Aviation's Economic Downside
Prof John Whiteleggand Dr Spencer Fitz-Gibbon
withDr Seth Crook
Dr Caroline Lucas MEP
Green Party of England & Wales
Second edition, November 2002
Promoted and published by Spencer Fitz-Gibbon for The Green Party,1a Waterlow Road, London N19 5NJ.
Tel: 020 7561 0282. Email: firstname.lastname@example.org
John WhiteleggBA PhD FCIT FILT FRSA, the Green Party's Chief Policy Advisor on Transport, is an internationally-respected transport expert and environmental consultant. Managing Director of Eco-Logica Ltd, he teaches in the School of the Built Environment at Liverpool John Moores University, and is Honorary Visiting Professor in the Department of Biology at the University of York. Spencer Fitz-Gibbon BA (Hons) PhD is a member of the Green Party's national executive and formerly the party's Air Transport Spokesperson. He has written or edited a number of Green Party publications on transport. Seth Crook BA PhD has been visiting philosophy lecturer teaching on green issues at universities in California, Oregon and Illinois. He is currently head of the Hebridean Green Philosophy Circle and contributes to the Green Party's research programme.
The authors would like to thank Dr Caroline Lucas MEP (Green Party, South East England), Dr Lucy Ford, AirportWatch, the Aviation Environment Federation, the European Federation for Transport & Environment, Friends of the Earth, Transport 2000, the Gatwick Area Conservation Campaign, HACAN Clear Skies, North West Essex & East Herts Preservation Association, Manchester Airport Environment Network, and the Financial Times.
1. Introduction - Aviation growth: the economic downside
2. Noise pollution from air transport: health and economic impacts
3. Air pollution from aircraft and airports: health and economic impacts
4. Climate change: the colossal economic costs of air transport pollution
5. The hidden costs of aviation
6. The hidden subsidies to aviation
7. Aviation is a drain on the UK balance of payments
8. Cutting through the aviation sector's economic propaganda
9. Policies for economic and ecological sustainability in the aviation sector
Caroline Lucas MEP
(Green Party, South East England)
When this report was first published in August 2001 it made uncomfortable reading for the government and the aviation industry. By drawing together data about flying’s impact on the UK economy, it put the lie to the industry-sponsored myth that aviation was good for business. In fact, it found that the industry costs the country more than £11 billion each year in tax breaks, hidden subsidies, ill health and environmental clean up.
This new edition of Aviation’s Economic Downside will make uncomfortable reading for all of us. In July 2002 transport secretary Alistair Darling announced the most ambitious programme of airport development in British history, claiming expansion is needed to meet projected growth of some 300 per cent and that the UK needs new airports to meet business demand and maintain London’s competitive edge. This report shows these claims are simply not true. The high projected growth in demand for flying is a product of the cheap flights made possible only thanks to the billions of taxpayers’ pounds being used to prop up the industry. And business reliance on flying is a consequence of the same policy: the deliberate creation of an uneven playing field for transport, with taxpayers’ money being spent on subsidising cheap flights rather than investing in greener alternatives.
Seasoned campaigners living in the shadow of Heathrow and elsewhere have already mobilized widespread opposition to the plans. In my constituency, proposals for a brand new airport the size of Gatwick on the banks of the Thames estuary, at Cliffe in Kent, have caused particular alarm and generated some very active local anti-airport campaigns. But the threat is more widespread than that: a plan has been proposed to give Stansted three more runways, multiply its passengers throughout by ten (to 122 million) and turn it into an airport twice the size of Heathrow. Manchester airport, which recently built a second runway as part of a £525 million 10-year expansion, wants to grow to 41 million passengers per annum by 2015, from 15 million in 1995. All over the country, airports are seeking to expand regardless of the consequences.
But the proposed expansion to the aviation industry poses a far greater threat to us all than a local campaign seeking to conserve its own environment can tackle, however large or well-organised the individual group concerned. We need a concerted, co-ordinated, national effort to explain why any airport expansion would be an unsustainable drain on the UK economy and major impact on both the local and the global environment. We need to realise that the issue is not about whose back yard airports are built in, but whether we build them in any back yard at all.
Aviation’s environmental downside is already well documented: a scientific consensus has emerged on the industry’s contribution to climate change and ill health. This report contributes to our understanding of the economics of flying, and the clear picture that is starting to emerge: that the much-vaunted economic benefits of our aviation industry are a mirage, disappearing when you look closely.
S1 Aviation is the most highly-polluting transport mode on earth, and its pollution constitutes a major hidden cost to the economy. Aviation is also subsidised directly and indirectly by the taxpayer, and is a major drain on the UK balance of payments.
S2 The health costs of air pollution from the UK aviation sector are estimated at more than £1.3 billion pounds a year.
S3 The economic costs of aircraft noise in the UK are estimated at £313 million a year.
S4 The costs of UK aviation's contribution to climate change are estimated at well over £2 billion a year in 2001. And unless the government radically changes its policy on the matter, aviation's CO2 emissions will have increased by 588% between 1992 and 2050, and its NOx pollution by 411%. By 2050, aviation could be contributing up to 15% of the overall global warming effect produced by human activities - with staggering economic costs.
S5 The overall hidden economic costs of the European Union's aviation sector are currently estimated at £14.3 billion a year - of which the UK alone accounts for £3.782 billion, or 26%. This doesn't include the costs of aviation accidents, accident services, and direct subsidies like the £500 million given to BAe to help it develop a new airbus.
S6 Hidden subsidies to the aviation sector also include the costs of building and maintaining the surface transport infrastructure which serves airports - costs which are growing fast in parallel with the growth of aviation.
S7 Aviation is under-taxed compared to most sectors. Flight tickets, aircraft and aviation fuel are zero-rated for VAT. HM Treasury collects £1 billion in air passenger duty per year, but forgoes £3 billion due to VAT zero-rating of aviation products and loss of excise revenue. Aviation fuel pays no tax at all, although if it were taxed at the same rate as unleaded petrol, this would raise some £5 billion a year. Effectively, society is subsidising the aviation industry through a colossal tax-break of £7 billion a year.
