Civil Aviation Authority reports slowdown in UK air passenger growth since 2005

Fri 11 Jan 2008 – The United Kingdom’s Civil Aviation Authority (CAA) has published a report ‘Recent Trends in Growth of UK Air Passenger Demand’, which sets out an analysis of how growth in different segments of passenger traffic at UK airports has changed in recent years and the likely causes of these changes.
It investigates four factors: broader economic trends, competition with rail, aviation cost pressures and attitudes towards the environment. It also examines the inclination to fly of different leisure passenger types, in particular the relationship with income, demographic factors and property ownership abroad.
The report finds that annual air passenger growth overall has fallen in recent years to approximately 2%, compared to a historical annual average of around 6% since the mid 1970s. UK air passenger growth in 2006 was slower than in 14 other developed aviation markets in the EU, many of which saw GDP growth similar to the UK.
There are winners and losers in the various passenger type segments. International holidays taken by UK residents accounted for a modest growth of only 0.2% in the year to June 2007 and UK domestic travel fell by 1.4% in the year to October 2007. Although the growth rate in low-cost airline passenger travel is around 10%, there has been a marked annual slowdown in this sector.
There have been above average growth increases in certain international traffic segments. Business travel (which accounts for 12% of all passengers), leisure travel to visit friends and relatives (15% of all passengers), and non-UK resident holiday travel (6% of all passengers) have all continued to increase at or above the 6% historic growth rate.
The growth in UK residents visiting friends and relatives abroad has been sustained mainly by nationals of other EU countries resident in the UK, with annual growth rates in the last couple of years exceeding 20%. This highlights, says the report, how the freedom of movement of labour and liberalization of markets within the EU have affected the UK economy.
Data from the 2007 CAA Passenger Survey indicates that those UK residents who used UK airports took, on average, around two and a quarter return flights per year in 2007 for leisure purposes. However, other surveys indicate that this represents only a subset of the UK population as a whole, up to half of whom will not fly at all in any 12-month period.
The report attributes much of the lower overall growth to a slowdown in consumer expenditure growth experienced in 2005 and 2006. The slower growth in domestic air travel, which accounts for 20% of all trips, is mainly the result of competition from other modes of transport, particularly the improvements to long-distance rail services, and the increased journey times by air due to longer security procedures at airports.
As the slowdown pre-dates both, the CAA does not believe the increases in passed-on fuel charges or the doubling of Air Passenger Duty in February 2007 have been primary causes.
The report has also found little evidence that consideration for the environment has played a part in curbing growth in air travel. It points to a Department for Transport survey carried out in May 2006, which commented that of all the interviewees who were anticipating taking fewer flights in the following 12 months, none mentioned environmental concerns as a reason for reducing trips. It also mentions a Commission for Integrated Transport survey in February 2007 into public attitudes to aviation and climate change, which stated: “Only a small proportion [of respondents] expect to fly less frequently in the future, and this is predominantly due to changes in personal circumstances rather than a concern about the environmental impact of aviation.”
Traffic growth in the near future, concludes the report, is more likely to be affected by changes in the cost of aviation rather than attitudes of passengers to the environmental effects of flying.
Commenting on the report, Dr Harry Bush, the CAA’s Group Director, Economic Regulation, said: “The CAA’s analysis shows the impact on passenger air travel of recent slowing of consumer expenditure, but also indicates a significant impact from the recovery of rail travel and from the increasing internationalization of the UK economy, with the consequent growth in air travel to visit family members or friends in other countries.
“Looking to the longer term, demographic changes and ownership of homes abroad are also likely to buttress air travel demand, although small changes in frequency of leisure travel between mid and higher levels of income suggest demand growth is constrained to some extent by factors other than income, such as availability of leisure time.”



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