Support A Fair Tax on Flying Campaign - Please participate!

The Government raised the already sky high Air Passenger Duty last April by another 8%.  This tax on flying is not just paid by Brits but also by returning overseas tourists and business people as they depart from a UK airport. Then when they stay here they face 20% VAT on their Hotel or accommodation bills!   So much for the Government encouraging inbound tourism and business to come to the UK!  An alliance of Travel business and airlines "A Fair Tax on Flying" has called for the public to email their MP's to reduce the taxIt is very simple to do taking only a couple of minutes to send a pre-written letter to your local MP.  By entering your household Post Code the letter pops up addressed to your local MP.  Enter yr home address and email details - submit and its done !

http://www.afairtaxonflying.org

Seemples! 

I do not have specific research to hand to prove this but I believe it is a well accepted principle of successful marketing that your brand should attract a loyal and saitisfied customer base.  They will then return regularly for your product.  The UK's short term strategy of extracting every penny possible from overseas visitors through APD and VAT looks to me like an excellent one for discouraging the return of tourists and other visitors - everyone likes value for money after all.  

It is not just the UK that suffers from APD...  It has already seriously affected Caribbean resorts who fall into the third (out of four) most expensive APD mileage Bands (Barbados by a mere 250 miles).
The CTO has just (21 June) repeated its calls to change or dismantle the tax.. http://news.cheapflights.co.uk/caribbean-joins-calls-for-axing-of-air-passenger-duty/ .
Clearly the world economic downturn has an affect, but as an example my Favourite B&B in Barbados told me that this year they are 60% down on Bookings compared to last year!  (http://www.bayfieldbarbados.com/) - Jet Fuel prices have not helped either as  trans Atlantic and long distance flights carry  significant fuel fuel surcharges.  For example  my wife and I were given airmiles by our son-in-law who flies regularly - we paid APD and other fees including the fuel surcharge on two premium economy seats to Barbados.  These came to over £800.  By the time we had paid BA £120 to reserve outbound and return seat numbers it was close to £1000 for the flights despite them being "free".

There is a point where if you raise taxes to an unsustainable level your revenue will actually fall rather than increase.  This has happened in the UK when years ago the Government at the time put huge tax increases on alcohol and tobacco.  It will be interesting to see the revenue generated by APD when the stats for last year are released eventually. (Always assuming that these are not doctored in any way!  Perish the thought of course!)

U-Turns and Political Expediency -

Waiting for a viable UK Aviation Policy

This week, if one believes reports in the National Papers, The Prime Minister may be prepared to consider a U-Turn on the politically thorny issue of a 3rd runway at Hethrow to which he has been implaccably opposed since before the election.  In recent years Governments have become remarkably flexible about countenancing policy and tax changes over the past few years when it comes to appeasing voters and maintaining or gaining seats.  Viz. the recent dropping of the rediculous VAT changes on "hot pasties" after public derision and also the infamous so-called "Granny" tax. 

On policy changes, the Coalition's reversal of the previous Government's decision to back the third runway at Heathrow is an example of political manifesto tweaking, where to improve chances of winning crucial West London seats, the then opposition guaranteed to drop the 3rd runway.    Winning seats is all very well but the independent research and industry feedback to the Government when after they took power demonstrated that the Heathrow option is by far and away the most cost effective option and one that will keep London competitive with its near Europe airport competitors well into the 21st century.  According to the study by the respected Oxford Economics, failure to allow the third runway or new runway capacity will cost the UK £8.5 billion per year by 2021.  Furthermore, the study predicts that 141,400 jobs will be lost by 2021 with no new Heathrow capacity which will have a significant knock-on effect on the West London economy.

Other options, even should they be practical ones, and not just political papering over the need for more capacity in London and the South East,  will take well into the second and even the third decades to become operational.  Many believe that by that time the UK and the City may have lost vital ground against our business rivals in Europe.