S8 The effect of these tax-breaks and externalities is equivalent to each of the 58 million people in the UK donating an average £185.90 to the aviation industry every year - not including accident costs, direct and indirect subsidies to supporting industries including the oil industry and the aircraft manufacturing industry, or the costs of providing airports with ground transport infrastructure at public expense.
S9 Air passenger transport currently represents a drain on the UK balance of payments of £8.6 billion a year. This doesn't include the costs of importing fuel and aircraft.
S10 All these costs and subsidies are increasing rapidly as the aviation sector grows. Government policy continues to support such growth regardless of the consequences.
S11 If remedial action isn't taken, UK air passenger numbers are forecast to increase from 130 million in 1995 to 400 million in 2020 - the equivalent of an extra 4 airports the size of Heathrow or 12 new airports the size of Manchester. Without remedial action, by 2020 demand is forecast to be rising by about 15 million passengers a year - equivalent to a new Gatwick every 2 years.
S12 The application of a fairer tax regime on aviation could cut UK passenger numbers to 59% of the figure forecast for 2020. But even with such measures, passenger numbers would still have increased by almost 150% during 1998-2020.
S13 The Green Party urges rigorous action to curb the growth of the aviation sector, through the following 7-point plan:
a. A European-level charge on aviation, based on emissions.
b. An end to all public subsidies to aviation, and all its tax exemptions.
c. Investment in less-polluting travel alternatives. Because 70% of European air trips are less than 1000 kilometres, there is huge scope for transfer to alternatives.
d. Research into, and promotion of, further alternatives to business air travel, including video-conferencing, tele-presence etc.
e. Optimisation of air traffic control, which alone could reduce aviation's CO2 emissions by 6-12% over 20 years.
f. Changes in land-use planning law, requiring all applications for airport development to give full consideration to climate change, health, external costs and alternative job-creation.
g. A public education programme on the negative economic and ecological consequences of air transportation.
Aviation growth: the economic downside
"…an unquestioning attitude toward future growth in air travel, and an acceptance that the projected demand for additional facilities must be met, are incompatible with the aims of sustainable development."
Royal Commission on Environmental Pollution, 18th Report on Transport and the Environment
1.1 Aviation is the most highly-polluting transport mode on earth. Its pollution translates into hidden economic costs which are paid not by the industry itself but by society as a whole. Aviation is the fastest-growing source of greenhouse gas emissions, and a major contributor to climate change and the resulting damage to the economy.
1.2 Yet the fuel aircraft burn to cause this pollution isn't even taxed. Unlike most goods, aircraft and aviation fuel and airline tickets are zero-rated for VAT. The hidden subsidies to the aviation sector also include:
a. Health costs associated with noise and air pollution.
b. Costs of building and maintaining the transport infrastructure which serves airports.
c. Direct and indirect subsidies to the industries which supply the air transport sector, including oil and aircraft manufacturing.
1.3 The effect of these tax breaks and hidden costs is equivalent to every man, woman and child in the UK donating an average £182.45 to the aviation industry every year - not including direct and indirect subsidies to the oil industry and to the aircraft manufacturing industry, or the costs of providing airports with ground transport infrastructure and emergency services at public expense. Although some people derive economic advantage from this situation, the net effect is that those who don't fly are subsidising those who do, and those who fly occasionally are subsidising those who fly a lot. Society is subsidising businesses that generate air travel, but not businesses that don't. All this is incompatible with the government's professed belief both in economic level playing fields and in social justice.
1.4 The UK has the biggest airline, the largest airport, a very dynamic market (including new low-budget airlines) and very high passenger growth rates. Of all European Union countries, the UK is the worst offender when it comes to passing the hidden costs of aviation on to society as a whole. The UK generates over a quarter of the European Union's hidden aviation costs. (See tables 1 and 2 in section 6 of this report.)
1.5 Growth forecasts vary, but the middle of the range indicates at least a doubling of the miles flown between 1995 and 2015. On a 1995 base, global forecasts of miles flown in the year 2015 range from a low growth of 181% to a high growth of 380%. Recent government forecasts predict a 239% increase. That is, 310 million passengers will go through UK airports in 2015, up from 130 million in 1995 - an increase of 180 million passengers in 20 years. That's the equivalent of an extra 4 airports the size of Heathrow or 12 new airports the size of Manchester. [ 1 ] By 2020 the forecasts indicate that demand will be rising by about 15 million a year, equivalent to a new Gatwick every 2 years. [ 2 ]
1.6 As the aviation sector expands, so the environmental and economic costs associated with it expand.
2. Noise pollution from air transport: health and economic impacts
2.1 Aircraft noise is not simply annoying. It can be a significant threat to health. It thus has human, social and economic costs.
2.2 According to the World Health Organisation: "Environments with heavy noise [are characterised by] cardiac diseases, doctors' calls and purchase of medicine more frequently than in quiet environments." [ 3 ]
2.3 The World Health Organisation proposes a range of noise standards designed to protect human health. Yet over 170,000 people in Britain are currently threatened with aviation-associated noise that fails to meet these standards. Evidence from specific studies points to clear areas of health damage in noisy environments, such as reading deficits and problems with cognitive development among infants and pre-school children. [ 4 ]
2.4 The growth of aviation will make the problem worse, and currently there is no government or industry response that can guarantee noise reductions to safe WHO levels.
