Ready for take-off? How significant are regional airports for rural communities?
Since the Wright Brothers (Orville and Wilbur) invented, built and flew the world’s first successful motor-operated airplane in 1903, aviation has played a defining role in connecting people and global trade. And while PPE, pharmaceuticals and vaccines have all long been carried by air, COVID-19 has seen unprecedented demand for transporting these critical goods. At the same time the pandemic has led to travel restrictions and a sharp fall in passenger numbers – affecting airports and the entire air transport system. As part of its Levelling Up agenda the Government wants to improve connectivity between all corners of the UK, making it easier for more people to get to more places more quickly. What role can regional airports play, not only in bringing us closer together, but in boosting jobs, prosperity and growth? Jessica Sellick investigates.
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What is a regional airport?
While there is no statutory or legislative definition the term has been commonly applied to UK airports. The label ‘regional airport’ can be traced back to a White Paper on Airports Policy published in 1978. This distinguished between four categories of airports: gateway international airports (Category A); regional airports (Category B); local airports (Category C); and general aviation airports (Category D). Section 5 of the Airports Policy described regional airports as those airports not in or near London. The Environment, Transport and Regional Affairs Select Committee carried out an Inquiry into regional air services back in 1997. Again, the Committee defined regional airports as those UK airports other than the five London airports (Heathrow, Gatwick, Stanstead, Luton and London City); as well as the airports on Guernsey, Jersey and the Isle of Man. The Airport Commission’s work in 2013 categorised the following airports as ‘regional’: Southampton, Norwich, Southend, Bristol, Cardiff, Bournemouth, Birmingham, East Midlands, Coventry, Manchester, Newcastle, Liverpool, Leeds Bradford, Durham Tees Valley, Doncaster-Sheffield, Humberside, Blackpool, Glasgow, Edinburgh, Aberdeen, Prestwick, Inverness, Belfast International and Belfast City. The Civil Aviation Authority publishes data on 42 regional airports – this omits 6 London airports (Heathrow, Stanstead, Gatwick, Luton, London City and Southend), and 4 non-UK reporting airports (Alderney, Guernsey, Isle of Man and Jersey). In summary, the term ‘regional airport’ has been commonly applied in policy and practice to a range of UK airports not in or surrounding London.
Who owns regional airports?
The British Airports Authority (BAA) was established by the Airport Authority Act 1965 to take responsibility for four state owned airports from the Ministry of Aviation: Heathrow, Gatwick, Prestwick and Stanstead. In proceeding years, BAA acquired Edinburgh, Glasgow and Aberdeen. The Airports Act 1986 mandated the creation of BAA Plc which sought funds from the stock market and led to the sale of Prestwick. In 2006 BAA Plc was purchased by a consortium led by Ferrovial. Since then, the consortium has expanded into international operations – including signing contracts with Boston Logan, Baltimore-Washington and Indianapolis. Following an Inquiry by the Competition Commission in 2008-2009, BAA Plc was required to sell three of the seven UK airports it owned at the time within 2-years. Subsequently, Gatwick, Edinburgh and Stanstead were sold.
In June 1985 the Government published a White Paper which, as per BAA Plc, proposed moving Local Authority airports onto a private footing. The Airports Act 1986 enabled airports to access private capital by becoming arms-length companies. This resulted in airports with a turnover of more than £1 million that were owned by Local Authorities to be privatised, including: Birmingham, Blackpool, Bournemouth, Bristol, Cardiff, East Midlands, Exeter, Humberside, Leeds Bradford, Luton, Manchester, Newcastle, Norwich and Teesside. However, some Local Authorities retained a ‘public interest stake’ in the sales. For example: 7 West Midlands district councils retained a 49% stake in Birmingham airport; Durham, Darlington, Stockton-on-Tees, Middlesbrough, Hartlepool and Redcar and Cleveland Councils retained a 25% stake in Durham Tees Valley airport; and Durham, Gateshead, Newcastle, North Tyneside, Northumberland, South Tyneside and Sunderland Councils retained a 51% stake in Newcastle airport. Cornwall Newquay Airport is a former RAF based which began operations as a fully civilian airfield in 2009. It is wholly owned by Cornwall Council and operated by Cornwall Airport Ltd. More recently, in 2019 Durham Tees Valley was brought back into public ownership to save it from closure and renamed Teesside International Airport.