So if reports are to be believed ,  whilst the "Pros" might be looking for a reversal from the PM and the "Anti's" considering their political and other options to block the runway if he does,  nothing is going to happen politically until after the next General Election in 2015.  Who knows what policies or lack of them will result then ?

We still have to wait for this summer's (if we everhave one!) much heralded  Government White Paper clarifying the Government's policy on aviation and also on the HS2 (the High Speed rail link to Birmingham and evenually beyond to Manchester).  Current cost estimates for the HS2 are £34 Billion.  Politically this might be an attractive project but Economically the cost does not seem to justify a 20 minute reduction in travel time to Birmingham.   Especially when offset against the destruction of homes and the environmental damage the new HS2 rail will cause. Many expert commentators have pointed this out.   However,  the media is again reporting that from within the corridors of power in Whitehall and Westminster there are signs of unease about the cost and the effectiveness of the HS2 scheme.  So a change of policy may be waiting in the wings.

Whilst there is a lot of rhetoric from Westminster about the need for an infrastructure appropriate for the 21st Century we have yet to see any projects definitely approved and ground broken, all to the detriment of UK Plc.  This is a wild guess, and call me a cynic, but I am wondering whether the forthcoming White Paper will be released in the middle of the Olympics just in case there are some U-turns that need to be downplayed.

Heathrow Olympics Terminal & BA's "Flying Britain Home" Seats Offer Campaign

Whilst Eurozone air passenger traffic has affected* the number of overall passengers using Heathrow in the run-up to the Olympics, the airport still dealt with 5.8 millions passengers in May* according to the airport operator BAA.  The operator is not responsible for immigration controls which caused huge delays of 3 to 4 hours recently.  However, to help reduce pressure on immigration and passage during the Gamesfor passengers using Terminals One, Three, Four and Five and to help maintain normal  levels of service, Heathrow has opened a temporary "Olympics Terminal" specially for Olympic teams and officials.  The dedicated terminal will remain open for three days after the Olympics closing ceremony which takes place on 12 August. It will have 31 check-in desks and seven security lanes to handle more than 10,000 athletes and 37,000 bags.   It is expected that August 13th will see the highest daily traffic of the year as Olympic visitors and participants start for home.

In a patriotic gesture BA has run a campaign until today on facebook.com/britishairways which offerered: To give the home nation a boost,  by launching the British Airways ‘Flying Britain Home’ campaign, offering a quarter of a million pounds worth of flights to Brits that live abroad to fly back for the Games. A further 50 flights have been offered to Team GB and Paralympics GB athletes to bring their friends and family home for an extra boost during the Games. 

BA's  Press Office confirms thay have "Received thousands of entries and are really pleased with the campaign."  They are processing the entries asap to be able to advise the lucky entrants in good time for the start of the games.

*  For Dan Milmo, the Guardian's Industrial Editor's article about the drop in Greek, Spain and Italy passengers please see:
http://www.guardian.co.uk/business/2012/jun/12/heathrow-traffic-eurozone-crisis

Greece - To Boldly Go? Or Not?

Ελλάδα - γενναία θα πάω; Ή μήπως όχι;

 

The current uncertainty re Greece's  future within or outside the Eurozone (and the Euro) should be decided by next Sunday's 17th June's Greek Elections.  It seems that everyone from currency traders to tourists are presently holding back from respectively trading the Euro or booking holidays.  Tourism accounts for over 16% of the Greek economy normally and is a vital part of it for Greece.  With overseas media playing on the risk of riots and violence and the possibility of Greece reverting to the Drachma it is not surprising that bookings for Greece are down.  Uncertainty about stability and the possibility of  failing local businesses like hotels are outweighing the attractions of the Mediterranean climate and the possibilty of value for money holidays.  Interestingly a survey by travel meta-site Skyscanner recently also revealed that Greece is still more expensive for a one-week holiday than Portugal, Spain, Morocco, France and Egypt.  However, Greek package holiday discounting continues and once (and if) the election results show that the country is willing to accept the austerity measures required to keep Greece within the Eurozone there should be some excellent deals to be had. 

