Special Report: The future of aviation

Friday, January 16, 2009

Transport Secretary Geoff Hoon's announcement that the government has approved the construction of a third runway at Heathrow has provoked high emotions from the residents and environmentalists in opposition and the industry bodies in support. For the aviation industry, big questions remain. Should we go on expanding aviation to meet economic demand? What alternatives are there?

Dramatic increases in aviation flights over the last 60 years have revolutionised the way people navigate the globe. Now, a perfect storm has accumulated involving turbulent fuel prices, congested routes, oil depletion, global economic slowdown and increasing spotlight on aviation's contribution to total greenhouse emissions. Expect some tough decisions on tax, growth, investment and travel choices.

The government's approval of a controversial plan to build a third runway at Heathrow Airport despite huge opposition from residents, environmental campaigners and many MPs has underlined the high stakes involved. No other issue so starkly illuminates the huge conflict between economic and environmental aspirations.

Most of us accept the need for reduced carbon emissions, new technologies and travelling greener. But should we block expansions and encourage alternatives? Or encourage growth, while at the same time investing in research and development?

A growing band of experts looking at the present situation argue that we need to take a long-term view. The question is one of balance. Emissions reduction targets cannot be achieved without the aviation industry on board. Yet it is feared that recovery from recession will be greatly impeded by scaling back plans to expand the industry.

In this special report, Public Service Review brings together key thinkers from government, lobby groups, private sector and industry who agree that we must face up to these challenges but they profoundly disagree on the ways to confront them.

Mary Peters, US Secretary of Transportation, speaks of the need to develop competition in industry to ensure that passengers get a better deal, while Peter Lockley, Head of WWF-UK, claims that, as growth of the aviation industry runs counter to the government's environmental policies, it should drop all plans to expand the UK's airports. Chairman of the Environment Agency, Lord Smith agrees that the government's 80% emission reduction target should take precedence.

But Barry Humphreys, Director of External Affairs and Route Development at Virgin Atlantic believes that this strategy would be highly detrimental to economic growth. Instead, he suggests investments in technological solutions, inclusion of aviation in the Emissions Trading Scheme and pushing forward the Single European Sky proposal. Angela Gittins, Director General of Airports Council International, urges that capacity and contribution to economic development must not be impeded.

Experts are at loggerheads, Lockley challenging the government to cut one in every five flights, Humphreys urging that, unless there is expansion, there will be huge setbacks for the UK economy.

So should aviation capacity be increased indefinitely? Might alternatives be developed? We invite you to read the insights of our expert panel and offer your own opinion.

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Mary E Peters, US Secretary of Transportation, US Department of Transportation

Reliable transportation is increasingly a challenge for the travelling public. Substantial changes are under way for airlines, especially as they find ways to offset rising fuel costs. One proven way to manage these increases is to ensure that travellers are using a more efficient and reliable system of air travel.

Consumers are rightfully demanding on-time arrivals and departures, and I have proposed steps that will reduce congestion, keep airfares affordable and increase passenger throughput by using a fundamental economic principle – pricing.

The basics behind pricing are simple – and you already know the concept.

It's why using your mobile at night is cheaper than during your lunch hour.

But airlines pay the same price for takeoff and landing slots regardless of congestion levels. Accordingly, the number of delays at popular flying times and into popular airports has exploded.

Airlines prefer the broken status quo. Their lobbyists assert that pricing is not an effective mechanism to balance supply and demand for air space and airport capacity.

In our economy, pricing works not only to balance supply and demand, but also to add capacity where it's needed – instead of where politicians want it.

I don't begrudge an industry's efforts to protect its interests. But my business is protecting consumers, fostering competition and providing reliable travel. Moreover, independent economic experts of all political stripes agree that slot auctions (an approach whereby an airline that most highly values a takeoff and landing slot is able to utilise it) or congestion pricing is far preferable to the status quo.

The US airline industry has amazing achievements over the last 25 years. Today, we have one of the safest aviation systems and most diverse flying publics in the world thanks to those achievements and a policy of airline deregulation.

Pricing has helped improve efficiency and reliability across a broad spectrum of consumer services, and it deserves to be applied to aviation congestion.

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Roderic Jones, Professor in Atmospheric Science, Department of Chemistry, Principal Investigator and Director of Institute and Dr Helen Rogers, IAE Research Liaison Centre for Atmospheric Science, University of Cambridge

Aviation's impact on the climate system is not only from CO2 emissions, but is also due to other effects such as emissions of nitrogen oxides, which influence atmospheric greenhouse gases, and the formation of contrails and aviation-induced cloudiness.

Industry and government have often attempted to account for these additional effects through the use of a single uplift factor, where the net climate impact of aviation is assumed to be a multiple of its CO2 emissions. The appeal of an uplift factor is in part due to its simplicity of use, since aviation's emissions of CO2 are directly proportional to fuel burn, a well-known quantity for any aircraft operator.

