Best of AERBT – Olympic Worries, Lost Aviation Years & WTO Verdict-Boeing v Airbus

Keeping the lawyers busy

Olympic Worries By The Airlines

The heads of the UK’s four major airlines have warned the British Government that there could be chaos at London’s airports during this summer’s Olympic Games, which would cause major embarrassment to the country unless a deal can be reached over their concerns.

In a blunt letter to the Department for Transport, British Airways, bmi, Virgin Atlantic and easyJet said time was running out to tackle the expected surge in air traffic and its impact.

Sir Roy McNulty, former Chairman of the CAA and currently Deputy Chairman of the Olympic Delivery Authority (ODA), recently spoke to the executive aviation community on the subject

According to the airlines’ bosses, failure to address their concerns could bring misery to millions of travellers including those coming to London for the world’s biggest sporting event.

“As the situation currently stands the industry believes that there is a significant risk of severe delay and disruption at all of London’s major airports unless urgent action is taken,” they wrote in a letter to the Government.  “Time is running out to ensure that any changes to procedures and the appropriate training are in place prior to the Games.”

The Civil Aviation Authority told a meeting of airline executives on Thursday that their call for their scheduled flights to be given priority over business jets and smaller aircraft would be difficult to execute and legally questionable. www.caa.co.uk

Comment: The Lost Aviation Years or an About-Turn?

Confused regarding the Government’s policy on Air Transport?  Or does it have a policy on aviation?

Last Wednesday’s Budget hardly mentioned the business of airlines, the life blood of the country.  Pleas regarding Air Passenger Duty (APD) were totally ignored.  Chancellor George Osborne did acknowledge that something had to happen.  Was this an about-turn?  On Thursday the Department for Transport (Strategic Information Officer) issued what was termed “The Aviation Policy Framework and Hub Call for Evidence” confirming action “in the summer”.  By Friday the Budget debate was under way in the House with the Secretary of State for Transport Justine Greening telling MPs the Government was determined to ensure the UK remained internationally-competitive.

She said: “We should remember that our country and our capital are right up there with the very best when it comes to international connections.”  Some would argue that point.

It looks like we have lost a decade.  When it came to power this Government hastily jumped in and scrapped the 2003 Aviation White Paper.  A scoping document was published in March 2011 with the closing date for evidence 20 October last year.  Five months on and nothing.  With this latest delay and no fixed date for publication the London Mayoral election has been taken out of the scenario.  Will something be announced hours before the recess?  We then have the party conferences.  By the end of the year Westminster will be already looking towards May 2015 and an election.  If Ms Greening, MP for Putney, still holds the transport portfolio will she be campaigning for the nation, Heathrow, or her own seat?  In case anyone has forgotten, the excellent Gatwick – Heathrow helicopter link was destroyed for constituency requirements, not for its undoubted value?

Outside Parliament every business orientated lobby group is shouting for action and wanting to be heard.

However we may have a white knight from an unexpected source.  The All Party Parliamentary Group on Aviation (APPGA), chaired by Brian Donohoe, Labour MP for Ayr, has today announced its own enquiry, which will last for seven weeks. inviting a wide range of aviation stakeholders to provide written evidence by 16 May.

The House itself has recognised the urgency of the situation.  Mr Donohoe sums up.

“The UK’s aviation industry is at a crucial juncture.  Air Passenger Duty will rise next week by twice the rate of inflation and the Government has announced that it is re-igniting the debate on airport capacity in the South East.

The aviation industry makes an enormous contribution to the UK economy, directly employing more than 352,000 people and paying in excess of £8.6bn in tax each year as well as contributing more than £50bn to GDP.  Its impact is far reaching: supporting a further 600,000 jobs indirectly, acting as the gateway for the vast majority of Britain’s inbound tourism and driving economic growth more widely.

However, the sad truth is that it is simply not competitive internationally: the World Economic Forum’s recent tourism competitiveness report ranked the UK 134th out of 138 countries for air ticket taxes and airport charges.  This inquiry will explore to what extent Government policy-making is responsible for this and what more can be done to improve the long-term prospect of the UK as an important international aviation hub.”

AERBT believes the Government must, as soon as possible, declare the policy of “no new runway in the South East” dead and then make a rational decision to either build a new airport, expand an existing operation, including Heathrow, or our own favoured quick mid-term cash positive/low-cost solution, turn RAF Northolt into a civilian operation.

Ten years have been lost.  Thankfully we have had the about-turn.  No more delays please.  Let us all march forward together.

Airbus and Boeing – The WTO’s Verdict

Last week the World Trade Organisation (WTO) pronounced on the alleged subsidy row between Airbus and Boeing with both sides claiming victory.  AERBT, rather like all watchers of the air transport scene, was confused.  There is fierce competition between airlines and the suppliers of their aircraft.  Airlines seek fuel-efficient aircraft at the best price.  Thus, the Boeing/Airbus subsidies cases at the WTO matter greatly.  Clearly the only ones to benefit are the lawyers.  So we asked our tame legal experts to clarify.

Gates and Partners explain.

“The WTO examined both sides’ allegations and asked: was there a subsidy?  Was it “specific”?  Did specific subsidies cause “adverse effects” and what remedies apply?

The US alleged that the EU and France, Germany, Spain and the UK had subsidised Airbus over 300 times in 40 years.  The EU complained that the US had subsidised Boeing for up to US$19.1bn between 1989 and 2006.

The WTO Panel in both cases partly upheld and partly dismissed the two sides’ complaints.  The Appellate Body upheld key Panel findings and dismissed others.  There is a sense that Airbus has edged a narrow victory at the WTO, complementing its recent lead over Boeing in orders and deliveries.” www.gatesandpartners.com

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An Executive Review of Business Travel is compiled and edited by Malcolm Ginsberg & team. It publishes every Monday. We present highlights here with their permission.

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