2.5 Airports and aircraft manufacturers promise "quieter" aircraft. But this is not solving the problem. Airports in Germany are served by the same kind of "quieter" aircraft that serve UK airports, but there is still a trend towards more people being affected by noise. [ 5 ]
2.6 It's impossible to quantify all the negative impacts of aircraft noise, such as the negative effects on the education and development of individual children. But studies indicate that the economic costs of aircraft noise pollution in the UK amount to £313 million a year. [ 6]
3. Air pollution from aircraft and airports: health and economic impacts
3.1 US data clearly suggests that aviation contributes significantly to local inventories of emissions such as Volatile Organic Compounds (VOCs) and Nitrogen Oxides (NOx). Studies around Zurich Airport and Stockholm Arlanda Airport show that aviation contributes a significant share of total emissions within a well-defined geographical area. [ 7 ] The London Borough of Hounslow, which borders on Heathrow Airport and monitors air pollution, is of the view that "further expansion of the airport and associated road traffic congestion could lead to significant worsening of local air quality." [ 8] In a press release dated 10.8.99 the same authority concludes "It is clear that the use of motor vehicles and the operation of Heathrow Airport heavily influence the levels of air pollution in Hounslow". A study of London's second largest airport [ 9 ] came to a similar conclusion: "The Gatwick Study reveals a dramatic rise in aircraft derived emissions - particularly NOx. For this pollutant at least, it will mean that air quality in neighbouring Horley will remain above National Air Quality Strategy levels beyond 2005 despite the dramatic drop in road vehicle emissions." Similar fears have been expressed at other airports, not least due to the massive increase in ground traffic. Britain's third largest airport, Manchester, is seeking a doubling of passenger numbers between 1995 and 2005, which will lead to an extra 12 million car journeys a year around what is arguably Britain's most traffic-polluted city. [ 10 ]
3.2 Heathrow alone contributes about 10% of the England and Wales total of VOCs. Its NOx levels are predicted to rise by 110% by 2015. Yet this pollution is associated with a range of serious health risks. [ 11 ]
3.3 Problems associated with various pollutants include the following:
a. Carbon dioxide (CO2): at high levels this causes headaches, drowsiness, nausea, slowed reflexes, and at very high levels it causes death. At low levels it can impair concentration and nervous system function and may cause exercise-related heart pain in people with coronary heart disease.
b. Nitrogen oxides (NOx): impairs respiratory cell function and damages blood capillaries and cells of the immune system.
c. Carbon monoxide (CO): increases susceptibility to infection and aggravates asthma. In children exposure may result in coughs, colds, phlegm, shortness of breath, chronic wheezing and respiratory diseases including bronchitis.
d. Ozone (O3): ground level ozone reduces lung function in healthy people as well as those with asthma. It may increase susceptibility to infection and responsiveness to allergens such as pollens and house dust mites. It may cause coughs, irritation of the eyes, nose and throat, headaches, nausea, chest pain and loss of lung efficiency, and increases in the likelihood of asthma attacks.
e. Particulate matter (PM): strongly associated with a wide range of symptoms such as coughs, colds, phlegm, sinusitis, shortness of breath, chronic wheezing, chest pain, asthma, bronchitis, emphysema and loss of lung efficiency. As many as 15% of asthma and 7% of Chronic Obstructive Pulmonary Disease cases in the urban population are estimated to be possibly related to prolonged exposure to high concentrations of PM. Long term exposure is associated with increased risk of death from heart and lung diseases. PM may carry carcinogens such as polycyclic aromatic hydrocarbons (PAHs), hence may increase the risk of developing cancer.
f. Volatile Organic Compounds (VOC): This category of pollutant includes thousands of different chemicals, many of which are hydrocarbons (HC). They may cause skin irritation, breathing difficulties and long term exposure may impair lung function. Many individual compounds are carcinogenic (including benzene). Benzene can cause leukaemia. Those most at risk are people exposed to benzene at work or who live or work in the vicinity of petrol filling stations or general vehicle activity.
g. Sulphur Dioxide (SO2): SO2 irritates the lungs and is associated with chronic bronchitis. People with asthma are particularly vulnerable and a few minutes' exposure to the pollutant may trigger an attack. The most serious effect occurs when SO2 is absorbed by particulate matter and then inhaled into the lungs. At high doses it can release sulphuric acid on reaction with moisture in the lungs. This can result in widespread death and illness - for example, it is likely to have been the main cause of the 4000 deaths during the notorious 1952 London smog. [ 12 ] One study cites cancer. [ 13 ]
3.4 Given the above it's no wonder that air pollution, including from aircraft and the surface traffic pollution associated with airports, kills 12,000-24,000 people in the UK every year [ 14 ] and requires medical treatment for thousands more. The health costs of air pollution from the UK aviation sector are estimated at more than £1.3 billion a year. [ 15 ]
4. Climate change: the colossal economic costs of air transport pollution
4.1 Aviation currently accounts for just over 3.5% of total CO2 emissions. According to a recent report by the Intergovernmental Panel on Climate Change, by 2050 emissions from aircraft could be responsible for up to 15% of the overall global warming produced by human activities. [ 16 ]
4.2 Not only is aviation the fastest-growing source of CO2 emissions. Aircraft emit a very large proportion of their pollutants directly into the upper troposphere and lower stratosphere, where the pollution is disproportionately damaging. It has been argued that aircraft pollution from NOx effectively doubles the contribution to global warming from aviation's share of the main greenhouse gas, CO2 itself. [ 17 ] Moreover, the ground traffic associated with airports is considered to be an even greater contribution to climate change than the aircraft themselves. [ 18 ]
4.3 All the forecasts point to large increases in the global inventory of pollutants from aviation: the percentage change for CO2 in the period 1992-2050 is expected to be 588%. The equivalent NOx increase for the same period is 411%. [ 19 ]
4.4 Of further concern are contrails, the vapour trails made by aircraft. Below the flight corridors where air traffic is concentrated, contrails could have a greater warming effect than all greenhouse gas emissions together.[ 20 ]
4.5 Estimates of the economic costs of climate change vary widely. But climate-induced damage appears to be increasing at a faster rate than economic growth, so that at some point this century the damage caused by climate change might be expected to equal or surpass the sum of the world's annual economic product. [ 21 ]
4.6 The costs of UK aviation's contribution to climate change are estimated at well over £2 billion a year. [ 22 ]
5. The hidden costs of aviation
5.1 Regardless of any detailed arguments about methodologies of studies into the alleged benefits of the aviation sector, the external costs alone illustrate that this particular golden goose has something of the appearance of a white elephant. (See tables 1 and 2.)