But there are dangers in this approach, since it incorrectly assumes that all climate effects due to aviation are proportional to the amount of CO2 emitted. For example, if you take the example of aviation-induced cloudiness, it is likely that the distance flown rather than the fuel burned is the important parameter, and in the case of emissions of nitrogen oxides, the geographical location and altitude of aircraft during flight influences the climate impact.

So should we be concerned if industry and government use a simple uplift factor? Yes, as flawed policy measures and technological choices may then be applied to aviation that may even negate other anticipated mitigation options for climate change.

Instead, we suggest that an appropriate range of analytical tools are used to evaluate the climate impacts of the various emissions from aviation, as well as to compare the impacts of aviation relative to other transportation and energy sectors.

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Peter Lockley, Head of Transport Policy, WWF-UK

The challenge for aviation is simple and profound: continued rapid expansion of the industry is incompatible with a genuinely low carbon UK. On 16th October the government accepted the Climate Change Committee's recommendation that the UK's carbon target should be at least an 80% cut from 1990 levels by 2050, and that if aviation and shipping do not achieve this level of carbon reduction themselves, other sectors would have to compensate.

WWF's analysis suggests that to comply with such cuts in carbon emissions, the most we can feasibly allow is for aviation to stabilise its emissions at around today's levels – and it must be noted that this represents very special treatment in comparison with all other industries, which are expected to make radical cuts.

The challenges for policy-makers are: first, to understand that growth of the aviation industry runs counter to government's environmental policies, and therefore to drop plans to expand the UK's airports; second, to produce a plan that will allow British businesses to stay connected in a low carbon, or indeed an oil-depleted, future.

The latest generation of video-conferencing technology offers an attractive alternative to many business flights, and progressive companies are already saving time, money and carbon by replacing flights with virtual meetings. WWF is promoting video-conferencing and high-speed train travel through its campaigning, by challenging businesses to 'Cut 1 in 5' flights. Government should be encouraged to cut flights too, and with the money saved from departmental travel budgets, it could fund regional videoconferencing centres accessible to smaller companies unable to afford their own equipment – helping them to fly less, yet remain productive.

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Rt Hon Lord Smith of Finsbury, Chairman, Environment Agency

The greatest challenge facing the aviation industry is the same one we all face: adapting to climate change. I have yet to see evidence that unconstrained expansion is compatible with our ability to reduce greenhouse gas emissions by the 80% target that the government has now adopted. There will of course be a need for continued air travel into the future; but we need to think carefully about how to minimise – rather than maximise – its impact on the global climate.

The issue of air quality and the growth in emissions at a more local level also means that the future patterns of air transport need to change. I am not anti-aviation, but the Environment Agency's remit is to ensure that environmental dimensions are not overlooked in the decision-making process.

I have consistently believed that the proposed third runway at Heathrow would have an unacceptable effect on air quality and on people's health in that area. I think the government has not yet taken this inevitable and detrimental consequence of expansion seriously enough.

Nor do I agree that expansion at Heathrow is essential for business. The number of short haul flights would, for example, be reduced by a high-speed rail link within mainland Britain, which could provide a very sensible environ-mental solution.

The Environment Agency is not against development for its own sake, but it must not be to the detriment of our environment. We should all be working together to secure the most sustainable future we can.

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Barry Humphreys, Director of External Affairs and Route Development, Virgin Atlantic Airways

The Director General of the International Air Transport Association, Giovanni Bisignani, has described the economic challenges currently facing the airline industry as "the perfect storm". High oil prices and economic downturn have combined to reduce profits and growth, and raise questions about the very survival of several carriers. These are tough times for the airline industry as a whole throughout the world, and UK airlines are suffering along with their foreign competitors. Already XL Airways and Silverjet have been forced to declare bankruptcy.

But amid all the current gloom we need to take a longer-term perspective. Growth and prosperity will eventually return. When they do, we will again be faced with an acute shortage of airport capacity, especially in the South East of England. Heathrow in particular desperately needs a third runway to compete with Continental hubs. The economic benefits of the third runway for the UK are substantial and a government decision whether to approve construction is expected before the end of the year. A failure to press ahead with the new runway will be a major setback for the UK aviation industry, and indeed for wider UK business interests.

The objectors to Heathrow's expan-sion argue that the environmental costs are too high. There is no doubt that aviation is a polluter, despite accounting for less than 2% of global CO2 emissions. The industry has accepted that emissions are a major hurdle to be overcome if it is to be allowed to continue growing. Enormous effort is being devoted to finding technological solutions to the underlying problems, and firm commitments to dramatic improvements over the coming years have been made. In the meantime, aviation is to be included in the European Emissions Trading Scheme.

However, the industry alone cannot achieve a breakthrough. Governments also have a role to play. Nowhere is this more evident than in the provision of air traffic control services in Europe. There has to be a more logical and efficient model than the current patchwork of services, with each country jealously guarding its national sovereignty. It has been estimated that airlines could use 12% less fuel, and therefore emit 12% less CO2, if air routeings across Europe could be straightened. The Single European Sky proposal is designed to do just that.

