UK aviation sector in long-term decline
The aviation sector in the UK continues to deteriorate, and Flybe’s chairman and CEO announced that a GBP3 surcharge per passenger would be imposed from 05-May-2011 on all flights from 01-Sep-2011 onwards. Citing a “challenging” UK market and increased fuel costs, Flybe chief Jim French said the increase was required to “optimise passenger yield and streamline capacity in the UK”.
Slow, steady slide
This is just the latest indication that the UK, in a global market which continues to slowly recover, remains uniquely problematic. The CAA announced in Mar-2011 that passenger counts for all UK airports had again fallen in 2010 by 3.4%, and that a continuous drop over the past three years has resulted in passenger numbers below 2004 levels.
Citing the volcanic ash shutdowns as well as heavy winter snows as a reason for the 2010 decline, CAA Director of Regulatory Policy Iain Osborne acknowledged that even without these events traffic would have remained flat.
Domestic passenger numbers took an even greater hit, declining by 9% in 2010 in comparison with 2009 and the number of aircraft movements in 2010 had fallen to 2001 levels.
UK carriers hardest hit
The CAA also reported that while UK airlines continued to carry the majority of passengers – 55% – they had suffered a greater loss in 2010 than either EU or non-EU airlines. UK airlines’ passenger numbers declined by 5.4% compared with a 2.6% decline for EU carriers and a 4.4% increase for non-UK or EU airlines.
If the goal of UK regulators is to reduce traffic, they appear to be succeeding. There will likely be a boost with the Olympics in 2012, but it will be interesting to see if the increase in air passengers is equal to the overall visitor increase, or if the limited capacity and additional cost generated by the APD will encourage other forms of transport.
Little to celebrate in 2011
Those who argue that the decision to scrap Heathrow’s third runway was a precursor of further aviation decline may continue to see their argument strengthened. According to the BAA, a slight increase at LHR in 2011’s first quarter was negated by a very significant drop at Stansted. Manchester also recorded a first quarter drop, indicating that the outlook for the current year shows no major reversal of the general downward trend.