News

08 November 2018

AOA Annual Conference 2018: here’s what happened

Day 1: setting the scene for a growing aviation market

Ed Anderson, AOA Chairman opened the conference by setting out the benefits that aviation delivers and emphasising that it is a catalyst for economic growth.

He told the conference: “Given the benefits that aviation brings to people and business across the UK, the Aviation Strategy should be the opportunity to actively encourage aviation and connectivity growth to ensure that more people and more parts of the UK can reap the benefits that aviation can deliver.  We would like the strategy not just to note that aviation growth happens, but to actively promote that growth to maximise the economic benefits”.

Mr Anderson said that the Government had many important levers that could affect the extent to which connectivity grows.  “Our airspace needs to be modernised.  That requires clear Government leadership” and the same was true of surface access to airports.   The Aviation Strategy was “a perfect opportunity to set out a clear framework for growth, including stating clearly under what conditions there would be a presumption in favour of development.  Of course, we understand that this would include environmental conditions.  Our licence to grow depends on our ability to do so sustainably”.

On Brexit he said Ministers understood the issues for aviation, but added: “We are, however, concerned at the lack of progress in this aspect of the Brexit negotiations”.  He urged the Government to “keep this at the top of their Brexit priorities”, noting that securing the withdrawal and transition agreements as soon as possible would give passengers the certainty to book with confidence for summer 2019.

Mr Anderson told the conference that he would be standing down as AOA Chairman after 11 years at the AOA’s annual dinner on 5 March next year.

Chris Grayling MP, Secretary of State for Transport said that Mr Anderson had done “a fantastic job” for the AOA over the years and that he would be “a hard act to follow”.

Transport Secretary Chris Grayling MP at the AOA Annual Conference

Mr Grayling said that the Government Green Paper on the Aviation Strategy would be published in December and followed by a final document next year.  The Green Paper would set out proposals to enable sustainable growth across the country.  It would put the passenger at the heart of aviation policy and would require a partnership between the industry and Government.  He said that at the top of the list of issues that needed to be dealt with was the airspace challenge and that airspace modernisation was “an increasingly pressing issue”.

Dealing with Brexit, Mr Grayling said that it was in everyone’s interests to ensure that that there would be no disruption of air services.  The Government was ready to start talks on an aviation agreement with the European Commission as soon as it was ready.  In the absence of a UK-EU agreement flights would be the subject of bilateral agreements with member states, but he emphasised that “there is nobody who thinks the planes are going to stop.  There is nobody who either expects or wants any interruption to aviation”.

On Heathrow expansion, Mr Grayling noted that Parliament had voted overwhelmingly to give outline planning consent for the new runway.  He acknowledged that the approval process for the new runway would be contested in the courts next March, but said the Government was hopeful there would be a legal ruling that processes had been correctly followed and that the new runway would be open in the middle of the next decade.

Karl Turner MP, Shadow Minister for Aviation said the Labour party believed that a strong aviation sector was vital to the UK’s status as a global, outward-looking nation and a future Labour government would seek to ensure that the aviation industry continued to thrive.

Shadow Aviation Minister Karl Turner MP speaking at the AOA Annual Conference

On Brexit he said that Labour had always maintained that aviation should have been a priority in the negotiations.  Any new service agreements for the aviation industry should seek to replicate the existing arrangements as much as possible.  It would be important to retain access to the Single European Sky and the Open Skies agreement with the United States, as well as membership of EASA.  UK air passenger rights following Brexit should be no less than they are currently.  Mr Turner said he thought that no deal was becoming more likely, but that it would be completely unacceptable.

The Shadow Minister for Aviation said that Government cuts to Border Force budgets and staff levels had been far too deep and urged Ministers to commit to extra resources for Border Force.  There had been “more misery and chaos for passengers this summer” and that could easily worsen after Brexit.

On Heathrow expansion, Mr Turner said that, although Labour had opposed the new runway, it had allowed a free vote for Labour MPs.  He didn’t think that “the Labour party would come into power and scrap Heathrow”.  He said that Labour understood the importance of better surface access for airports across the country and Labour wanted to see more passengers travelling to airports by public transport.  He pointed to poor links with airports in the North of England and said that Labour supports a Crossrail for the North.

