John Spellar – 2002 Speech to UK Aviation Club

Below is the text of the speech made by the then Transport Minister, John Spellar, to the UK Aviation Club on 3rd July 2002.

Thank you for inviting me here today. It’s a delight to be able join this auspicious occasion, which brings together so many of the leading lights in the aviation industry.

And with that in mind, I’d like to begin today by making an announcement about the launch of our consultation proposals on airport capacity . . . but unfortunately, I’m going to have to disappoint you.

In the meantime, please be assured the air transport White Paper remains very much a top priority. And to that end we want to issue our consultation documents covering all the UK regions as soon as we can.

And whatever you might have read in the papers let me stress here and now, we’ve not made up our minds in advance about what or where.

It’s vitally important that we have an informed public debate on these matters – and one that is genuinely open and frank.

With that in mind, the consultative process will be what it says – the documents will inform key stakeholders and the public on the issues, as fully and as fairly as we can.

And once those documents have been finalised and dispatched, your comments and that of others on the different options will be genuinely welcomed. The industry needs to realise the importance of engaging actively.

At the end of this process, we’re going to be setting the pattern for aviation in the UK…not just for today and tomorrow…but for the next 30 years.

Currently, Britain is a major player in the aviation industry. You probably know the facts and figures better than I do. But let’s remind ourselves:

A quarter of all international air journeys in the world are to or from the UK.

In turn, the UK accounts for over 40% of all air travel between Europe and the USA.

We have an annual £13 billion of inward tourism – 1½ per cent of GDP.

Industry and commerce, increasingly relies on the efficient and rapid transport of goods by air.

And in total, the aviation industry, directly employs over 180,000 people in the UK, and indirectly supports up to 3 times as many jobs on top of that.

I make no apology for repeating those facts. Our current prominence in this transport sector is what makes the issue of future capacity so crucial. Not just to the businesses and individuals in the industry and all they serve – but also to the economy as well.

As we all know, in an age of increasing globalisation, where products can be designed and developed in one country, assembled in another and then distributed around the world – for many people, international business travel by air is a way of life.

However, let’s not forget that by value, one fifth of all UK trade now goes by air – much of it in high-value pharmaceutical and IT goods.

And whilst the great majority of air freight continues to be carried in the bellyhold of passenger aircraft, and from airports in the South East – dedicated freighter traffic has been growing steadily by around 27% a year, in the regions.

And nearly half of all dedicated freighter traffic – by value and tonnage – is concentrated on East Midlands airport. The presence there of several dedicated express freight operations has served to create strong growth in this market sector.

And this growing success story reminds us of course, that airports are not only central to our trade and competitiveness as a country. They are also significant employment generators in their own right.

The most obvious example is of course, Heathrow. The UK’s premier airport for half a century, it handles 20 million more international passengers per annum than any other airport in the world. As such, it contributes very significantly to London’s position as a world city.

But the airport is also the largest employer in the locality. Half of its 68,000 workforce live in the London Borough of Hillingdon and its immediate neighbours.

In turn, it’s not just the dominant employer. BAA’s education programme helps many thousands of young people in those areas every year prepare for the world of work, through ‘work experience’ placements, workshops and other training initiatives.

What’s more, the airport promotes business with local firms. Much of this is done via an annual trade event designed to foster links with local businesses in the area. In the year before last, contracts worth a substantial £10 million were generated between major airport companies and local businesses following this event.

And in total, BAA Heathrow procurement to the Region is estimated to be worth over £180 million. So the impact the airport has on the surrounding community and its economy is very substantial indeed.

Neither can we forget that many large and international companies chose to have corporate headquarters within a stone’s throw of Heathrow – each of which brings additional employment, prosperity and prestige to those localities.

And although the East and South East of England clearly predominate, aviation also accounts for significant direct employment in other regions too, especially the north of England. I mentioned growth at East Midlands airport, in Manchester too, many new jobs have been created as a result of the airport’s expansion. At least 12,000 extra jobs are predicted by 2005 as a result of the airport’s expansion.

In addition, just as in the case of Heathrow, regional airports generate significant amounts of indirect employment – either in terms of attracting inward investment, or clusters of businesses needing easy access to air services.

However, we all know that our obvious success in the international aviation market and the associated economic benefits cannot be sustained unless we review and make decisions about future capacity. And if we fail to accurately respond to capacity needs, Britain will lose out.

For example, if the right capacity isn’t there, as in any market, shortage of supply will push up prices. Our studies show, for instance, that flights from the main airports in the South East could typically cost £100 more, in real terms, by 2030 if no additional runway capacity were provided over that period.

In contrast, our studies clearly indicate that the provision of additional airport capacity in the South East of England would generate large economic benefits.

Needless to say, benefits would mainly be to air passengers, but by default additional direct and indirect benefits would inevitably accrue to UK airlines and the UK economy through increased productivity and inward investment.

