus on a number of areas. Aviation is a wide area; it is not just about airports and passengers—there is also the manufacturing end. It is vital that we look after that and get the planes flying. Otherwise, our manufacturing industry will collapse. Northern Ireland depends heavily on one of our major manufacturers. That company employs many in the aviation industry, but it depends on planes being built and sold. That is vital.
There are many areas to look at. One is connectivity, not just with the wider world but regional connectivity. Northern Ireland is suffering at present with a reduction in the number of flights we can get. There is even difficulty in coming to London, our capital city. We used to have five or six flights a day coming out of the international airport to Gatwick, but that has been rationalised down to four a week. Those numbers make it difficult to grow business.
There is good news in relation to a vaccine and trying to bring back some confidence to the public when it comes to making use of flying. Flights could go ahead safely if we can get people vaccinated to ensure that it is safe to fly. Many within the industry have done everything asked of them to try to encourage people on to planes. Unfortunately, sometimes the Government have not moved with the industry when it has made recommendations about what can be done, and it has had to take measures itself.
One tool vitally important from a Northern Ireland perspective is air passenger duty. A study by York Aviation on the removal of APD at a national level showed how that would be of benefit: it could save 130 routes that might otherwise be lost. The cost to the Exchequer would not be exorbitant—in fact, 3.3 times gross value added would be created by reducing the duty, given the increase in those who would travel. APD costs an additional £13 on every flight from Belfast to Bristol. When flying to Dublin, we would not see that because Dublin has been very active in reducing APD and encouraging people to use flights.
Interestingly, the Republic of Ireland Government made an announcement about injecting €80 million into the aviation sector—in a country with a population of about 4.5 to 5 million people. That is their predatory approach to sucking the life out of the aviation industry in Northern Ireland. We really need to wake up to that and see how we can put measures in place to ensure that, after the pandemic, we have an industry that is still vibrant and one that people will be willing to use.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) on securing this important debate on the future of aviation—an issue that the negative impact of the covid-19 pandemic has put into even starker relief.
I have the privilege of representing Gatwick airport, which is in my constituency, and it is truly suffering as a result of the pandemic’s impact. I established, and am honoured to chair, the all-party parliamentary group on the future of aviation because the issue has not only had a devastating impact on my local community; it is, as my right hon. Friend said, of vital importance for the whole UK economy. Before the pandemic, aviation accounted for about 4.5% of UK GDP and, as he also said, many hundreds of thousands of people are employed directly in the sector and more widely as well.
Business at Gatwick airport has reduced by more than 61% since the start of the pandemic. In August—its peak time—when it would normally have more than 5 million throughput passengers, it had fewer than 1 million. Some 40% of jobs have been lost, as they have been at some of the airlines that operate from the airport, such as Virgin Atlantic, which is headquartered in my constituency, and easyJet, whose largest centre of operations is there too.
That is why I very much echo the solutions to deal with this unprecedented challenge. I do not think anybody doubts the sincerity of the Government and the incredible challenge that they face in these unprecedented circumstances. We need to move from quarantine, which was a natural response in the early days, to a testing regime. Our competitors, such as Germany and France and, further afield, the United Arab Emirates and Singapore, are testing, which is putting the UK aviation industry and business more widely at a competitive disadvantage.
Last week in the House of Commons, I asked for the global travel taskforce, which the Prime Minister rightly established, to report as soon as possible. I hope that testing will be part of that. Anything that requires a quarantine of more than three days effectively means that travel does not happen in any meaningful sense.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the right hon. Member for Epsom and Ewell (Chris Grayling) on securing this timely debate.
I completely agree with everything the right hon. Gentleman said about testing and the opportunity for testing at scale at our airports. He focused on long-haul routes, but on the routes that serve my constituency in the Northern Isles, it could be even more transformative. If we as an island community with few points of entry, and much lower rates of infection at the moment, could allow people in and out with confidence, it would be of enormous assistance. I very much hope that his words and mine will be heard in the parts of Government here and in Edinburgh where they need to be heard.