Table 1: Annual external costs of EU aviation: in billions of pounds
Table 2: Annual external costs of UK aviation: in millions of pounds
Overall Total for passengers + freight: £3,782 million
5.2 It will be noted that the UK figures represent 26% of the total for the European Union. The Green Party believes that if one country out of 15 is responsible for more than a quarter of the total external environmental costs, then that country must take the lead in exercising responsibility for solving the problem. [ 23 ]
5.3 The European Environment Agency has estimated that the costs of climate change, health, accident, noise, air pollution, landscape, nature loss etc presently unaccounted for and unpaid amounts to about €44 (£28.39) per 1000 passenger kilometres. [ 24 ] This is the equivalent of subsidising each passenger on a return flight from Luton to Glasgow by £28 for the external costs of their environmental impacts. [ 25 ]
6. The hidden subsidies to aviation
"...the demand for air transport might not be growing at the present rate if airlines and their customers had to face the costs of the damage they are causing to the environment."
[ 26 ]
6.1 Aviation is doubly subsidised. Firstly, as described in the previous section, it externalises many of its costs. Secondly, it almost entirely escapes taxation. Although air passenger duty raises about £1 billion a year, there is no tax on aviation fuel, no VAT on aircraft fuel, the purchase of new aircraft, aircraft maintenance or airline tickets, and no duty is paid on consumer goods sold to non-EC citizens.
6.2 If aviation fuel were taxed at the same rate as unleaded petrol, this would raise about £5 billion a year. [ 27 ]
6.3 If aviation's VAT zero-rating were removed, this would raise £2.6bn for VAT on aircraft fuel, passenger tickets etc, and £0.4bn for excise duty and VAT on consumer goods. [ 28 ]
6.4 That is, even allowing for £1 billion revenue from air passenger tax, society is effectively providing a colossal hidden subsidy to the aviation industry in the form of a tax-break of astonishing proportions - some £7 billion a year.
6.5 Partly as a result of these hidden subsidies, air tickets are 42% cheaper today than they were ten years ago. [ 29 ]
6.6 If the government forecast that air passenger numbers will increase by 250% over the next twenty years, UK aviation's tax breaks would amount to about £17.5 billion per year. [ 30 ] These tax breaks amount to subsidies primarily in favour of wealthier people. A Mori Poll, commissioned in 2001 by the industry pressure group Freedom to Fly, showed that only 2 out of 5 people had made a trip by plane in the last 12 months, and those most likely to have flown were people earning over £30,000 [ 31 ] Essentially, those who don't fly are subsidising those who do, and those who fly a little are subsidising those who fly a lot.
6.7 According to a UK government report, [ 32 ] introducing an aviation fuel tax at 100% would reduce demand by 10%. Taxing aviation fuel at 25p a litre - just half the rate applied to motor fuel (i.e. at around 140%) - might therefore be expected to reduce demand by about 14%. This would reduce the mid-point forecast for the number of passengers passing through UK airports in 2020 from 400 million to 344 million. [ 33 ]
6.8 VAT on air travel (including fuel and aircraft purchases) would put air fares up by 17.5%. DETR figures [ 34 ] indicate that this would reduce demand by about 22%. Imposing both a fuel tax and VAT would reduce forecast demand to around 268 million. [ 35 ]
6.9 Trebling airport charges at Heathrow and Gatwick would raise average UK airport charges by about 100%. The government's figures indicate that this could be expected to reduce demand by a further 11%. The abolition of the remaining duty-free might knock off a further 1%, reducing the total demand in 2020 to 236 million. [ 36 ]
6.10 It would seem reasonable to conclude that the total effect of introducing realistic landing fees and a fairer tax regime - even with aviation fuel taxed at only half the rate of unleaded petrol - would be to bring about a situation where demand for air travel rises from 160 million passengers using UK airports in 1998 to about 236 million in 2020. This would represent a significant reduction in the growth of CO2 emissions and of the various hidden costs, but would still represent an increase in passenger numbers of 147.5% over 22 years. [ 37 ]
6.11 A greater reduction in growth would be desirable in order to help the UK meet serious emissions-reduction targets and further reduce the growth of aviation's hidden costs. This could probably be achieved through a combination of measures:
a. Higher rates of aviation fuel tax.
b. Public education on the impacts of aviation - especially with reference to climate change, which is of growing concern to the public.
c. Provision and active promotion of alternatives to air travel.
d. Encouragement of UK holiday options not requiring air travel.
7. Aviation is a drain on the UK balance of payments
7.1 The economic effects of aviation are not the same for everyone everywhere. This is particularly significant with respect to tourism. Far more tourist money flies out of the UK than flies in - £17.7 billion a year compared to £9.1 billion. That's an £8.6 billion annual drain on the UK balance of payments due to air tourism. As fares have become cheaper, so this deficit has increased, as subsidised flights tempt far more Britons abroad than are persuaded to visit the UK. [ 38 ]
7.2 Aviation is extremely fuel-intensive and relies on imported oil. Moreover a very high proportion of the air transport fleet is made up of imported aircraft. On both counts the UK suffers a further drain on its balance of payments. Efforts to manufacture a higher proportion of aircraft in the UK involve huge subsidies from the public to the aviation industry - for example the £500 million donated by the UK government to BAe to help it build its Airbus. [ 39 ]
8. Cutting through the aviation sector's economic propaganda
8.1 The case for expanding airports and supporting the growth of aviation is usually accompanied by claims about the economic gains associated with this growth. The claims fall generally into two categories: the amount by which aviation supposedly benefits the economy, and the number of jobs this will create. In both cases these arguments are commonly inconsistent, flawed and misleading.
Aviation is a net drain on the UK economy
8.2 When the government announced that it wanted a massive expansion of airport capacity in summer 2002, a standard claim reiterated in the media was that aviation benefited the UK economy by some £15 billion a year.