Since the 1990s it has been possible to ring-fence a regional air service to a national hub through a Public Service Obligation (PSO). A PSO is a form of ‘state aid’ and allows for socially and economically necessary air services to be subsidised by national Government or Local Authorities to protect lifeline routes to peripheral or development regions. PSOs are currently used on routes in Northern Scotland, and routes from Cornwall to London. While PSOs date back to our membership of the European Union, the Government has indicated that these regulations will be retained.
Why are regional airports important?
While there are no official figures for the overall economic contribution of regional airports, some airports have commissioned studies to estimate their economic impact including the number of direct and indirect jobs they support and/or their contributions through the supply chain. Other commissions have sought to draw together data on the importance of regional airports to other sectors and their wider impacts on GVA.
From a public policy perspective, the contribution of airports (and the aviation sector more widely) to pandemic recovery, levelling up, net zero, and global Britain have taken on increased importance in recent times.
Levelling Up: in January 2020 the Government announced that the Department for Transport (DfT) would be carrying out a review of regional air connectivity. The aim of the Review was ‘to ensure that all nations and regions of the UK have the domestic transport connections local communities rely on – including regional services from local airports’. The Review was suspended during COVID-19 and is now being taken up as part of the Aviation Recovery Plan (ARP). Also in 2020, the Government commissioned Sir Peter Hendy CBE to work on a Union Connectivity Review. His final report, published in November 2021, recommended the creation of UKNET – a strategic transport network for the whole UK. To support UKNET, the Review identified a series of transport infrastructure enhancements to improve the capacity, reliability, journey times and sustainability on key strategic links across the UK. This included improving connectivity to and from Northern Ireland via the three airports and seaports. Where journeys are too long to be reasonably taken by road or rail, the Review recommended the Government assess existing subsidy rules for domestic aviation to allow support for routes between different regions of the UK rather than just to and from London; reduce the rate of domestic aviation tax; and intervene in the assignment of slots at London airports to provide more slots for domestic routes.
Air Passenger Duty (APD) is a duty chargeable per passenger flying from UK airports to domestic and international destinations. APD follows a band structure, with the rate varying according to destination and class of travel. Receipts are collected by the operator of the aircraft and payable to HMRC within one calendar month. Airlines, airports and industry bodies have consistently campaigned for a reduction in APD. In 2021, the Government consulted on reducing APD. The consultation sought views on reducing the rate of APD on domestic flights to support the Union and domestic connectivity whilst increasing the international rates to reflect the Government’s environmental objectives. At the Autumn Budget and Spending Review 2021, under the subheading ‘a better-connected UK’, the chancellor announced a package of APD reforms including a 50% cut in domestic APD and the addition of a new ultra-long-haul distance band. The new domestic band for APD has been set at £6.50 and will apply to all flights between airports in England, Scotland, Wales and Northern Ireland (excluding private jets). As a result, the Treasury estimates around 9 million passengers will pay less APD in 2023-2024, benefitting connectivity between Great Britain and Northern Ireland.
In Spring 2021, the DfT published a General Aviation Roadmap which described the network of national airfields as a national asset, providing crucial connectivity for business, emergency services leisure and sporting flying. In recognising their local and regional impacts, airports are viewed as vital to levelling up. The Levelling Up White Paper published in February 2022 contained several references to airports – including plans to connect Birmingham Airport, Solihull and Walsall to Birmingham city centre via a light rail system; and the establishment of a freeport at East Midlands Airport.
