Sean Gates and Jeremy Robinson of Gates and Partners evaluate the meaning and effect of policy changes in the UK aviation regulatory regime.
Opponents of air transport in Europe (and in particular in the UK) are generally open in their opposition: aviation should pay its “fair share” of taxation (whatever that means; always an increase on whatever the aviation industry is already paying); airports should not be able to expand; airlines should stop “whingeing” about their inclusion in the EU Emissions Trading Scheme, and so on. Even as we disagree with some or all of these opinions, we can appreciate that our opponents can be recognised by their clear opposition to the industry.
If our governments were as honest in expressing opposition to aviation, we should at least know what to contend with. But instead we must question whether they really want mass air transport, when they use words as weapons to hide irreconcilable policy conflicts.
To criticise a politician for prevarication is not new; to illustrate his or her “double-think” is commonplace, but there is no need to apologise for unoriginality. The industry must fight every day: not just to put forward arguments and controvert those of its opponents (this is only the start), but to force governments and regulators to debate in clear and honest language.
The regulatory system abounds with legislation introduced to serve one purpose (apparently) but then hammered and wrought into something very different. Air Passenger Duty, ETS and EU 261 are all examples of this. Regulation frequently occupies more than its allotted territory, creating obligations and costs where none were thought to exist before. The clearest example has been how the European Commission and Court of Justice have enthusiastically, and in the best teleological traditions, interpreted and widened the scope of EU 261.
Unfortunately, this diverts attention from areas that really do require extra regulatory attention: the creation of a Europe-wide accident investigation system. Equally, it focuses attention on individual pieces of legislation, without considering how rules in one area create regulatory barriers to entry elsewhere, with consequences for the competitiveness of industry and the welfare of the consumer.
All aspects of aviation regulation must be considered together, not in isolation. There must be an honest debate about why the aviation industry should exist, taking full account of the alternative means of transport. This debate can inform an overall aviation policy.
The target of this article is not the open opposition to the aviation industry. The industry can meet that opposition. It targets the hidden opponents: bad government and bad law, whose insidious effects we cannot afford. The theme of this article is the language used to describe policy. George Orwell argued in his essay “Politics and the English Language” that English was becoming “ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.” How true is that of aviation policy?
CHAMPIONING CONSUMER RIGHTS
Controversial from the outset, EU 261 has been a difficult regulation for airlines to stomach, particularly after the volcanic ash crisis in 2010. A specific problem – the practice of overbooking by airlines – has been transformed into a general exercise in extending consumers’ rights in transport by air. Other industries are not burdened in a like degree. A greater objection is that this broad regulation has created a false opposition between airlines’ and consumers’ interests, when in fact their interests are more often aligned: the extra cost of unintended (or at least, not openly intended) regulation is found in the higher cost of air transport, to the disadvantage of both consumers and airlines. Fares rise: those consumers who still fly must pay higher prices in return for their extra consumer rights (so there is a loss of consumer welfare, scarcely balanced by their extra rights); airlines face falling demand and run fewer services (so there is a loss of producer welfare). The only winners are those who oppose air transport for the masses.
When the EU 261 review began, the Commission warned industry that consumer rights, once granted, could not be easily removed. Consider the language used by British politicians to describe consumers: they are “hard-working families” (a variation is the “hard-pressed” family: presumably they are related); the consumer must be “put first” in the regulatory hierarchy of values. But how do we reconcile the “right” of the “hard-pressed family” to their summer holiday with the fact that aviation regulation and taxes make them yet more hard-pressed to take those holidays? How can politicians then say that the aviation industry holds the “keys to economic growth”? Surely, in large measure, industry and the consumer will stand and fall together?
Mike Ambrose, Director General of the European Regions Airline Association (ERRA), has said:
There are strong grounds to support the view that increased regulatory burdens, designed to protect the minority of air travel consumers, have not been applied consistently across all transport modes and have unintentionally increased the cost burdens for the great majority of passengers.
“I’M NOT ANTI-AVIATION. FAR FROM IT”
Overcrowding at airports (particularly in the South-East of England) can be managed through reducing the demand for air travel, through efficient use of capacity, or through building more runways.
Opponents of air transport are clear in their desire for managing (reducing) demand for air travel and restricting the growth of supply through opposing new runway or airport development. Demand management tools (mechanisms to increase airfares for consumers) include taxation and, although not admitted to, increasing the regulatory costs for airlines. Opponents rely in part on concerns that mass aviation may harm our environment. How does the UK Government reconcile aviation growth with environmental protection?
Philip Hammond, the former secretary of state for transport, said in a speech at the Aviation Club Lunch in June 2011 that:
[Government and industry] must work together to define a growth strategy for aviation that will support UK economic growth, but which will also support the delivery of our decarbonisation commitments.
This is his first articulation of the problem of balance. He has several more tries at it:
Ensuring we can lead the global debate and shape a low-emission aviation sector of the future, without disadvantaging UK airlines or UK airports.
He then moves to another problem: in promoting economic growth, while protecting the environment, it is necessary to ensure that other countries do not take advantage. Mr Hammond continues:
We will continue to work with ICAO and the UN Framework Convention on Climate Change to push for international agreement on aviation emissions, ensuring that the playing field is level as quickly as possible.
[O]ur policy framework must support economic growth and protect Heathrow’s status as a global hub. But it must also address aviation’s effects on climate change and its impact on local communities. A tall order you might think.
So, just in case we missed it last time:
[W]e will ensure the outcome is a positive and enduring policy framework that will deliver the benefits of a flourishing air transport sector, while also meeting our environmental goals.