The newest CEOs at UK airports

In a panel discussion four new airport chief executives gave insights into the opportunities and challenges facing their airports:

From left to right, Dave Lees – CEO, Bristol Airport; John Irving – CEO, Liverpool Airport; Derek Provan – CEO, AGS Airports and Karen Smart – MD, East Midlands Airport

Karen Smart, Managing Director, East Midlands Airport said that East Midlands was the No 1 airport for dedicated freight aircraft in the UK and the only UK airport with unrestricted 24-hour flying facilities, with 11 p.m. to 2 a.m. its busiest time.  The airport had seen 10% year-on-year growth in the freight operation.  It has concerns that a no deal Brexit could result in lorry drivers being stuck on the M1 and is working with local authorities to identify space to hold vehicles.

Dave Lees, Chief Executive Officer, Bristol Airport said that Bristol benefits from a very large catchment area.  He would be working to secure greater densification on existing European routes and to attract new routes, with Istanbul being one target.  Mr Lees said that Bristol is one of the worst-served airports in terms of public access, with no rail line, motorway or dual carriageway and he would be working to build the case for surface access improvements.

John Irving, Chief Executive, Liverpool John Lennon Airport said his biggest surprise on taking on his role was the level of inbound tourism for which the airport caters.  The airport was nearly twice as busy in the summer as in the winter and this summer it had been much harder than previously to recruit enough seasonal workers.

 Derek Provan, Chief Executive Officer, AGS Airports (Aberdeen, Glasgow and Southampton) said that high levels of Air Passenger Duty had been a key driver of Ryanair’s decision this year to pull 20 routes from Glasgow Airport.  He said that local communities around Southampton Airport had been very positive about the airport’s plan to extend its runway.  Mr Provan said that the Transport Secretary’s statement that disruption to air travel after Brexit was “unlikely” was insufficient to reassure passengers.

A Growing Aviation Market?

Martin Bowman, Director of Aviation Technology, Deloitte set the scene for a panel discussion on a growing aviation market.

He said that, according to IATA figures, the number of passengers is set to double between now and 2040, which would increase the risk of delays.  He noted that this year had been worse than last for delays and that the cost of a minute’s delay to an airline was €100 per passenger.

Mr Bowman suggested that airports should consider a three-point plan to minimise the impact of delays:  they should adopt a marginal gains mindset, looking for incremental improvements that would claw back valuable seconds; they should leverage the UK’s unique expertise in accommodating growth in a capacity-constrained environment and they should put data at the heart of decision-making, applying predictive analysis to forecast what was likely to happen.  They should also seek to work more collaboratively with airlines, air traffic controllers and ground handlers.

A Growing Aviation Industry discussion at the AOA Annual Conference

Stewart Wingate, Chief Executive Officer, London Gatwick Airport said that Gatwick had experienced a very strong period of growth with passenger numbers up from 32 million in 2010 to 47 million this year.  Gatwick recognised the Government’s decision to support a new runway at Heathrow and would not pursue an additional runway at Gatwick at present.  Instead it proposed to take advantage of the ending of legal restrictions on the use of its standby runway in August 2019 to use this runway for take-offs by small aircraft, which would allow for up to 30% additional growth and improve resilience.  This low-cost infrastructure improvement could be open by 2025 and enable Gatwick to secure more long-haul routes.

Bob Schumacher, Managing Director UK & Ireland, United Airlines said that profound growth in the US economy had helped to create one of the best revenue environments that United had ever seen.  The airline was looking at “a very rosy future” internationally as it expected to benefit from the growth of the middle class around the world.

Sophie Dekkers, UK Country Director, easyJet said that there were several factors that could be “game-changers” for easyJet routes to and from regional UK airports, including the Airbus neo engine, the move to develop the first electric-powered commercial jet engine over the next decade, an increased use of data scientists and possible reductions in Air Passenger Duty.  She said that easyJet would not consider operating out of Heathrow unless it could secure a substantial number of slots.

Andrew Bell, Chief Executive, Regional & City Airports (owner of Bournemouth, Coventry, Exeter and Norwich Airports) said that the Aviation Strategy should be a blueprint for the entire aviation industry, helping to unlock the potential of capacity that had a great deal of potential but that was not currently being fully used.  He suggested that post-Brexit the Government should consider extending the concept of freeports to airports to encourage businesses and their supply chains to base themselves at airport locations.

 The passenger experience of the future

Anthony Smith, Chief Executive, Transport Focus (the road, rail and bus users’ watchdog) set the scene for a panel discussion on the passenger experience of the future.