Achieving net zero: The Hendy final report recommended that the UK Government should drive the uptake of sustainable fuels and zero emission technologies on domestic aviation; and support the development of sustainable aviation fuel plants in part of the UK that are particularly reliant on aviation for domestic connectivity.
The DfT published its plan to decarbonise the entire transport system in the UK in July 2021. This highlights the lead role the UK plays in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the role of the UK Emissions Trading Scheme. Alongside the plan the DfT published Jet Zero, a consultation on how to reach net zero aviation by 2050. The plan references ZeroAvia, the world’s first hydrogen fuel cell powered flight and contained commitments to consult on a target for UK domestic aviation to reach net zero by 2040, and to consult on a target for decarbonising emissions from airport operations in England by 2040. The plan sets out how the Government will fund a zero emission flight infrastructure R&D at UK airports; and kick-start commercialisation of UK sustainable aviation fuels (SAF).
Manchester and Gatwick airports have already achieved carbon neutrality and Bristol airport is aiming for net zero emissions by 2030. Many regional airports have joined an Airport Carbon Accreditation programme (ACAP). Whilst these developments are welcome, it is worth noting that Airport ground-based activities account for approximately 2% of the aviation sector’s total carbon emissions. Indeed, the Association of Directors of Environment, Economy, Planning & Transport (ADEPT) queries the extent to which passenger growth is compatible with net zero, and what this might mean for airport expansions. North Somerset Council, for example, rejected a planning application to expand Bristol Airport which is owned by the Ontario Teachers’ Pension Plan. This decision was overturned by The Planning Inspectorate on the grounds that the benefits would outweigh the harm to greenbelt land.
Global Britain: for Government, our departure from the European Union has been viewed as an opportunity to reach out to the rest of the world to forge new trade links, to connect and compete. CEBR research to quantify the economic impact associated with Heathrow Airport, for example, considers which countries will potentially provide the greatest opportunity for the UK economy through free trade agreements and their reliance on routes through Heathrow. As part of the UK Research and Innovation (UKRI) Future Flight Challenge, the results sets out a vision for the aviation system in 2030. This references ‘regional air mobility’ with electric, hydrogen or hybrid aircraft providing short-medium range hops between fixed locations; calling for demonstration pilot projects across selected airfields by 2024 with passenger carrying regional flights by 2030.
More recently, policy attention has focused on domestic flights and regional connectivity – which can be seen as a move towards reducing spatial inequalities, and boosting productivity, jobs and growth. At the same time, this has also opened debates around spatial inequalities (London/South East airports versus other airfields), sustainability and the environment (airport capacity for growth versus climate change).
What support have they received during COVID-19?
The Government estimates it has spent some £12 billion supporting the aviation industry through the pandemic. Some of these measures have been economy-wide such as the Covid Job Retention Scheme [furlough] and Covid Corporate Finance Facility (CCFF); while others have been sector specific including the Airport and Ground Operators Support Scheme (AGOSS) and temporary waiver of the ‘80:20’ rule requiring 80% of flights have to be made from/to UK airports for airlines to maintain their slots. The Government also provided business rates relief, capped at £8 million per airport which was taken up by 22 of 25 eligible airports. The AGOSS is available until the end of March 2022.
According to research by the Local Government Chronicle, many Local Authority owned airports – intended to boost economic growth and generate a commercial income – have become a drain on resources during the pandemic. Manchester Airports Group, for example, had provided an annual dividend of approximately £65 million a year to Manchester City Council – which has a 35.5% stake in the airport. Any future dividend income unlikely to be received until at least 2023-2024.
Since March 2020, the EU has ensured Member States can implement State Aid schemes from which regional airports can benefit. During the pandemic, the EU has supported airports through its Recovery and Resilience Facility which aims to make Europe better prepared for green and digital transitions. At the same time a greater focus on tackling climate change is driving various projects to make airports more sustainable. In addition, some Member States have provided greater financial support to their aviation industry and/or taken equity stakes in their national carriers, often with environmental conditions attached (e.g. ending domestic flights where there are viable train options).
