Tax reductions are expected to drive demand
3 June 2015 (NATS)
Each year NATS produces UK flight forecasts in order to ensure we can efficiently manage the flights our customers wish to fly. Starting with an estimation of the passenger demand for air travel, we convert that demand into flights using assumptions on load factors, aircraft size and airport capacity constraints.
Demand for air travel is driven by various factors, with economic growth affecting propensity to travel being the most important. And we look at things like changes in tax, the UK’s Air Passenger Duty (APD) for example, which make it more or less affordable for people to travel.
Introduced in 1994, APD paid by passengers flying from UK airports, with a £5 rate for the flights to Europe and £10 for the rest of the World. Since then there have been numerous changes which we have had to factor into our forecasts – the introduction of bands based on distance, class of travel and aircraft type as well as increases to the value of duty itself.
The aviation community has long argued that having the highest flight tax in the world makes the UK less competitive than our European counterparts. At NATS, we have always been clear that what damages our customers, also damages us. A 2013 [1]PricewaterhouseCoooper study claimed that scrapping APD could not only pay for itself, but may add an immediate boost to UK GDP of 0.45% in the first 12 months, averaging at 0.3% for the following years through a boost in exports and tourism.
As a result the 2014 UK Budget reformed APD. The 4-band tax structure was replaced with a simpler 2-band structure based on distance flown – either below or above 2,000 miles – and class of ticket – either Economy or Business. Most passengers will save on the taxable element of their ticket with a family of four travelling Economy from the UK to the Caribbean, for instance, set to save £56. Additionally, from 1 May 2015 children under the age of 12 are exempt from paying, with a further extension planned next year to include children under 16.
Cheaper ticket prices are expected to contribute in driving passenger demand, and our modelling suggests that the 2015 APD reform is likely to attract an additional 70,000 passengers per yearwhich will benefit the UK economy.
We are likely to see further changes in demand as a result of APD reform. In 2014, the Smith Commission, set up by the Government to look at further powers for Scotland, recommended that APD be devolved. The Scottish Government has been clear that they would initially cut APD by 50%, then abolish it. Scrapping APD for flights departing from Scotland’s three main airports – Edinburgh, Glasgow and Aberdeen – could mean an Economy ticket being up to £71 cheaper and a Business ticket up to £142 cheaper, attracting as many as 2m more passengers per annum. That looks like good news for the Scottish economy!
[1] The Economic Impact of Air Passenger Duty, Pwc, February 2013 http://ift.tt/1GlZ1QK
One AirportWatch member commented:
You’ve got to be kidding !
The UK consumers have the best and most competitive airfares available to them of any traveller in the western world. APD has no negative effect on people travelling from the UK (if anything its the scaremongering by the industry that might put people off rather than anything else.)
Look at Belfast – APD was removed from USA flights in 2011 and since then – bar 2013 – traffic levels have gone down and they remain 10% below the 2010 level.
How can an organisation, with a majority government ownership, recommend the removal of a duty which is the only realistic tax contribution that the incredibly lightly taxed aviation industry pays. No fuel tax, no VAT and favourable import duties plus tax free privileges on profits for clever accounting and NATS wants to see it given even more bonuses !
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When NATS is not lobbying to help boost airline traffic, it is trying to save airlines money. Coincidentally, as well as saving fuel and saving cost, this also means emitting less CO2. Which is good.
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Record environmental savings at NATS
5.6.2015 (NATS)
NATS has enabled a reduction of more than 600,000 tonnes of CO2 emissions thanks to more efficient air traffic control procedures, improved use of airspace and innovative technology in the last financial year.
This is equivalent to £155 million in fuel savings for airlines.
The record-breaking results have been published in NATS’ 2014-15 Corporate Responsibility report, which reviews its environmental and community affairs performance, today on World Environment Day.
Last year NATS became the first air navigation services provider in the world to adopt the use of near real time airspace efficiency monitoring using an in-house developed tool called Flight Optimisation System – or FLOSYS.
The tool uses real radar data and combines it with NATS’ 3Di airspace efficiency metric to produce a graphical representation of every flight in UK airspace, meaning controllers can immediately review performance and identify areas for improvement, or best practice techniques to share.
NATS has also continued to work closely with industry leaders, including airlines, airports and manufacturers, as part of the Sustainable Aviation coalition to increase the use of continuous descent operations (CDO) around 23 airports, to save fuel and reduce airlines’ CO2 emissions, while reducing noise for flights around airports.
Last year more than 39,000 additional quieter flights were achieved through CDO, from its launch in July 2014 to April 2015. The figure remained high even with an increase of traffic.
Through these efficiency measures, NATS has reduced the average ATM related CO2 emissions per flight by 4.3%, compared to flights in 2006, exceeding its 4% target for 2014. In 2008, NATS became the first ANSP in the world to set itself targets on the environmental performance of its airspace, including to reduce average ATM related CO2 emissions per flight by 10% by 2020.
Ian Jopson, Head of Environmental and Community Affairs said: “This has been a fantastic year for us in reducing CO2 emissions and enabling fuel savings. I am delighted that NATS has been recognised for its on-going development of our 3Di airspace efficiency metric and received re-accreditation for a “Big Tick” award, as part of the Business in the Community (BitC) annual Sustainable Product and Services award.
“NATS has also been shortlisted for BitC’s “Engaging Customers on Sustainability” award for our Continuous Descent Campaign for this year’s award. BitC’s endorsement of our achievements helps us demonstrate that we consider the wider impact of everything we do.”
While reducing its environmental impact on UK airspace, NATS has also invested in energy efficient facilities and targets to reduce energy consumption (kWh) by 8.5% in the last financial year.
Only 1% of waste went to landfill in 2014/2015 and water consumption has reduced by 52% since 2006, with a 7% reduction last year.
NATS continues to support the Swanwick Lakes Nature Reserve in partnership with the Hampshire and Isle of Wight Wildlife Trust. In 2014, NATS was awarded the Biodiversity Benchmark by the Wildlife Trust for its work in managing the reserve, following a rigorous nine-month certification process.
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via Airportwatch http://ift.tt/1Iq33Hn
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