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Tina Tietjen, Chairman, Air Transport Users Council

The most obvious difficulties currently facing the aviation industry today are economic. Airlines, in particular, have been hit by a double whammy of falling demand and rising fuel costs. But airports are not immune: they depend on airlines for their income, so they will not want to see airlines reducing services to cut their costs.

Meanwhile, all aviation industry players – including passengers – must face up to their impact on the environment in order to have a sustainable future. Mitigating those impacts comes at substantial cost.

Airlines must invest in new fuel-efficient aircraft – which are less polluting and cheaper to run. Airports and air traffic control service providers must provide infrastructure that enables the airlines to use their aircraft as efficiently as possible. But they all need the co-operation of governments, who control the planning regimes and sovereign airspace, to enable them to meet that objective.

Finally, air passengers are going to find themselves meeting the costs of the environmental impact of their air travel. The era of cheap air travel may or may not be coming to an end. But if we are going to have to pay substantially more for our air travel, the industry will have a sustainable future only if it meets the challenge of providing us with the service we want at a price we are prepared to pay.

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Angela Gittens, Director General, Airports Council International

Sustainable aviation is our greatest future challenge. Achieving that vision will depend on continued progress in three key areas: environment, system-wide capacity and continuing economic contributions.

Over the past two years, aviation stakeholders have joined forces on collective environmental efforts to reduce our carbon footprint. Airports, airlines, air traffic managers and manufacturers are working together to define and pursue new options for greater fuel efficiencies. This is a shared commitment that has joined the ranks of our top priorities safety and security. Research and development will play a key role in bringing new solutions to the table.

Adequate capacity is the second challenge to address without delay. ACI's latest traffic forecasts indicate that 10 billion passengers will use the world's airports by 2027 – double today's traffic. In 2007, airports committed over US$42bn to airport expansion and renovation projects. We must maximise the benefit of new technologies that help us to perform more efficiently and cost-effectively and that enable us to provide high quality service in a simplified and streamlined end-to-end process that enhances the travel experience.

The third challenge is aviation's contribution to stable economic development – a role that must not be diminished. For local communities and their regions, airports provide employ-ment, facilitate commerce and attract new business development. It is a challenge to ride out cyclical economic downturns, as we are experiencing today. That is why co-operation through-out the industry must focus on long-term solutions that translate into a steady and healthy economic input. By targeting these three areas, we can make a significant contribution to meeting aviation's challenge for a sustainable future.

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Mike Ambrose, Director General, European Regions Airline Association

Air transport's problems resulting from soaring fuel prices are now vastly overshadowed by the larger economic crisis.

States, regulators and politicians need to recognise that we are not far off from a situation in which investment in air transport development will cease because the cost of uncontrolled additional regulations will have changed the balance from 'prudent investment' to 'lottery'.

There is a finite limit to the additional costs that airlines can absorb and still remain financially viable, especially when coupled with poor market conditions and unprecedented fuel costs. In the next 12 months, many airlines could approach that point and Europe, especially its peripheral regions, could suffer accordingly.

Against this background, which is far worse economically than the conditions experienced in the aftermath of the 9-11 tragedy, we find an ardent determination by regulators to pursue the implementation of Emissions Trading for aviation. The concept of an Emissions Trading Scheme (ETS) is supportable but its formulation is being undertaken by a process that does not require evaluation of the potential effects of individual amendments. In October 2008, more than 1100 amendments to the mother directive were proposed without any form of impact assessment. When so much is at risk – company survival, jobs, international access for Europe's regions – this is not just grossly unacceptable, it is thoroughly irresponsible.

Our greatest challenge now is to make governments recognise that air transport is an essential tool for helping to rebuild European economies.

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Paul Steele, Director Aviation Environment, International Air Transport Association

The aviation industry has been growing historically by 5% each year but technological and operational efficiencies mean its carbon footprint has grown by just 3%. However, a growing carbon footprint is unacceptable for any industry and aviation is no exception. So, the first challenge for the industry is how to get its emissions growth down to zero.
 
IATA's four-pillar strategy aims to achieve this: develop new fuel-efficient technologies, including for airframe, engines and alternative fuels such as sustainable biofuels; fly more efficiently through improved procedures and techniques; make infrastructure such as air navigation services more efficient. In addition, explore positive economic instruments, such as favourable depreciation regimes for using more fuel-efficient aircraft.
 
The second challenge is persuading governments to help the industry reduce its emissions. Many governments impose taxes that do nothing for the environment but drag their feet when it comes to the steps that make a difference. For example, the governments of the European Union could save 16 million tonnes of CO2 a year a year by implementing a "Single European Sky" for air navigation.
 
The third challenge is communications. There are a lot of myths surrounding aviation's role in climate change. We need to ensure that decision makers are aware of the facts and are not led astray by special interest groups that make erroneous claims. Aviation is not the fastest growing cause of climate change but the important point is to talk about the steps the industry is taking and the steps politicians need to take.