If the election results reject austerity and the Drachma returns, then there could initially be problems with fuel and food distribution and the possibility of civil disorder.  Having said that, it is usually the big cities which suffer disturbances.  For example, when Cairo was erupting during the protests to remove President Mubarak, the holiday resorts were not apparently affected -  Resort towns know that their livelyhoods depend on tourism after all.   Remember also that many major Greek holiday destinations are  islands like Kefalonia - Corfu - Rhodes - Skiathos.    Being distant from the political axis of Athens the islanders have a significant vested interest in preserving their tourism industries rather than scaring tourists away. 

Thus recent media advice to book packages with reputable and well-known bonded travel companies is the certainly best way to go to Greece rather than booking independently.  This gives the holidaymaker a large degree of certainty regarding protecting costs and also providing repatriation should the holiday be spoilt in any way.  Do not therefore cross Greece off your holiday destination list yet - wait for the election this coming week-end and check out the great offers that are bound to be available once that uncertainty is out of the way..... Here's a thought tho' you could always hedge your bets and check out an ATOL protected fly-cruise in the Agean.   Ships can be diverted s in the unlikely event the port of call is affected by any problems ashore - the weather is the same as ashore and you get to see different places - worth thinking about!

IATA Renews Call for Global Solution to Aviation Emissions

68th IATA Annual General Meeting and World Air Transport Summit in Beijing, China.

Tony Tyler - Beijing 2012

IATA is an international trade body, created over 60 years ago by a group of airlines. Today, IATA represents some 240 airlines comprising 84% of total air traffic.  It is a respected and valuable source of data about the industry and has led many international initiatives for industry improvements that have benfitted not only the industry but also passengers.  It is probably no coincidence that this year's IATA conference is being held currently in Beijing.  China is building literally hundreds of new airports and as a major economy in the 21st Century.   IATA is sensibly acknowledging the economic shift with its chopice of venue.

One of the key calls by IATA for some time has been for a global approach to aircraft emissions through a comprehensive global solution  to be negotiated through the International Civil Aviation Organization (ICAO).  The aviation industry has set its own target on emissions and efficiency including:

To improve fuel efficiency 1.5% annually to 2020

To cap net emissions from 2020 with carbon-neutral growth

To cut net emissions in half by 2050 compared with 2005 levels

Tony Tyler, IATA’s Director General and CEO stated in Beijing:
“To meet our ambitious targets we will need a globally-agreed approach covering the areas of technology, operations, and infrastructure as well as positive market-based- measures. Everyone—including Europe—agrees that the solution must be a global agreement through ICAO at the 2013 Assembly. But Europe’s unilateral and extra-territorial inclusion of international aviation in its emissions trading scheme from 2012 is creating discord when we need harmony,”

The EU is currently pressing ahead ahead unilaterally with the intended inclusion of ALL international airlines using EU airspace in its Emissions Trading Scheme that is predicted will cost aviation 1.4 billion Euros annually.  This has natuarally generated huge international anger and opposition (see http://stowawaetravelnews.blogspot.co.uk/2012/05/eu-carbon-tax-war-of-words-ramps-up-ft.html) .   There is currently gamesmanship being played by the EU who, whilst now  agreeing the need for an international solution to replace its EU ETS, is not so far indicating it will postpone its scheme before the first payments are due that it is demanding from international airlines next year.

In an apparenct call for the EU to make a move to encourage the EU to makea gesture that would prevent the situation deteriorating into a series of retaliatory moves against the airlines of Sovereign states refusing to comply with the EU demands and an even broader trade war, Mr Tyler added: "..............Nobody can deny Europe the credit for moving sustainability up the global agenda. States are focused on the issue as never before. The onus is now on Europe to seize the moment, take a credible action to defuse the situation, and get on with finding the global solution that everybody is hoping for....”