It is not rocket science; it is pretty straightforward. In an island community, if we get transport right, just about everything else—economic development, public services and the rest of it—falls into place. Aviation is critical, both within the islands to shift doctors, vets and teachers around the smaller island groups, and between the islands and mainland communities. Those are my principal areas of concern, but we need the same level of connectivity and interlining that other communities have. It is about us getting not just to Aberdeen, Edinburgh or Glasgow, but onwards to Heathrow or wherever else we may wish to go. For our businesses and communities, that connectivity is absolutely critical.
The situation facing Loganair, the operator of the lifeline services throughout the highlands and islands, is pretty serious at the moment. I should say parenthetically that I bow to nobody in my appreciation and admiration of the staff and management of Loganair, which just before the pandemic took on some of the Flybe routes, so it may soon be more familiar to other Members in this Chamber. I appreciate their professionalism and dedication and the approach they take to the business. They understand that they are there not just for an economic purpose, but for a social and community purpose. They are an exemplar for others, and a flying example of what corporate social responsibility means.
2:52 pm
Jack Lopresti (Filton and Bradley Stoke) (Con)
It is a pleasure to serve under your chairmanship, Sir Edward. I apologise for my lateness; I had to be in a Delegated Legislation Committee. I congratulate my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) on securing this important and timely debate. I will focus my remarks on aircraft manufacturing, as Filton in my constituency is at the heart of the UK’s Aerospace Centre of Excellence, which is in the south-west of England.
The south-west hosts one of the largest and most significant aerospace clusters in the UK, and the top 14 global aerospace companies have a significant presence in the region. Some 17,500 people work in the sector, which generates £1 billion annually for the greater south-west. That includes the wider supply chain and research work in local universities, such as the University of the West of England in my constituency.
We must not forget that the UK aerospace sector represents more than 110,000 jobs across the country. The aviation sector is worth £52 billion a year, which equates to almost 3.5% of the UK’s entire GDP. In 2019, the aerospace sector contributed £32 billion in exports to the economy. In my constituency well over 10,000 jobs directly depend on it, and many more are involved in the supply chain.
The challenges are clear. The aerospace industry has been disproportionately hit by the pandemic, owing to the shutdown in global aviation. The sector has seen a contraction of 32% since February. Although UK GDP grew 15.5% between June and September, the aerospace industry saw only modest growth of 2.7%, which suggests that demand remains low, and that it will be one of the last sectors to recover. Manufacturers have therefore had to cut production rates significantly—by more than a third in some cases. Demand for new aircraft may not significantly increase until 2025 at the earliest, and possibly much later in the decade for long-haul aircraft. If aircraft are not being delivered, the industry will not be able to generate revenue and continue to invest in the technology, apprenticeships and jobs that we need to maintain the UK’s place in a very competitive global market.
The Government have given great support so far, which I welcome. The furlough scheme is now extended until March. There is support from the Bank of England’s corporate finance facility and funding for the Aerospace Technology Institute, which supports research and development. That sum is now approaching £9 billion.
Nearly 70 aircraft flown by UK-registered airlines are more than 15 years old. They could be replaced by new aircraft that have better environmental standards and use at least 25% less energy. The Prime Minister announced the ambition that this country should be the first to build an all-electric commercial airliner. That will encourage the development of jet zero technology—a net zero carbon emissions target by 2050. The Government should support the scrapping of those 70 aircraft, allowing manufacturers and designers to build newer aircraft, to protect jobs and skills for the future. I have also been working closely with the West of England Combined Authority and I applaud the action it has taken, under the leadership of Tim Bowles, to support the aerospace sector, with £5 million of funding for the digital engineering technology and innovation initiative—DETI—delivered with the National Composites Centre. The combined authority is supporting both initiatives as part of the regional recovery plan. It has pivoted to focus to ensure that it supports our recovery, accelerating access to skills and ensuring that our major industry can keep going.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the right hon. Member for Epsom and Ewell (Chris Grayling) on securing this debate on an industry that is vital to my constituents, thousands of whom work at Heathrow.