Mr Smith said it was important for airports to get the basics right and to work to ensure that passengers have an experience that was as hassle-free, quick and painless as possible.  Punctuality, delays and accessibility for passengers with reduced mobility were key issues. The aim should be to ensure that the experience did not degrade as passenger numbers grew.  He said that in his view Terminal 2 at Heathrow was a “really impressive” example of a hassle-free experience.

Nick Barton, Chief Executive Officer, London Luton Airport agreed that removing unnecessary interventions to make the experience the least frustrating and upsetting that it could be was key.  A great airport was one that could reduce as much of the hassle as possible and an airport could make its reputation by how it dealt with unforeseen events.  He forecast that technology would be the solution to a lot of the challenges that passengers experienced.

Robert Sinclair, Chief Executive Officer, London City Airport said that London City was spending £500 million on an expansion programme that would see a four-fold increase in the size of its currently tiny terminal building.  It would also take the opportunity to create an ambience that would give passengers a real sense of place and of the diversity and dynamism of modern London.

Alan Thompson, Director of Developments, Portland Design, which has designed 42 airports over the last 15 years, agreed that every airport should be different and should have its own sense of place.  An emphasis on this “spirit of place” would help to create an experience of note for airport guests.

Andy Smith, Business Development Director, SITA said that, while airports were not destinations in themselves, they needed to deliver the best experience.  For years complaints had centred on inbound baggage, but that had changed in the last few years and the passenger focus was now on outbound security and inbound immigration.  He said that biometric, face-only boarding could shave 10 minutes off boarding times and ought to be considered for arrivals in the UK.

Extending the use of ePassport Gates to Australian, Canadian, Japanese, New Zealand and US citizens

Paul Lincoln, Director General, Border Force closed the first day of the conference by giving an update on Border Force plans to improve the passenger experience at airports.

Paul Lincoln – Director General, Border Force at the AOA Annual Conference

He said that Border Force recognised that there was a justified requirement to improve the passenger experience and that no-one wanted to see a repeat of the kind of queues that were experienced at Heathrow this summer.

Border Force needed to be able to deal with both continuously increasing demand and possible changes resulting from Brexit.  On Brexit it was working closely with other Government departments as part of a cross-border delivery group.  It had already recruited a 300-strong readiness task force and an additional 600 staff were being recruited for next year.  It was undertaking “an ambitious reform agenda” and would need the collaboration of the AOA and its members “to make sure that our plans are aligned and that we can tackle this challenge together”.

Mr Lincoln said that the continued roll-out of e-passport gates was helping to deliver an improved service and 72% of eligible passengers were now using these gates.  He said that the Chancellor of the Exchequer, Philip Hammond, had just announced in his Budget speech that nationals of the United States, Canada, Australia, New Zealand and Japan would be able to use these gates.  Greater use of automation would enable staff to spend more time dealing with those who might pose the greatest security risk.

Day 2: building a sustainable aviation future with a skilled and diverse workforce

Martin Rolfe – CEO, NATS speaking at the AOA Annual Conference

Martin Rolfe, Chief Executive Officer, NATS opened the second day of the conference with a presentation on the Airspace of the Future.

He said that the UK had experienced six consecutive years of growth in air traffic and this summer had been the busiest on record.  Without a redesign of airspace by 2030 delays could be up to half an hour per flight, which would result in a breakdown of connectivity.  The UK needed to build an airspace infrastructure that could support the country’s ambitions for years to come.  He said that the Government had agreed that airspace modernisation was a priority and had made it one of the pillars of its Aviation Strategy.

An investment programme of up to £800 million had started five years’ ago and the main project, the London Airspace Management Programme, was already underway.  From a technological perspective the programme was on track, but there was still a need to get better at explaining the issues to communities to build a consensus that everyone could get behind over the next five years, with everybody understanding that our airspace is a national asset.

Mr Rolfe said that the UK had always been an aviation pioneer.  The country occupied an incredibly lucky geographical space and needed to capitalise on the geographical advantage that it had been granted.  Decisions that were taken today would shape our place in the world for decades to come.  Airspace modernisation was both necessary and urgent.

Next steps for sustainable aviation

Neil Robinson, Chair, Sustainable Aviation set the scene for a panel discussion on sustainable airports and aviation.

