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How the government can step up to secure the future of air freight
The air freight industry is vital to the UK economy, with almost half (49%) of the total value of UK exports outside of the EU transported by air before the pandemic.
As the UK seeks to establish new international trading relationships post-Brexit and rebuild its economy following the COVID-19 pandemic, government support for this industry is essential. To facilitate the sustainable growth of air freight, in June 2021 Logistics UK and Aberdeen Standard Investment’s AIPUT fund (Airport Industrial Property Unit Trust) published a ‘call for action’, setting out 11 key steps the government and the industry should take to secure a prosperous future for UK air freight.
CALL TO ACTION
Research for the ‘call to action’ began in February 2021, when Logistics UK and AIPUT hosted a policy roundtable with representatives from across the aviation industry. Using insights from the roundtable, Logistics UK and AIPUT worked together to produce a paper that details the steps industry believes are necessary to assure the future strength of UK and reinforce its position as a leading global trading nation in a post-Brexit world. The key priorities identified for both government and industry are detailed below.
PERCEPTION OF AVIATION
Air freight and passenger aviation is a key driver of economic growth, both in terms of financial contribution and employment. The government needs to give a clear signal that it is supportive of air freight, and values it as a sector of national strategic importance. Aviation has a strong reputation for innovation and has supported the UK throughout the COVID-19 pandemic – now is the time to consider it as a crucial component of a global-trading, outward-looking Britain.
Passenger and freight operations work in tandem: prior to the pandemic, 95% of cargo at Heathrow Airport was carried in the belly hold of passenger planes. Capacity in the air freight network is key, with freighter operations working alongside and complementing capacity provided by passenger services. Any assistance and support from government needs to be targeted at aviation in general, without emphasising help for passenger services above freight, or vice versa; the fortunes of both are intertwined.
Effective transport and real estate infrastructure is vital for efficient air cargo operations; the UK needs to facilitate the delivery of upgrades across its airports.
Payment “holidays” for Air Passenger Duty (APD) and business rates would assist the sector as it recovers from the pandemic both operationally and financially with flight levels still to return to pre-pandemic levels; such support would also signal the government’s appreciation of the industry’s strategic importance to UK plc.
The logistics industry has made clear that it needs to see the UK government’s negotiations with the EU on traffic rights to be accelerated to open up key markets and routes. This would build on the foundations laid out in the Trade and Cooperation Agreement (TCA) and help to ensure that air cargo can continue moving and operating efficiently. Logistics UK, working with AIPUT, is seeking two priority changes. First, UK carriers are not currently operating on a level playing field owing to the Department for Transport (DfT) and Civil Aviation Authority’s (CAA) liberal view on approval of traffic rights for EU operators which are not currently reciprocated; Logistics UK and AIPUT are calling on the EU to grant equivalent rights to UK operators. Second, Logistics UK and AIPUT are seeking additional traffic rights beyond the first four freedoms of the air agreed in the TCA. The fifth freedom is vital for air cargo, as it enables a plane to take off in the UK, land in an EU member state, unload cargo and continue its journey onto a second country with additional cargo. Logistics UK and AIPUT ask for a long-term sustainable plan for traffic rights.
A healthy air freight sector is an essential part of a global digital economy. Consumer behaviour over the course of the pandemic and recent years has led to an increase in e-commerce, with the UK now one of the top three online shopping nations. With just-in-time and next day deliveries no longer an ambition but a consumer expectation, express freight airlines operate a significant number of services to support e-commerce – such as moving goods between working days (overnight), which accounts for £4 billion to the economy and just under 6,000 jobs. Industry and government, must continue to innovate, supporting flexible freight movements throughout the day and, where possible, at night to support this vital sector and growing market.
Innovation can be seen in all aspects of the air cargo supply chain, from ground operations and aircraft technology, to warehousing solutions and security. The new generation of cargo warehouses, aircraft and equipment need to be fit for purpose, promoting safety and security, and designed to be as carbon neutral as possible, as well as future-proofed through the enabling of automation and digitisation. A long-term commitment to innovative solutions is the foundation of private investment and strategic planning for years to come. For its part, the industry must continue to drive innovation, strive to demonstrate its commitment to carbon reduction and its overall Environmental, Social and Governance (ESG) performance.
While the industry has welcomed the government’s proposal to introduce several new Freeports, they must be designed to deliver new opportunities for the air freight sector in a post-Brexit world. Freeports must be structured in a way that will attract inward investment and job creation. They have a major role to play in driving UK-wide regeneration and spreading economic and societal benefits across the UK, while realising enhanced global trade routes and growth prospects.
Logistics UK and AIPUT are calling for targeted and appropriate regulatory relaxations in planning. Appropriate planning flexibility at ports, for warehousing and connectivity infrastructure, will allow for continued investment and reactive supply chains in air freight. Specifically, they are calling for support for sustainable expansion at Heathrow Airport and other regional airports where required.
There is a strong willingness from businesses operating in the air freight and wider aviation sector to meet the UK’s decarbonisation targets, with many companies already taking measures to decarbonise as quickly as possible. Logistics UK and AIPUT are calling for the government to support research and development in this space, to enable the production of new technologies for electric and hydrogen aircraft that are fit for the future and cargo handling.
AIR FREIGHT GROWTH
All individuals and businesses in the air freight space need to be brave and progressive, and come together to achieve long-term growth, rather than working in silos.
“Throughout the pandemic and since the end of the Brexit transition period, the air freight sector has risen to the challenge,” said Mags Simpson, Head of Policy Engagement at Logistics UK, “and taken the steps needed to support the economy and the lives of everyone across the UK, facilitating both the rise in e-commerce and the movements of vital pharmaceuticals. Air freight will recover from the impacts of COVID-19 and Brexit, but the industry needs to know now more than ever that the government is fully behind the sustainable growth of UK air freight.”
Published On: 02/09/2021 16:00:07