[ 40 ] However, it must be noted that if British consumers spend £15 billion of their disposable income each year on aviation products, then that is £15 billion they are not spending elsewhere in the economy. If, for arguments' sake, demand for aviation was only two-thirds of that figure, then the consumers would be spending £15 billion on aviation and the remaining £5 billion elsewhere in the economy. There is nothing about the aviation industry which is inherently 'valuable to the economy' in this sense. [ 41 ]
8.3 Moreover, it has been seen above that there are substantial tax breaks and externalised costs to take into account, as well as the net drain on the UK balance of payments. Between them, these outweigh the supposed contribution which aviation makes to the UK economy:
External costs £3.782 billion
Tax breaks £7 billion
Balance of payments deficit £8.6 billion
Total £19.382 billion
The myth of 'environment v economy' in the aviation debate
8.4 The aviation industry is adept at the skilful use of partial information, including slanted or selective statistics, to argue that an airport is some kind of magical goose that lays golden eggs. Media reportage of such claims is often uncritical, so that the public is usually unlikely to be presented with an informed critique of grandiose claims by airports.
8.5 The issue of an airport expansion is most commonly resolved into the false argument of economic benefits v environmental disbenefits, and the latter are usually presented as noise nuisance and loss of greenbelt - as though climate change and other huge negative economic impacts of aviation simply didn't exist.
Does aviation really create jobs?
8.6 A study by Oxford Economic Forecasting, based on 1998 figures, argued that aviation directly employs 180,000 people (0.8% of the total) and supported up to 3 times as many additional indirect jobs. [ 42 ] But there is nothing special about aviation when it comes to creating jobs - all sectors of the economy sustain jobs. The more money passes through that sector, the more jobs it will sustain. But there are two crucial factors to bear in mind:
a. There is an 'opportunity cost' involved. All the money that consumers choose to spend in the aviation sectors, they are choosing not to spend in another sector of the economy. Jobs created in aviation result in jobs not created in other sectors of the economy.
b. Aviation is extremely capital-intensive and resource-intensive. A high proportion of the turnover of the industry is spent on (1) expensive technology and (2) burning fossil fuels, and therefore a relatively low proportion of its turnover is spent actually employing people compared to probably most other sectors of the economy.
8.7 However, job-creation has been a vital component in the economic myths promoted by the aviation lobby. And sometimes the numbers of jobs to be created by an airport expansion have been grossly misleading, but have served to (unjustifiably) strengthen the case for the development. For example, Manchester Airport plc announced in 1991 that it wanted to built a second runway which would create 50,000 jobs. The latter claim was based on a flawed study - but the point was made and the media continued to associate Runway 2 with 50,000 jobs. A second study on Runway 2 and job-creation was commissioned by the Airport but never published. A third, presented by the Airport to the Runway 2 public inquiry in a detailed econometric report, revised the figure from 50,000 down to 18,000 - and even then could only reach this figure by making absurd claims about the jobs to come from tourism and inward investment - but the media continued to use the 50,000 figure anyway.
[ 43 ]
8.8 Moreover, the lengthy econometric study commissioned by the Airport in that case gave the distinct impression that the choice was between building Runway 2 and creating 18,000 jobs, or not building Runway 2 and not creating any jobs. There was simply no comparison of the alternative job-creation potential of the same investment being applied to other sectors of the economy (as Manchester Airport is owned by the Greater Manchester local authorities, which could have used airport profits for purposes other than investment in airport expansion). The Green Party established through correspondence with the majority shareholder that the latter had taken no account whatsoever either of alternative job-creation potential, or of the external costs of the airport, when it decided to support the £525 million expansion of the Airport between 1995 and 2005. [ 44 ]
Do airports generate wealth?
8.9 The aviation industry is happy to spread the simplistic and questionable impression that airports generate wealth, whereas in reality airport expansion is only facilitated by consumer choice - that is, by people deciding to spend their money on aviation rather than elsewhere in the economy. Of course, if a person chooses to spend money on furniture, home improvements, car maintenance, a non-air holiday or anything else for that matter, their spending will still create jobs somewhere else in the economy. Because air travel is heavily subsidised by society - because it passes on billions of pounds of external costs to society every year, and evades billions of pounds in taxation - it simply appears good value for money. But if the cost of air travel reflected its true costs to society, and if it paid its way through taxation as other items must, then it could not appear such good value, and demand would fall. The Royal Commission on Environmental Pollution has attributed the rapid growth of aviation to the fact that aircraft and aviation fuel escape any kind of taxation. [ 45 ] [ 46 ]
8.10 A public education programme is necessary to provide balance in the public's perception of the economics of aviation.
9. Policies for economic and ecological sustainability in the aviation sector
9.1 The latest scientific evidence on climate change, and on the contribution of aviation to global inventories of greenhouse gases, and the expected economic disbenefits of climate change, point to the need for a fundamental change in public policy towards aviation - for both economic and ecological reasons.
9.2 Recent years have seen major changes in land-based transport where traffic reduction is now part (albeit imperfectly) of most policy agendas. If international organisations, the European Union and national governments have agreed sustainable development strategies and/or greenhouse gas reduction strategies then it follows that aviation, like any other commercial activity, should be expected to play its part in delivering those reductions.
9.3 The following policies would help achieve such reductions with respect to aviation.
A European environmental charge based on emissions
9.4 The demand for aviation can be reduced by policies that build into the cost of a flight the full cost of that flight. [ 47 ] Such a policy is already accepted for the transport sector as a whole (for example, lorries) where the Polluter Pays Principle is agreed European Union policy. This can be achieved by different methods including fuel charges, landing charges and seat/ticket charges. Any or all of these pricing strategies can be used to achieve a target level of cost paid by the user and modified from time to time to reflect new calculations on the costs of noise or damage to human health or climate change effects.