I want to make a few points. First, we urgently need a plan for aviation, including a plan for passenger testing, to help get planes flying safely, inbound and outbound. Secondly, we need a realistic, targeted support package to tackle the impact of the pandemic in the medium term on jobs, businesses and aviation communities. Thirdly, we need to plan for the future and invest more, not less, in the pace of decarbonisation in the sector.
In March, the Government promised a recovery plan for aviation. Eight months later, an integrated plan has not yet been published, while redundancies continue to rise. To help the industry recover as quickly as possible, we need a robust testing regime at our airports, which could reduce quarantine. Some welcome pilots are under way, which put public health first while taking advantage of swifter testing.
The Government have said that families will be able to fly abroad for Christmas with a new testing regime, but that is still six weeks away. United Airlines has already begun pilots on the London-New York route, but closer international working is needed. Are the Government planning to commit to a common international standard for health screening measures? The UK lags behind more than 30 countries around the globe that are doing more on aviation testing.
Getting planes flying safely will be key to saving jobs, including those that will be viable for the long term. We need more flexible and targeted schemes to keep people in work, and in their jobs, until aviation recovers. In Hounslow, we have seen devastating impacts. My constituency has the third-highest number of furloughed employments in the country, but 40,000 jobs are still at risk unless we see a recovery. I thank our unions and councillors, like Councillor Khulique Malik, who works at Heathrow, for the support that they have given the community at this time.
It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) on securing the debate. It is good to see the Minister in his place; he visited Southampton airport within days of becoming the Minister, for which we are grateful. I will focus predominantly on Southampton airport this afternoon.
The pandemic has dealt the aviation sector a huge blow —Southampton airport, in my constituency, in particular. With airports predicted to lose around £4 billion by the end of 2020, and with possibly 20,000 jobs under threat, it is clear that a number of things need to be done urgently to support the sector. I want to raise two points in the short time that I have.
First, as has been discussed, we need a proper airport testing regime. The 14-day quarantine rules are inflexible and the process of setting up an airport testing regime is too slow. Airports are willing, but the speed of the Government response has hampered progress, and the delay in the committee’s reporting is regrettable. As my right hon. Friend the Member for Epsom and Ewell said, advice now needs to be re-examined to see how we can get that regime set up as quickly as possible, to unlock the industry.
Southampton airport has its own unique set of circumstances. With the collapse of Flybe, which represented 94% of all flights, and an application for a runway extension of 164 metres to allow larger planes to land, Southampton airport is now in a fight for survival. That situation could be exacerbated because any application, if refused, could take 18 months to appeal and any application, if successful, could be subject to judicial review.
The Minister and I have spoken about this before, but it seems bizarre to me that I can receive letters from the Cabinet Office for numerous special development orders being awarded for Brexit preparedness, but special development orders are not forthcoming or being examined by the Department for Transport or the Cabinet Office for a major regional airport like Southampton. I would ask the Minister to look for further advice on that as time goes on.
I am afraid we are still running out of time, so for the next speaker I will have to reduce the time limit to three minutes.
3:03 pm
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The first key step that must be taken is to replicate what other countries are doing on testing. The current UK rules are simply too restrictive for low-risk destinations. I very much hope that the reports in the media about a reduction of the two-week quarantine rules are correct, but a decision to travel that still includes a period of several days when someone cannot leave their home, makes an important business trip, a short family holiday or a visit to an elderly relative in another country extremely difficult. Other countries are not asking for the same period of isolation.
I applaud my right hon. Friend the Health Secretary for the work he has done in expanding our test capabilities to the extent he has; it has been a phenomenal achievement and he deserves huge personal credit for that expansion. We have now by far the largest testing capability and the broadest range of testing capacity in Europe—well done. But if we can test the whole population of Liverpool quickly and effectively, why can we not open a handful of key economic routes quickly using those same technologies?