On the one hand, the dramatic drop in passenger numbers due to COVID-19 triggered a range of financial support – loans, loan guarantees, wage subsidies, equity injections etc. On the other hand, many airports have faced increased operating costs to meet additional health and safety requirements. For me the pandemic has highlighted the importance of regional airports and the connectivity role that they play [particularly for islands]. Some Local Authorities are content to continue subsidising airports because of the boost they have – and will – provide to their local economies and communities.
How important are regional airports for rural communities?
In Europe, 50% of people live within a 30-minute drive of a regional airport, compared with only 41% for commercial airports. In February 2021, the European Parliament published a briefing on the future of regional airports. This highlighted their role in improving accessibility in remote locations or those not well served by other forms of transportation; stimulating employment and tourism and facilitating access to essential services.
A report for the Australian Airports Association describes how regional airports bridge the gap between cities and rural communities, supporting the economic and social vibrancy of rural communities, enhancing their liveability, social connectedness and prosperity. Here regional airports deliver essential and emergency services to rural areas (e.g. protecting people and property from bushfires and/or The Royal Flying Doctor Service which brings medical services to rural and remote Australia).
In the United States, ‘general aviation airports’ or ‘public airports’ located in suburban and rural areas are seen as a leveraging tool for recruiting and retaining businesses. For example, there are 72 public airports in North Carolina, only 10 of which are commercial airports (that offer regularly scheduled commercial flights). More than 90% of North Carolinians live within a 30-minute drive of a public airport. North Carolina’s general aviation airports provide some 25,000 jobs and produce nearly $5 billion in economic output. They also provide a salary that is approximately $20,000 higher than the median annual per capita income.
In 2021, the International Transport Forum (ITF) published a roundtable report on connecting remote communities. Drawing together examples from Australia, Canada, Chile, Greece, Finland, Japan, Norway and the United States; the report highlights how many smaller airports struggle with both higher costs per passenger and lower commercial revenues compared to bigger airport sites. This is often due to the seasonality of traffic, smaller catchment areas, and a less well-off customer base. According to the Airports Council International (ACI), 71% of airports handling less than 1 million passengers make loses annually in Europe. Indeed, regional airports have been impacted by COVID-19 as passenger traffic dropped. For example, more than 6,000 routes served from Europe’s airports in 2019 were not fully restored 9 months into the pandemic. Regional airports recording the highest declines in direct connectivity include: -96% Linz (Austria), -95% in Treviso (Italy), -93% in Groningen Eelde (the Netherlands) and -91% in Vaasa (Finland).
In considering airport and air travel, it is worth noting how some countries have an index to distinguish between accessible and less accessible rural areas (e.g. Australia, Chile, Greece, Scotland). Some of this work considers connectivity (access to services digitally and physically rather than drive time to an urban centre) and mobility (physical movements between locations) – and some account for whether rural areas are well served by other forms of transportation in addition to air travel.
In England, in evidence to the Transport Select Committee’s review of the impact of the coronavirus pandemic on the aviation sector, witnesses highlighted how some form of Government incentives would continue to be necessary to encourage airlines to invest in regional routes which often have tight margins. Yet we have very little data on the influence and impacts of regional airports (individually and collectively) on rural communities. What are their usage levels, what economic and social contribution do they make, what are their environmental impacts, and importantly what are the emerging and future issues that they face? How do they link to other modes of transportation and digital connectivity?
The Government is due to publish its Strategic Framework for Aviation – what will this say about regional airports and rural communities? Watch this space…
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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). Her current work includes supporting health commissioners and providers to measure their response to COVID-19 and with future planning; and evaluating two employability programmes helping people furthest from the labour market.
She can be contacted by email jessica.sellick@roseregeneration.co.uk.
Website: http://roseregeneration.co.uk/ https://www.ncrhc.org/
Blog: http://ruralwords.co.uk/
Twitter: @RoseRegen
