The Plane Truth - Economic Impact
Introduction - Economy - Environment
The great majority of air travel and the great majority of the forecast growth is for tourism, not business (business is 22%). So the large growth being promoted has little to do with business anyway. There is more than enough airport capacity for business travel for the conceivable future.
Investment
The industry and government make great play about the fact that air travel can bring investment and jobs into the country. But they never mention the fact that it can equally suck investment and jobs away.
Jobs
Air transport employs some 180,000 direct staff and about 200,000 indirectly via the supply chain. But the number of people employed in industry does not directly affect the total number of jobs in the UK. This is because money spent on air transport is money not available to be spent on something else. If the money were spent on goods and services other than air transport, the supply of those goods and services would equally generate jobs.
Tourism deficit
Tourism takes far more money out of the country than it brings in. In 2001 UK residents spent £18.7 billion abroad compared with £7.6bn foreigners brought into the UK. Less and less people spend their holiday in Britain - causing further job losses in English holiday resorts! Find out more...
House prices
Cheap domestic flights also encourage the growth in the number of second homes, which price local people out of the housing market. This is happening in Cornwall, partly through the effect of Newquay airport that offers cheap internal flights.
Importance
Aviation is the 29th most important industry in the UK. At 28th in the league and slightly more important are sewage and sanitary ware!
GDP
Air transport contributes only about 1.4% of GDP. Not spent on air transport this money would equally contribute to GDP.
External costs
Air transport imposes large costs on society because of its impacts, but is not paying for it. Many of these, such as global warming, air pollution and noise, can be expressed in economic terms and are called external or hidden costs. Paying such costs is a part of the 'Polluter Pays Principle'.
Inequality
When everyone else - other industries and citizens - have to pay tax on fuel, VAT and excise duty, exemption for the air transport industry is, in effect, a subsidy by the taxpayer. It means that the amount of air travel is greater than the economic optimum. This tax-free regime favours frequent fliers, i.e. the better-off, at the expense of the poor.
Tax breaks
No tax on fuel, no VAT, and duty-free sales continue except for trips within the EU.
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per year |
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Fuel tax @ 45.8p per litre (the same rate as applied to car fuel) |
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VAT |
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Duty free |
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Deduct Airport Departure Tax (currently £5 or £10 per ticket) |
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Net tax subsidy |
The Government's own computer model predicts that there would be NO need for any new runways or airports if the aviation industry would not receive this astonishing £9.2 billion tax break. Furthermore air traffic would still increase at an absolute growth rate of 2% each year!