Why can we not reopen routes to New York and Washington, for example, setting aside the quarantine rules for those people who travel those routes and test negatively? Those are blue-chip routes for our industry; they deliver the highest level of profits and they are particularly vital for our economy. Are we really going to be putting the health of the country at risk by introducing the same kind of test rules that exist in other countries today and putting the same measures in place for those key routes?
Sir Edward, you or I could fly to Madeira tomorrow, taking with us a 72-hour-old test certificate. We would be allowed to enter the country freely, travel around and enjoy our visit. There is not a massive epidemic of the virus in Madeira. Why can we not apply the same rules for those key international destinations here?
The industry is starting to take steps itself. Heathrow airport, for example, is now providing travel to destinations such as Hong Kong, Cairo, Bahrain, the Seychelles, Japan, Italy and South Africa and pre-departure testing at the airport. The average turnaround time for test results is 67 minutes, and travellers have a certificate they can take with them to prove they have tested negative that same day.
British Airways is showing how it could be done on transatlantic routes by starting voluntary testing on key routes to the United States. Why not make those approaches official? Does anybody seriously think that that would be a less effective way of screening for risk than the current system, when it is patently clear, I am afraid, that many people are not following the self-isolation rules anyway? Allowing testing and restriction-free entry to the UK for those with negative results could unlock key routes and start the long rebuild of this vital industry.
I am not going to speak for long because many people want to contribute, but my message to the Minister is very simple; I also have one for the industry itself. Introducing airport testing and accepting a risk-based approach—which all the evidence suggests is low—is the easiest way to rebuild confidence in the airline industry and save jobs. That is the crucial piece: ultimately, the issue is about the welfare and employment of our fellow citizens. It is vital that we do this. Are we really going to continue to stand aside while entire airports risk closure and entire airlines risk disappearing? We have to act, and act now.
There is another issue for us as a Government and a nation. The first of January marks our first day outside the ambit of the European Union. The transition period will have ended and the post-Brexit world will begin—whatever the result of the negotiations. On the first day of global Britain, will there really be only three planes in the sky over the south-east of England? Will our global hub airport, and airports such as Manchester, Leeds, Bradford, Bristol, Belfast, Edinburgh, Glasgow and Cardiff, all be operating at a tiny fraction of their capacity? These are our global connections and have to be back in place for Britain in a global world post Brexit. For the sake of our economy, jobs and future role in that post-Brexit world, my message to Ministers is to make airport testing, and the flexibility that should come with it, the urgent priority that it should be.
One final word for the industry is that recovery must come and we have to do everything we can to make sure that it does, but it has to come with an eye for the future. I want to see that Plane Finder app full again, but aviation must rebuild with a focus on the environment as well. There is no magic technology solution that will make it a net zero sector by 2050, although I welcome today’s announcements about support for improved technology in the sector.
I am hopeful that, before too long, hydrogen will power some short-haul planes, that all airports will have electric and hydrogen vehicles on their entire premises and that new technology for engines will continue to bring down emissions. I also believe that the industry needs to strengthen its offsetting strategy further to reduce its environmental impact. The Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA, was a start, but is a long way from what is needed and is too remote a concept for consumers starting to worry about whether they can, or should, fly in the future. That is a big item on the agenda for the industry.
Immediately and over the next few weeks, the priority has to be getting planes flying again; the environmental strategy is a challenge we should be thinking about now, but the priority is that. That first task lies with the Government. My message to the Minister, to the great team at my old Department and particularly to the Department of Health is that we need airport testing and a regime that allows the industry to start to recover. Quarantine is killing it, and it will kill the first few months of global Britain. Things have to change, and they have to start changing right now.
I echo the remarks about air passenger duty. We charge the highest air passenger duty anywhere in the developed world—twice as much as some of our competitors such as Germany. Many of our competitors do not charge any at all. We need that to be reduced or, indeed, scrapped for at least the year to come, and, I would argue, for longer still.