But our studies are not about ‘predict and provide’. As I say, our minds are not made up.

However, Government does recognise that there are distinct benefits in having a major hub airport, capable of serving the widest range of destinations. There are also difficulties. However, it’s the only viable means for airlines to operate wide route networks, with more frequencies on the thicker routes that are in turn supported by good domestic and regional connections.

This is something our main European competitors already understand only too well, and have sought to provide for at Amsterdam Schipol for example, as well as at Frankfurt and, notably Paris Charles de Gaulle.

Indeed. Charles de Gaulle was conceived in the 1970s as a hub, and who would have thought 30 years ago that the subsequent expansion in air traffic would have been sufficient to merit its considerable expansion and growth. Yet it has and with that in mind, the French Government wisely located the airport in an area that could easily cope with high levels of growth.

Other countries have also recognised, and sought to exploit, the benefits of a large airport with a good network of services. You only have to look at the growing success of Copenhagen airport.

It’s not dissimilar in size to Manchester airport, with two runways. But with its network of routes, Copenhagen has been able to develop into a hub for Scandinavia as a whole, feeding traffic to Sweden, Norway and Finland.

This arguably gives it a prominence well above what natural geography might suggest and is impacting on the business of other airport outside of Scandinavia. And by attracting international traffic, Copenhagen is reaping the benefits, rapidly boosting its regional and economic status.

But while it’s true to say that size matters – the larger the airport, the bigger the potential problems, too. We know from previous public consultations that the key concerns of the public about airports (not surprisingly) revolve around noise, air quality and local road congestion.

If the consumer benefits of further development in the South East are potentially large, so too are the potential environmental concerns. As such, the willingness of the aviation sector to tackle these environmental factors vigorously and effectively will be crucial to any decision to expand.

As a part of the consultative process, we shall be specifically inviting views on what sorts of steps will be needed to deal acceptably with these issues, particularly in those cases where expansion of existing airports may be an option.

On noise, for example, it’s true to say that the number of people affected by noise at Heathrow has dramatically reduced over the last 20 years. And our policy is to do everything practicable to continue improve the noise climate at Heathrow over time. That’s why strict conditions have been imposed in the planning approval for Terminal Five.

But maintaining the progress on noise will require the industry to commit itself to further improvements. So is the industry prepared to invest in engine and airframe technology, and produce quietest available aircraft in return for further capacity?

On air quality, the UK will be obliged to comply with mandatory EU limit values in relation to various air pollutants – nitrogen dioxide (NO2) for example being one of them and of which aircraft are a major source of emissions.

The third big issue we have to deal with in terms of extra capacity is land access, particularly road congestion.

We are very committed to seeing public transport access to airports improved to help reduce both congestion and pollution on nearby roads. Our consultation documents will address that, including how improvements to rail access might be made, and paid for.

There are undoubtedly large benefits to be reaped from further growth. But we must also have a clear programme for tackling the impacts which come from growth. The public deserves nothing less. And nothing less will satisfy our commitment to the sustainable long-term development of aviation in the UK.

Before I conclude, let me say a brief word on security. Not surprisingly, it is an issue that has been particularly prominent in people’s minds since the tragic events of 11 September last year.

Having learned our lessons the hard way, following the equally tragic attack on flight Pan Am 103 over Lockerbie in December 1988, the UK already had one of the most demanding aviation security regimes in the world. That meant we were in a far better position than most countries to respond to the attacks in New York and Washington. Earlier in the year I was involved in a visit by a US congressional committee, who were looking to draw on our hard-won expertise in aviation security.

But we are not complacent. Aviation security in the UK remains at an enhanced level, in recognition of the continuing threat – which remains higher in the UK than in most other European countries.

We took new powers in last year’s emergency anti-terrorism legislation, and we’re in the process of using those powers to introduce a system for approving providers of contract security services.

In turn, we are engaging with the industry to consider how day to day implementation of security measures can be improved – my Department’s Director of Transport Security recently hosted a seminar with a hundred industry representatives to discuss how standards could be raised.

And we’re also busy on the international front to ensure appropriate enhancements in international security standards. This is in recognition both of the need for a “level playing field”, and the fact that the threat could come from incoming aircraft as well as from those departing the UK.

To sum up, I think you’ll agree that there are some tough decisions ahead with regard to future capacity. To succeed, we must face up to and be prepared to address the longer-term realities.

When it comes to taking decisions on capacity, the Government needs to know what the industry, for its part, can – and will – deliver.

The challenge is as much for you – as it is for Government – to convince the country that the potential benefits can be obtained at an acceptable cost and with minimal impact on individuals and society at large.

So now I look to you to take that lead. The continuing commitment and energy of all those who work within UK aviation will be a vital part of the process, to help us forge a responsible and sustainable future for the industry.