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Losing altitude: The economics of air transport in Great Britain
By Alex Chapman - New Economics Foundation, July 17, 2023
The environmental downsides of growth in flight numbers are significant. The sector has no short-term technological solution to its greenhouse gas emissions; over the medium to long term, much uncertainty remains as to the pace of emissions reduction achievable. All scenarios published by stakeholders such as the Climate Change Committee, the Department for Transport (DfT), and air transport sector bodies, suggest that future air traffic growth would necessitate the use of costly, and unproven, carbon capture technologies.
Despite these risks, the government continues to provide conditional support to air capacity growth on the (often tacit) basis that the economic upsides outweigh the negative impacts and future risks. But, the economic assumptions that underpin this position favouring growth are dated and have not been reviewed for some years. Given the urgent and sizeable nature of the climate risk, it is imperative that the evidence, and relative balance, of the economic and environmental impacts of air transport growth are kept up to date and under constant review.
This report shows that since the government’s last comprehensive review of the economic impacts of air transport in 2012, trends in the British air transport sector have changed dramatically. Contrary to expectations, growth in business passenger numbers has effectively ceased and new passengers now derive exclusively from the leisure market. In particular, passenger growth has been driven by wealthy British residents rather than foreign tourists or those on lower incomes. Early evidence suggests the pandemic has accelerated this trend. This report reviews the current evidence on the impact of air transport growth across four core economic domains: welfare, jobs and wages, tourism, and wider facets of economic growth, business productivity, and trade.
Download a copy of this publication here (PDF).
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