9.5 Pending wider agreement, the Green Party is calling for UK regional or local authorities to be given the power to levy 'air traffic congestion charges' similar to road traffic congestion charges. The Greens on the London Assembly have called for the GLA to be given this power, and to set a charge equivalent to one-fifth of an airport's estimated external costs. [ 48 ]
9.6 The Green Party is also calling for a Zurich-style emissions charge, to discourage the most heavily-polluting types of aircraft. This is a revenue-neutral charge under which aircraft are categorised according to their emissions, and the most heavily-polluting aircraft pay greater charges. [ 49 ]
Ending all subsidies and tax exemptions
9.7 It is normal for airports to be connected at public expense to the public road and rail systems and for those systems to be expanded when demand rises. Airlines receive large amounts of funds from national governments for "restructuring," and air traffic control costs are funded partly if not wholly from public funds. All these methods of shifting costs of aviation away from users and onto the taxpayer, whether he or she flies or not, are economic distortions and should be ended together with fuel tax exemption and zero-rated VAT on aircraft, aviation fuel and airline tickets.
9.8 The Green Party is calling on the UK government to internalise aviation's external costs by means of an end to tax exemptions, plus the levying of such other taxes as are necessary to do so.
9.9 The European Union is deeply involved in funding the expansion of aviation facilities via the European Investment Bank. [ 50 ] Large sums are provided under very favourable terms and conditions. This system of loans acts as both an insulator from the normal rigours of free-market financing and as a strong force pushing up the supply of infrastructure and stimulating growth in demand. The removal of these unnecessary privileges and subsidies is a key component of any strategy to reduce the demand for air transportation.
Optimising air traffic control
9.10 The Intergovernmental Panel on Climate Change has published a report showing that an overall fuel saving of 6-12% could be achieved by implementation of an improved air traffic control system during the next 20 years. [ 51 ] This would achieve a proportionate reduction in the associated hidden costs.
More stringent noise and emission standards for aircraft and for geographical areas around airports
9.11 Communities around airports will inevitably be lighted to a degree by factors like noise and the generation of ground traffic, which has knock-on effects in terms of congestion and pollution. To a certain extent, these factors are acceptable as a matter of collective choice: if society wants air travel, there will be social and human costs. But those who are using aviation should compensate those most adversely affected by it - hence the air traffic congestion charge which the Green Party proposes for local or regional government, which would compensate the affected area by feeding the revenue into projects calculated to improve quality of life.
9.12 However, This alone in insufficient, and there should be tight controls on noise and emission, strict regulation of flight paths, and a ban on night-time flying.
Provision of alternatives to air transport
9.13 Studies show that air travel produces far more CO2 emissions per passenger kilometre than rail. Over short distances (i.e. less than 500km) air travel produces around three times more CO2 per passenger kilometre than rail. Nearly 70% of all flights within European airspace are less than 1000km long, and in 1998 there were over 7.5 million flights within European airspace. [ 52 ] So clearly there is considerable scope for replacing air travel with rail travel, and the necessary investment must be made to facilitate the shift.
Research into further alternatives to air transport
9.14 Use of email, data transfer, video link-up, tele-presence etc can reduce the need for physical travel. A high proportion of business travel could be avoided by these methods, which are also cheaper and make better use of time. Evidence on the extent to which this is happening is scarce but the experience of telework in the European Union where the substitution is for the journey to work by car shows that the potential is there to be exploited. [ 53 ]
Change in UK land-use planning system
9.15 In considering applications for airport development, independent auditing of economic justifications should be mandatory. Full weight must be given to the climate change and human health issues, external costs and alternative job-creation potential - considerations not adequately considered even in the lengthy public inquiries into Manchester's Runway 2 and Heathrow's Terminal 5.
Education on the negative economic and ecological impacts of aviation
9.16 Consumer choice in favour of air travel is heavily influenced by the fact that it's heavily subsidised and therefore cheaper (or rather, appears cheaper, the true costs being hidden by the subsidies, tax-breaks and externalities). Demand is further encouraged by an abundance of advertising, travel programmes, uncritically positive news reportage of airports as "generators of wealth", etc, which contrasts sharply with a dearth of information about the negative consequences of air transportation. Balance must be restored through a comprehensive public education effort.
"The air transport industry is growing faster than we are currently producing and introducing technological and operational advances which reduce the environmental impact at source.
"The overall environmental impact is bound to increase since the gap between the rate of growth and the rate of environmental improvement appears to widen in important fields such as emissions of greenhouse gases.
"This trend is unsustainable and must be reversed because of its impact on climate and the quality of life and health of European citizens."
European Commission, 2000 [ 54 ]
10.1 The environmental impacts of aviation, which are already huge and are continuing to grow, translate into negative economic impacts. Reducing the ecological and economic impacts can only be successful if we reduce the size of the industry.
10.2 Whilst society will doubtless continue to make use of aviation on a large scale, it certainly isn't inevitable that demand for aviation will continue to grow. Demand is artificially stimulated by direct and indirect subsidies, and if these were removed, then aviation would not be seen as such good value for money. Moreover, as public concern about climate change grows, and as people become increasingly aware of aviation's contribution to this and other problems, more people will seek alternatives. On both counts, demand for air travel will fall.
10.3 The seriousness of problems like climate change and pollution-induced illness, and the scale of the economic disadvantages, suggest that we can't leave things to chance. There must be a determined effort to reduce the negative impacts of the aviation industry. This effort must be led by government policy, as a matter of public interest and ecological sustainability.
10.4 The Green Party has led the way in advancing policies for tackling the ongoing ecological crisis and for developing a sustainable and socially just economy. We shall continue to do so, not least in the realm of aviation.
1. DETR, 1997. Caroline Lucas MEP, response to The Future of Aviation, government consultation document on air transport policy, 2001, correspondence with the author, cites an increase of 240 million, from 160 million to 400 million, between 1998 and 2020.