Business rates relief is important. In England, airports should be subject to business rates relief. Gatwick airport is operating only from the north terminal. The south terminal is completely shut down, but it is still paying business rates on that. I echo what the Prime Minister and my right hon. Friend the Member for Epsom and Ewell have said about building back better and greener. I welcome the UK aviation industry’s commitment before the covid-19 pandemic to reach net zero carbon by 2050, and the Jet Zero Council. If we invest in technologies such as hydrogen, we can build back better, greener and more sustainably, which is good for our economy and contributes to the global environmental effort.
Loganair tells me that it faces a pretty bleak future. It has done well to provide a skeleton service throughout the lockdown, but as it looks towards bookings in quarter 1 of 2021, it sees very little to inspire confidence. It has the same fixed costs as all other airlines, including airport charges, standing charges and the cost of plane purchase and rental. Like other businesses it has the opportunity to put staff into furlough, but that is just part of the story.
In the Northern Isles, we are about to enter the third of three winters for our visitor economy. When we get to the end of the furlough period, at the end of March, we will be looking to open up and get our visitor economy going, because that is absolutely crucial to our running again. The availability of good, frequent, reliable air services in that time will be crucial.
On reliability, in the few seconds that remain to me, I place on the record yet again my exasperation at the fact that the Scottish Government, through Highlands and Islands Airports Ltd, continue to insist on the removal of air traffic control officers from airports throughout the highlands and islands, to centralise them all in Inverness. The service is not just good but reliable, so that should be put on the back burner for the foreseeable future.
Apprenticeships are a great way of providing high-skilled jobs and social mobility. The Government need to be a bit more flexible on the levy. Finally, we need to get aircraft flying back to more normal numbers and see the aerospace industry earning revenue again, or we risk losing the industry in this country and our world-renowned expertise.
Businesses also need to work together for the long term. I am grateful to Unite for highlighting the imbalance of power that we are seeing at Heathrow. Heathrow Airport proposes changes that could see workers’ pay cut by £8,000 a year—equivalent to a 20% slash in salary. Heathrow workers are set to go on strike next month. Much more concerted dialogue with management is clearly needed.
The GMB, Prospect and Unite have been clear in their ask of Government to put forward an aviation-specific package, and they will contribute to the thinking that goes into it. Furlough has been welcome, but the job support scheme, as expected, was criticised as not workable for the aviation sector and aviation jobs, which involve more complex 24/7 shift-work patterns. More support for transition where jobs are lost in aviation communities is vital.
Finally, on plans for the future and decarbonisation, we know that progress on decarbonisation has been painfully slow. We welcome the jet zero plans and the work going on in government on the aviation sector in that regard. More of that will be debated at the important conference, which the Minister is aware of, hosted by West London Business this Friday on “reimagining our global hub”, looking to the future of aviation and transportation, and our leadership in the UK and across the world.
What incentives are required to drive the innovation essential to delivering zero carbon aviation, and how can we look to the longer-term infrastructure development, including Southern rail access to Heathrow? Supply chains also matter. That is why we need an integrated sector-based plan now.
That brings me to my second and final point. I know that this is a Treasury issue and I know that the Minister is sitting on the Front Bench, but I would reinforce many of the comments made by other hon. Members: airports such as Southampton and Exeter, which are operating at 10% of the capacity of this time last year with the same running costs, are still paying the same business rates to local authorities and the Government while they are not operating at full capacity.
I really hope that the Minister will raise with the Treasury the prospect of extending the business rate relief that has been made available in the devolved Administrations. That would show some fairness in the industry and make a vital difference, going forward. Southampton is paying £1.5 million a year in business rates and it has not had that relief. For an airport that is fighting for survival, taking that figure off the balance sheet would be appreciated.
We have all acknowledged that the aviation industry is facing a fight, nowhere more than in Southampton. I am asking the Minister to speed up the support around testing and business rate relief to the industry, so that airports around the country such as Southampton can survive, and we can have a vibrant regional airport offer when the pandemic finishes.