In view of the Eurozone crisis, it's clearly in everyone's interest to come up with a solution as soon as possible.  Let's hope that behind the scenes Eurocrats are working on a solution that will avoid such an unwelcome and uneccessary situation........

To see The IATA release click: http://www.iata.org/pressroom/pr/Pages/2012-06-11-04.aspx

Can't Resist Blogging The Thames Pageant - Didn't London do Well!!

Battersea Bridge with Oar Powered "Gloriana" Royal Barge

I don't usually blog about events but when one occurs that will not happen again in two generations' lifetimes at least, it merits a line of two.   When you live 300 yards from the Thames it would have been silly not to go down to the Embankment to take in the atmosphere and the sight of some 1000 craft from kayaks to the Queens Barge and the wonderful "Gloriana" oared barge.  I took a step-ladder and parked it next to a lamp-post (the wind was very gusty).  It was a great vantage point, if a little breezy.  There was a fantastic spirit with the crowds along the river despite the appalling weather.   All the bridges river-side buildings and banks of the river the whole length of the Pageant were thick with people as you can see from the shot just of Battersea Bridge (which was where the Pageant officially started).   They came despite it being windy, cold and grey at first eventually getting very wet later.  This was when I retreated to the TV and a warming cup of tea up the road at home.

Considering the weather the crowds and participants really appeared to enjoy themselves as did the pageant crews.  I escially take my hat off to the rowers and paddlers.   Its a long way by river from the assembly point on the Hammersmith Reach down to the Pool of London beyond Tower Bridge!  I also tip my hat to the two cental figures who at 86 and nearly 91 stood in very cold and windy conditions for over 4 hours without taking a seat!  If I get to be that age and can last 4+ hours standing up in the cold and wind I shall be happily surprised!!   Appart from the BBC's inept and inappropriate coverage, the day was a huge success - all credit to Lord Salisbury and his helpers who organised the event.  Having missed several key moment  of the day, at least the Beeb managed to show the London Philharmonic's musical salute from their barge as it stood off from the Queen's barge at the end of the pageant.  Whilst the orchestra was protected by a see-through tent the choir from the London School of Music were not!  Standing in the open above the orchestra, soaked to the skin with hair dripping wet they belted out the patriotic songs and National Anthem as if in the Albert Hall on the last night of the Proms - great voices and they did it really smiling!!! Gave me a lump in me throat so it did! 

What a lot of people have been saying is that if London can organise and put on a show like the Jubilee Week-end which went so well despite the weather (apart from BBC coverage) we can hope and expect that the organisation of the Olympics will go as well - and hopefully the weather will perk up too! 

IATA end May Report - US Airlines OK - European Not

A350 - (Picture: Airbus.com)

IATA's (International Air Transport Association) April/May Monthly report on the health of the global airline industry just out, shows that oil prices have in fact eased back to the levels last seen in December 2011 and 12% lower than for the period February/March this year.  In the US this has meant that airlines have improved their profitabily through a combination of lower (dollar) fuel costs and increasing passenger demand.  By limiting the increase in the number of seats available in the face of rising demand, US airlines have achieved good load factors. 

In Europe the Eurozone crisis has put the currency under pressure versus the dollar.  Hence the drop in  fuel costs (which are priced in Dollars) has been somewhat offset by the weaker Euro and the Eurozone crisis.  Globally, in terms of profitability only US airlines have fared better in the first quarter 2012 than in Q1 2011.


The Saudis have made good their promise to increase production and this has taken the pressure off crude oil.   Brent Crude the benchmark price for crude oil broke the $100 barrier  to fixe under $100 for the first time in 240 days. The consequences of the threatend embargo on Iranian Oil in July is obviously an unknown factor which could well put oil into an uptrend again.  However, for the timebeing, if recovering worldwide passenger demand (an above 20 yr trend of 6%) continues plus cheaper fuel, should airlines resist increasing seat availability and maintain viable load factors, they may just improve profitability despite softer airfares around the world.