2. Caroline Lucas MEP, ibid.
3. World Health Organisation (1993) Community Noise, p83.
4. WHO (1993), p99. A 1995 study of school children around Munich Airport (Natural Resources Defense Council, 1996) noted that those children living in areas affected by aircraft noise had poorer long-term memory recall, reading comprehension and overall tolerance levels than did children in a comparable urban environment unaffected by aircraft noise. A study around LaGuardia and JFK International Airports in the USA controlled for racial, socio-economic and educational factors concluded that high levels of environmental noise are inversely related to reading ability in primary school children. Natural Resources Defense Council (1996) Flying Off Course: Environmental Impacts of America's Airports, NRDC, Washington DC, USA.
5. See John Whitelegg, The Plane Truth, Ashden Trust.
6. External effects of transport by IWW, Karlsruhe, Germany and Infras, Zurich. IWW and Infras are the leading transport economics consultancies in Europe. This report was dated 1994 and appears to be the most up-to-date study. Figures have been factored up by 48% in line with the rate of growth of the industry since the IWW/Infras research, and converted into sterling on the basis of 1 Euro = £0.60.
7. Airports and the Environment, edited by Anne Paylor, MDIS Publications Ltd, Chichester, West Sussex, 1994. Konzepte Studie zur Umweltsituation des Rhein-Main-Flugahafens Frankfurt/Main, TUV Rheinland Gruppe, 1992.
8. Source: http://www.hounslow.gov.uk/es/monitor.html .
9. Pease 1999.
10. See Pigs Might Fly: A Green economic critique of Manchester airport's expansion, North West Green Party, April 1996.
11. NRDC 1996.
12. Source: British Lung Foundation (1998) Transport and Pollution: the health costs.
13. Environment Protection Agency (1993) Estimation and evaluation of cancer risks attributable to air pollution in SW Chicago, EPA, Washington DC, USA. Conclusion: these pollutants contributed to elevated rates of cancer incidence in the vicinity of Midway Airport (SW Chicago). Midway's arriving and departing planes contribute far more of these toxic pollutants than other industrial sources within a pre-defined 16 square mile study area. The EPA study estimates that aircraft engines are responsible for 10.5% of the cancer cases in SW Chicago caused by toxic air pollution.
14. UK government figures.
15. External effects of transport by IWW and Infras, ibid.
16. IPCC, Special Report on Aviation and the Global Atmosphere.
17. See Aircraft and Our Atmosphere: Air Transport and Global Warming. Green Party Transport Policy Working Group, March 1997.
18. Atmospheric Research and Information Centre (ARIC), Manchester Metropolitan University, correspondence with Spencer Fitz-Gibbon.
19. See Intergovernmental Panel on Climate Change (IPCC) report Aviation and the Global Atmosphere, June 1999.
20. Sustainable Aviation: The Need for a European Environmental Aviation Charge, European Federation for Transport and the Environment, Brussels, 1998.
21. See Climate Change: Crisis and Opportunity, Green Party, forthcoming.
22. External effects of transport by IWW and Infras, ibid.
23. Source for Tables 1 and 2: Green Party calculations based on External effects of transport by IWW, Karlsruhe, Germany and Infras, Zurich. IWW and Infras are the leading transport economics consultancies in Europe. This report was dated 1994 and appears to be the most up-to-date study of this kind. Figures have been factored up by 48% in line with the rate of growth of the industry since the IWW/Infras research, and converted into sterling on the basis of 1 Euro = £0.60. AirportWatch arrive at an overall estimate of about £3 billion a year external costs for UK aviation in 2000: see http://www.airportwatch.org.uk/briefings/externalcosts.htm .
24. European Environment Agency TERM 2001 report, INFRAS/IWW study, cit AirportWatch, 'AirportWatch Aims', http://www.airportwatch.org.uk/about/aims.htm .
25. AirportWatch, 'AirportWatch Aims', http://www.airportwatch.org.uk/about/aims.htm .
26. Cit Airport Watch, 'Briefing Note on the External Costs of Aviation', http://www.airportwatch.org.uk/briefings/ecost1.htm .
27. See Brendon Sewill, Tax Free Aviation, published in December 2000 by the Aviation Environment Federation with the support of Friends of the Earth, Transport 2000, Gatwick Area Conservation Campaign, HACAN Clear Skies, North West Essex and East Herts Preservation Association and Manchester Airport Environment Network.
28. AirportWatch briefing 'Aviation, the Economy and Taxation', http://www.airportwatch.org.uk/briefings/econ6.htm .
29. Caroline Lucas MEP, response to The Future of Aviation, government consultation document on air transport policy, 2001, correspondence with author.
30. AirportWatch briefing 'Aviation, the Economy and Taxation', http://www.airportwatch.org.uk/briefings/econ6.htm .
31. Cit AirportWatch briefing 'Aviation, the Economy and Taxation', http://www.airportwatch.org.uk/briefings/econ6.htm .
32. DETR Air Traffic Forecasts.
33. Caroline Lucas MEP, response to The Future of Aviation, government consultation document on air transport policy, 2001, correspondence with author.
34. DETR, ibid.
35. Caroline Lucas MEP, ibid.
36. Caroline Lucas MEP, ibid.
37. Caroline Lucas MEP, ibid.
38. AirportWatch briefing 'Aviation, the Economy and Tourism': http://www.airportwatch.org.uk/briefings/econ2.htm . Note how this has increased as air transport has grown: in 1997 UK air travellers abroad spent £13.4 billion whereas foreign travellers by air to the UK spent £9.9 billion, giving a deficit of £3.5 billion: Y Van de Pol (1998) The Myths of Flying, Friends of the Earth, Amsterdam.
39. See, eg, Financial Times 13.3.2000.
40. A study by Oxford Economic Forecasting, based on 1998 figures, argued that aviation contributes £10.4 billion to the Gross National Product (1.4% of the total). It concluded that, if the number of passengers were not allowed to grow at all beyond 1998 levels, £30 billion a year would be lost to the economy by 2015: AirportWatch briefing 'Aviation and the Economy' http://www.airportwatch.org.uk/briefings/econ3.htm .