Mr Hammond acknowledged that the scrapping of the third runway was perceived by many as “loaded with hostile symbolism”, but he assured us that it was not and that:
I made clear at the earliest opportunity – and I want to do so again today – that this government is not and at least, so long as I am Transport Secretary, will not be, ‘anti-aviation’. Far from it.
His successor, Justine Greening, covered similar ground on 19 October 2011, in a speech at the London Chamber of Commerce and Industry Transport Dinner saying that while:
Willie [Walsh] and I have been on different sides of the aviation fence on this one, we both inhabit the same world of political reality.
And the political reality is that the runway decision has been made, it’s done.
But let me also say this. The decision we took on the third runway does not make this Government anti-aviation.
And it certainly doesn’t make me anti-aviation. Far from it.
Ms Greening also notes:
I am certain we can improve and reform airport regulation and we can develop a new Aviation Strategy for the long term – one that supports economic growth while addressing the environmental impacts of airports and flying.
Because, when you have an economic engine as powerful as London’s then, for the sake of the entire national economy, you need to make sure it can fire on all cylinders.
And that’s exactly what our policies are doing.
On 31 October, in a speech at the AOA Conference, Ms Greening noted that:
[T]he decision we took does not mean we are anti-aviation.
This Transport Secretary and this Government are anything but.
Finally, Ms Greening invites us to join together to devise:
A better way to do strategy. One that empowers us to develop real world solutions for the real world challenges facing aviation.
Is it possible to reconcile aviation and the environment? Ms Greening admits that this is “incredibly hard”, but she goes on to state that she believes it can be done.
The UK government pretends that this is a question of balance, but it is not. Let us accept the proposition that mass air transport emits a high volume of polluting gases. To say that we must “balance” aviation and the environment means that we agree that aviation and the environment are not in balance, that environmental concerns are inadequately addressed. To be clear, the environmental objection to aviation is not merely that pollution will increase if the industry grows; it is that pollution still exists while the industry exists.
If one accepts this premise, then it is easier to justify existing taxes such as APD, devised originally (so we are told) as an “environmental” tax, as well as including aviation in the EU ETS. One must also accept that these must reduce the demand for air travel. So to reconcile aviation and the environment means (at a given level of technology) to reduce the amount of flying we do. Some note that APD revenues are not hypothecated – kept separate from general Treasury revenue and directed towards protecting the environment – but that is the same of most if not all taxes in the UK. The real point is that APD is supposed to work by making air travel more expensive.
Mr Hammond’s claim that he is far from being anti-aviation is at best wishful thinking; at worst, disingenuous.
AIR AND RAIL
The environment versus aviation debate will not go away, but it can be put into perspective. New research commissioned by ERAA casts doubt on the assumption that rail travel, particularly high-speed rail, is any better for the environment than air travel. In that context, the heavy subsidies to the European rail industry not only discriminate heavily against the largely unsubsidised aviation industry, but also undermine EU governments’ environmental credibility. For how much longer can rail travel be seen as “emission-free”?
THE REAL OBSTACLES
Proper regulation must address problems proportionately and adequately. The EU’s approach to consumer rights is disproportionate; its approach to accident investigation is inadequate. Regulation 996/2010 concerns the investigation and prevention of accidents in civil aviation: plainly nothing is more important in civil aviation. The initial proposal was to create a European Civil Aviation Safety Authority. This was dropped in the final version. Instead, member states will continue to operate distinct systems, loosely woven together in a “network” of civil aviation safety investigation authorities. This obscures the very different levels of sophistication, maturity and skill of the national accident investigation boards. The network itself has a role in “promoting the sharing of information useful for the improvement of aviation safety and actively promoting structured cooperation” between the various authorities. They must also promote best safety investigation practices “with a view to” developing a common Union safety investigation methodology and drawing up an inventory of such practices. The phrase “with a view to” indicates how much remains to be done. It is true that the Regulation imposes onerous obligations on operators: for example, to assist victims of air accidents and their relatives; to have appropriate plans in place to include the psychological support of victims and their relatives; and to provide a validated passenger list within two hours of an incident. Such a network may be better than what existed before, but it is still not enough. There is no international standardisation of qualifications for accident investigators nor adequate means to ensure proper continuing competence. It is unclear whether the provisions of Regulation 996/2010 are sufficiently enforceable. In this area at least, further harmonisation, carefully prepared and this time following full consultation with the industry, is urgently required.
There is a very real risk that regulation will reverse the benefits of liberalisation. Low-cost travel, affordable holidays to far-off destinations, intense competition between carriers: the consumer in Europe has benefited enormously in the last 20 years. This is all at risk.
Current aviation regulation in Europe is failing because it is inadequate to deal with some of the real problems (accident investigation), misguided in its approach to consumer rights and confused about its approach to protecting the environment.
Mr Ambrose of ERAA has added:
Too many governments in Europe pay lip service to promoting air transport and recognising its value to the EU, whilst simultaneously milking the industry and its customers with massively increased tax burdens to gain revenues for purposes other than the furtherance of the industry.
Time is running out for solving this problem. The aviation sector has always operated on the margins of profitability. The heavy burden of regulation contributes significantly to the problem. There are three things we should seek: first, honesty and clarity from governments about their aviation policy; second, a clear and objective basis for comparing the environmental merits of different forms of transport; and third, a new regulatory settlement that covers the industry as a whole, not in parts.
To quote Orwell again: “In our time it is broadly true that political writing is bad writing.” And we can add that where political writing is bad, the law will be worse.