The Recession, APD and Fast Trains: Three risks to Scotland's airline industry

Most news relating to the UK airline industry currently is focused on either the proposed expansion at Heathrow or how the recession is affecting airport traffic to and from the US and Europe. According to BAA, overall airline traffic in the UK has fallen by 7.3 percent in May, which is down 5.6 percent in comparison to a year ago - with both Gatwick and Heathrow showing dropping figures. Yet, in the context of the commonwealth, Scotland may have the hardest battle on its hands.

Actually, in regards to the recession and its impact on travel, its affect on Scotland is not all bad - at least, it is certainly not black and white. In fact, according to BAA Edinburgh is the only UK airport to have seen a rise (1.4 percent) in airport traffic during May, but is still not processing as many passengers as it was a year ago with a fall of 2.5 percent. Additionally, Aberdeen and Glasgow reported worse figures, -14.1 and -11.7 respectively during May. Bringing Scotland's average to -6.2.

Another general difficulty for the airline industry at the moment is the Air Passenger Duty. After being double in February 2007, November will see further changes to the tax as the government tries to cut carbon dioxide emissions by 0.3 million tonnes every year. November will see £11 being added to ticket prices for flights up to 2,000 miles, £45 for flights from 2,001 miles to 4,000 miles, £50 for flights from 4,001 miles to 6,000 miles, and £55 for flights over 6,000 miles. These prices are also set to increase again in 2010.

However, a new issue that is more specific to Scotland is proposed to cut air travel by another third. A recent report entitled Rail First has been published by AirportWatch Scotland, a movement opposed to unsustainable airport expansion, which suggests investment in high speed trains will cut air travel from Scotland to England by 33 percent. The report highlights that 60 percent of all flights from Edinburgh and Glasgow serve mainland UK destinations, and that MSPs have applied for Scotland to be the one of the first areas to benefit from fast trains.

Of course, for many customers the short-term consequences of the changing airline industry are likely to be positive. At least where APD remains quite cheap, we are likely to see many passengers benefiting from competitive ticket prices and being able to cut costs or spend their savings elsewhere such as on airport parking, accommodation, and business class flights. However, in the long-term, critics are warning of less choice for customers, and a lack of services to smaller destinations - as well as poorer economic prospects.

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