41. This was the clear conclusion of an independent report commissioned from consultants Berkerley Hanover by the local authority group SASIG and published in 2000: Airport Watch briefing 'Aviation and the Economy' http://www.airportwatch.org.uk/briefings/econ3.htm .
42. AirportWatch briefing 'Aviation and the Economy' http://www.airportwatch.org.uk/briefings/econ3.htm . See also <http://www.airportwatch.org.uk/briefings/Employmentbriefing.doc> or PDF version:
43. See Cloud Cuckoo Land: The sad truth about jobs and Runway 2, Manchester Green Party, March 1996.
44. Correspondence between Spencer Fitz-Gibbon and the chief executive of Manchester City Council.
45. The RCEP said: "….the demand for air transport might not be growing at the present rate if airlines and their customers had to face the costs of the damage they are causing to the environment." Royal Commission on Environmental Pollution, 18th Report on Transport and the Environment.
46. Two reports published in 1999, dealing specifically with these issues, came to different conclusions. The Contribution of the Aviation Industry to the UK Economy was prepared by Oxford Economic Forecasting (OEF) for a consortium of the UK's major airport operators and airlines and DETR. Transport and the Economy was prepared by the Standing Advisory Committee on Trunk Road Assessment (SACTRA) for DETR. Although SACTRA's general remit deals with road transport, the latter report addresses the impact of all transport modes.The SACTRA report addressed the question of whether improvements in transport infrastructure and increasing transport capacities lead to increased economic activity. It concluded that although there are theoretical reasons why improved transport infrastructure could lead to more economic activity, the empirical evidence for this is weak. Moreover, in a mature economy with developed transport systems (such as the UK), contribution to economic growth from improved transport is likely to be modest: SACTRA (1999), p17. It also concluded that it isn't possible to give a complete and unbiased estimate of the economic impact of transport without an assessment of environmental costs and that, since transport improvements connect different locations and areas, the benefits do not necessarily accrue evenly: SACTRA (1999), p22. There may be losers as well as winners as a result of more competitive areas gaining improved access. Improved access could lead to loss of employment at particular locations. The OEF Report argues that there are important links between economic growth and aviation. These, it says, derive from the contribution aviation makes in its own right to employment, production, exports, investment, and the impact it has on the performance of other industries as a facilitator of economic growth and rising productivity. OEF produce quantitative estimates of the negative economic effects of restricting air travel, including the claim that restricting passenger growth to 3.5% per annum rather than the predicted 4% would reduce UK GDP by 2.5% by 2015, or £30 billion at 1998 prices. They estimate that over the last 10 years the impact of aviation growth in the UK economy has been to increase output in the whole economy by about $550 million per year. The OEF report lacks credibility. Its terms of reference exclude environmental costs, so it presents an incomplete analysis. In fact it may be that the beneficial effects (including economic benefits) of restricting air travel would be greater than any unproven estimates of reduced economic growth. Its data and methodology are also flawed. Some of these data are estimates of the required variables (such as the indirect employment caused by aviation), and its methodology makes simplistic assumptions about the nature of the links between aviation and economy that the SACTRA report reveals to be complex and context-dependent. The theoretical justifications made by OEF for the links between aviation and economic growth are weak. It is claimed for example that excellent air services are a key factor in foreign direct investment decisions and that the UK leads Europe in terms of such investment at least partly because of excellent accessibility by air. No convincing evidence has been produced to justify this claim. Good air services are necessary, but any incremental enhancement from an already high level is unlikely to make a significant difference compared with other advantages that the UK offers such as language and financial incentives. (See Airports Policy Consortium (1997) Efficiency and Equity, Policy Paper 1, Surrey UK.) Manchester Airport plc made similar claims when arguing that its proposed Runway 2 would create thousands of jobs from inward investment. Yet: (a) air accessibility is only one of a company's requirements, and seldom the highest priority - other regions were achieving higher levels of inward investment than the North West, despite lesser air accessibility (see Pigs Might Fly, North West Green Party, op cit); and (b) potential for inward investment would depend more on the availability of land than on the number of runways at Britain's third biggest airport - meaning, in this case, pressure to build on large areas of greenbelt, which would by no means be welcomed whatever the size of the local airport. Finally, restrictions on the growth of air travel are unlikely to result in a loss of jobs. This is because the long-run level of employment is determined more by the supply of labour than the level of demand in particular industries.
47. See Dutch Centre for Energy Conservation and Environmental Technology (1998), A European Aviation Charge. Feasibility Study, A Bleijenberg and RCN Wit, Centre for Energy Conservation and Environmental Technology, Delft, Netherlands. Other work carried out independently of the Dutch Centre for Energy Conservation and Environmental Technology arrives at similar conclusions. (Brockhagen and Lienemeyer, 1998, Proposal for a European Aviation Charge. Design and implementation with respect to international economical, ecological, legal and political constraints.
48. See Lucy Williams and Spencer Fitz-Gibbon, Air Traffic Congestion Charging: The Potential at Heathrow, July 2002, www.greenparty.org.uk/reports .
49. See Williams and Fitz-Gibbon 2002, ibid.
50. The EIB in 1998 provided 5.4 billion Euros in loans to transport infrastructure projects, of which 1.25 billion Euros was for air and maritime transport. These loans funded increases in capacity at Hannover, Edinburgh, Heathrow, Gatwick, Bologna, Athens, Reunion and Madeira Airports. They also funded airline fleet renewals in Austria, Spain, Portugal, Luxembourg and Sweden. Annual Report 1998, European Investment Bank, Luxembourg.
51. Caroline Lucas MEP, response to The Future of Aviation, government consultation document on air transport policy, 2001, correspondence with author.
52. Energy and emissions profiles of aircraft and other modes of transport over European Distances, Centre for Energy Conservation and Environment Technology, Delft, 1997.
53. Source: http://www.telework-mirti.org .
54. Communication on Air Transport and the Environment (COM(1999)640-C5-0086/2000).