30th April 2012
Slowdown in cheap flights gives boost to British economy
New figures published by the Office of National Statistics show that the British are taking almost 20 per cent fewer overseas holidays compared to three years ago, whilst the number of foreign tourists visiting the UK is virtually unchanged. This means a major boost for the UK Balance of Payments and shows that the Government’s policy of increasing Air Passenger Duty (APD) is actually benefitting the UK economy, contrary to the claims made by the UK’s major airlines.
The latest statistics show a decrease in overseas leisure trips by UK residents from 60 million to 49 million between 2008 and 2011 leading to a reduction in the UK’s tourism trade deficit from £20 billion to £13 billion. Inbound tourist numbers fell by just 300,000 over the same period. The figures are a powerful endorsement of the argument long put forward by Stop Stansted Expansion (SSE) that the boom in cheap leisure flights and the generous tax breaks given to the aviation industry actually harm the UK economy and damage traditional tourist destinations in the UK such as the Cotswolds, Norfolk Broads and Lake District.
The figures also demonstrate the fallacy of claims by British Airways, Virgin Atlantic, Easyjet and Ryanair that increased levels of APD are driving away foreign tourists. It is now clear that the real impact is to dampen the demand for overseas leisure flights by UK residents and there has been a negligible impact on inbound tourism to the UK.
Stansted, once the UK Mecca for cheap leisure flights, has seen passenger numbers fall by more than a quarter since its 2007 peak and last year it handled fewer passengers than in 2003.
SSE Economics Adviser Brian Ross commented: “The cheap flights boom was always going to be unsustainable for the UK economy and exempting airlines from fuel duty and VAT simply encouraged more and more British people to spend their money in other countries. At least now, with increases in APD, we’re moving in the right direction but APD would need to increase four-fold to compensate for the fuel duty and VAT exemptions enjoyed by the aviation industry.”
- The above figures have been derived by SSE from the ONS (provisional) MQ6 report for the final quarter of 2011 and from the 2010 edition of Travel Trends, also by the ONS.
- Details of the calculations are available on request. The SSE calculations produce almost exactly the same numbers as VisitBritain even though a different methodology is used. SSE submitted a detailed paper to the Department for Transport in August 2011, setting out the links between the growth in cheap flights, the UK tourism deficit, investment and jobs:
- Stansted handled 18.0m passengers in 2011 compared to 23.8m at its peak (2007).