He said that the recent report from the UN Intergovernmental Panel on Climate Change made “very compelling reading”, which the aviation industry took extremely seriously, recognising the gravity of the issue and the existential challenges that it posed for the entire industry.  He was confident that a thriving, flourishing and growing aviation sector could be consistent with a carbon-constrained world.

Mr Robinson said that he fully expected and anticipated that aviation would continue to grow, but that there could at the same time be a 9% reduction in carbon emissions.  Fuel efficiency was likely to increase by 40% and he was optimistic that sustainable fuels could be produced at scale, accounting for 18% of the inroads into emissions by 2050.

Carbon neutrality for 2050 would be secured by the carbon offsetting and reduction scheme for international aviation, to which 70% of states, accounting for 90% of global emissions, had signed up.  This was not “some sort of cheap, get-out-of-jail system”.  The offsets that were eligible would be of very high quality, would result in enduring carbon savings and would cost the industry multiple billions of dollars. The strength of the scheme was that it offered a global solution for a global industry.

Lord Deben, Chair of the Committee on Climate Change, speaking at the AOA Annual Conference

Lord Deben, Chair, Committee on Climate Change, which provides independent advice to government on building a low-carbon economy and preparing for climate change, recalled that he had spoken to an AOA conference in Cardiff 15 years’ ago and had urged the industry to “wake up and smell the coffee”.  Today he said he was “incredibly enthusiastic” about all the changes that the industry had made.  It was, he said, “always dangerous to be complacent, but I have to say thank you.  I do think the industry has done a remarkable amount and I congratulate you”.  The challenge now would be to ensure that the industry kept its feet to the fire and was ready to deal with the fact that the cost of offsets was likely to go up and that the targets set for the sector could yet be toughened.

Simon McNamara, Area Manager, UK & Ireland, IATA said that the global airline industry had made significant commitments on both noise and carbon dioxide.  It had plans in place to achieve reductions in emissions through a combination of improvements to technology, operations, infrastructure and market-based measures.  He described the carbon offsetting and reduction scheme for international aviation as “historic”.

Gordon Dewar, Chief Executive, Edinburgh Airport commented on the 29 October announcement by the Civil Aviation Authority that it had rejected Edinburgh’s proposal to change a flight path.  It acknowledged that the airport had engaged extensively with communities during the consultation.  However, it said that the differences between the proposal developed in consultation and the final proposal submitted to the CAA were too significant.  Mr Dewar said the conclusion he drew was that airports would have to accept that for every airspace change being considered there would be a minimum of four consultation rounds, turning a £1.5 million 18-month programme into a minimum of two years and £2 million.  He said that Edinburgh accepted the CAA’s decision and would recommence the consultation process.

Paul Stein, Chief Technology Officer, Rolls Royce said that technological evolution of engine development was continuing and delivering significant reductions in carbon emissions, but the real revolution would come with electric engines.  His expectation was that by the middle of the 2030s electrification could be having a serious impact on regional flights, particularly in countries with under-developed rail and road infrastructure, such as Indonesia and the United States.

Paul Everitt, Chief Executive Officer, ADS Group said that the aerospace industry had a pretty good environmental record.  Nevertheless, it recognised that there would be more pressure to do more and to do it more quickly.  The sector’s challenge would be to introduce and manage bigger changes.  It would take time and the industry would need to recognise that it would have to pull a variety of levers to be successful.  There would be an important role for Government to play in supporting the industry.  Airports would need to recognise that electric-powered aircraft would require infrastructure to accommodate them.

Building a skilled and diverse workforce

Matthew Fell, Chief UK Policy Director, CBI set the scene for a panel discussion on the workforce of the future – skills and diversity.

Giving a foretaste of a CBI skills survey being published in November, Mr Fell said “the gap between the skills that we need and the skills that we have isn’t narrowing.  It is growing.  It is a pretty damning account of our national skills picture.  The UK has something of a skills crisis”.  To fix it, Mr Fell said three things were needed:  an education system that wasn’t just an exam factory but encouraged young people to be inquisitive and prepared them for the modern world, harnessing the power of business to improve the education and skills system and creating the right conditions for life-long learning after people left school.

Steve Griffiths, Chief Operating Officer, London Stansted Airport described how Stansted has invested in the first purpose-built on-site college at a UK airport, with qualifications offered by Harlow College.  It opened in September with nearly 300 students enrolled and with a focus on science, technology, engineering and other skills required in the aviation sector.  He said that, with unemployment very low in the region, there were across-the-board skills gaps in security, customer-facing roles, maintenance and the fire service.

