In comments to the UK Transport Select Committee, IATA Regional Vice President for Europe, Rafael Schvartzman, called for Air Passenger Duty to be cut on UK domestic return journeys, in order to encourage the regional connectivity that an expanded Heathrow airport could offer.
«Airlines in Europe are operating on a 5% margin, so any additional costs are critical to the viability of a route. It is therefore essential that Heathrow charges remain flat – or are reduced – and that Air Passenger Duty be reduced on domestic flights,» said Schvartzman.
Mr. Schvartzman also made it clear that reforms to air traffic management will also be crucial for the success of the new runway.
«Expanding Heathrow without putting in place the necessary air traffic control reforms would be like buying a Christmas tree and not putting any decorations on it. The government must support the Future Airspace Strategy which is looking to make critical improvements to the airspace,» he said.
In addition, Mr. Schvartzman made the following points on connectivity to Heathrow in the event it will expand with a third runway:
1. Heathrow Airport is the right location for a new runway, and the best option for meeting the Government"™s objectives to retain the UK as one of the world"™s leading aviation hubs.
a . This is true for cargo as much as for passengers. LHR will process 132,000 tons of cargo in December, including exports of salmon, clotted cream and whiskey.
2. But Heathrow cannot be expanded at any price. Affordability remains the airlines main concern. While we welcome some evidence of a cheaper solution emerging, the level of risks associated with cost and schedule remains unknown due to the low level of maturity associated with the program.
3. Heathrow is already far more expensive than its rivals(1). The Government should give a commitment to flat charges (i.e. less than or equal to today in real terms) at Heathrow. If this cannot be met and fares have to rise to cover excessive cost, then the benefits assumed for the third runway will not be maximized and the competitiveness and viability of certain routes called into question.
4. The CAA has recognized that Heathrow Airport has substantial market power and therefore operates Heathrow Airport on a monopoly basis. Without robust economic regulation on behalf of consumers, a monopoly provider can result in development costs being higher than would be the case if undertaken in a competitive environment.
a. So we welcome recognition of new text on statutory undertakings "“ i.e. additional developers could be considered
b. We believe this could be strengthened to insist that proper competitive tendering takes place if there are credible alternative promoters
c. This is a once in a generation opportunity to maximize the economic benefit to the UK…