The aviation workforce of the future discussion at the AOA Annual Conference

 Dr Andrew J Timmis, Air Transport Lecturer, Loughborough University said that a significant proportion of his students aspire to be pilots or airport managers.  About half of them do 12-month placements.  Industry advisory boards are used to help shape how courses develop.  He said that the UK needs to move away from a system that educates to the age of 23 to a life-long learning process.

Al Titterington, Managing Director, Cornwall Airport Newquay said that his airport would continue to be a training centre for UK aviation but now has a new focus on its plans for a spaceport.  The airport has announced a partnership with Virgin Orbit to pioneer horizontal satellite launches from the UK, with a 2021 target date for the first launch.  Nearby Goonhilly Earth Station will provide mission management services.  Mr Titterington said that initially there would be a reliance on bringing in skills from the US, but the objective was to encourage, inspire, train and educate future generations locally.

Karen Dee, Chief Executive, Airport Operators Association said that the aviation sector had an ageing workforce and was heavily male-dominated.  It needed to attract greater numbers of skilled entrants and become more diverse.  The Women in Aviation and Aerospace Charter, launched with Government support in July, aimed to focus on this and to build a more balanced and fairer industry for women.  She said that greater visibility of successful women in the sector was important to encourage the female leaders of the future.

The Big Interview: Emma Gilthorpe, Heathrow Airport

The conference closed with interviews by Mishal Husain with two female leaders, Heathrow’s Emma Gilthorpe and Flybe’s Christine Ourmieres-Widener, the UK’s only female airline CEO.

Emma Gilthorpe – Executive Director Expansion, Heathrow Airport at the AOA Annual Conference

Emma Gilthorpe, Executive Director Expansion, Heathrow Airport said that MPs had voted by almost four to one to support the plan for a new runway at Heathrow, giving the airport the green light to prepare its Development Consent Order application.  Although the plan faces a legal challenge next March, she said she was confident that the courts would rule that the Government had followed the correct processes.  Consultations with the local community next year should provide the basis for approval of the Development Consent Order in 2021, leaving Heathrow on track to open the new runway by the end of 2026.

Ms Gilthorpe said that the new runway would be a massive opportunity to introduce new airlines at Heathrow, as it would enable 40 new long-haul routes and eight new domestic routes.  She emphasised that the airport had yet to settle on a fixed plan, since it first wanted to hear from residents.  Asked what her biggest concern was, she replied: “I worry about the local communities.  Have we done everything in our power to minimise the impact?  We need to respond to their concerns.  It is a daily struggle.  We need to keep working on it”.

She said that the expansion was fully privately- funded and the airport’s objective was to deliver the new runway for airlines at close to current charges, concluding: “We have a plan that I believe in that will get a runway open in 2026.  It is absolutely deliverable”.

The Big Interview: Christine Ourmières-Widener, Flybe 

Christine Ourmieres-Widener – Chief Executive, Flybe at the AOA Annual Conference

Christine Ourmières-Widener, Chief Executive Officer, Flybe was speaking to the conference two weeks after her airline issued a profits warning which forecast softening revenues over the next six months due to falling consumer demand.

She said that the airline had the right strategy to achieve a turn around by reducing capacity and would continue to act, but it faces a series of headwinds, including currency losses and fuel and carbon emission prices.   Brexit-related uncertainty was a factor and the prospect of Brexit had already hit the economy by reducing the value of the pound; 80% of Flybe’s revenue was in pounds, while most of its costs were in dollars.  All major airlines were affected but Flybe was in a different ball-game because of its size and fare levels.  Compared to bigger airlines Flybe had much less visibility about forward bookings.

Ms Ourmières-Widener said that Flybe was definitely “the flying school for the UK”, but that the airline faces a continuing issue of pilot attrition.  One way that it was seeking to deal with this was through its FlyShe campaign, which is aimed at inspiring the next generation of young women to consider a career in aviation.  She said that Flybe could offer women pilots an attractive work-life balance and that attracting more female pilots would be a fantastic solution to the attrition issue.

Asked if her job was enjoyable, she concluded: “It is a challenging job.  If you are not ready for big challenge you better take another job.  I have a great time.  Yes, I am enjoying my job, which is to show that Flybe is a sustainable airline”.