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Travel industry news

23 Jul 2019

BY James Chapple

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Heathrow urges government to invest APD in sustainable fuels

Heathrow airport has urged the government to invest some of the nearly £4 billion raised from Air Passenger Duty (APD) every year to scale up the production of cleaner, more sustainable fuels.

Heathrow control tower
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Heathrow urges government to invest APD in sustainable fuels

Last month, prime minister Theresa May signed legislation committing the UK to achieving net zero carbon emissions by 2050 through investment in low-carbon technologies and carbon offsetting.


However, Heathrow has called on the government to focus specifically on biofuels and other sustainable energy sources that could be used to power operations at Britain’s busiest airport.


Posting half-year (six months to 30 June) adjusted pre-tax profits of £153 million, up 61% year-on-year, and revenue of £1.461 billion, up 4%, on Tuesday morning (23 July), Heathrow chief executive John Holland-Kaye said the airport supported the government’s net zero carbon emissions goal and would work to “ensure global aviation plays its part”.


Heathrow says it has invested more than £100 million on sustainability initiatives over the past six years meaning it will operate “carbon neutral airport infrastructure” from 2020. It is also aiming to achieve zero carbon airport infrastructure “much sooner” than the government’s 2050 target.


“We support the government’s goal to make the UK economy net zero carbon by 2050, but we believe there is further scope for the government to help the aviation industry move faster by working with other governments to prioritise sustainable fuels for aviation, which is the hardest sector to decarbonise, and set common and progressive targets for the percentage of aviation fuel that must be from sustainable sources,” said Heathrow in a trading update.


“This will send a strong signal to producers to increase investment in biofuel and synthetic fuel production and start to reduce the cost of production.”

Airport must meet desire to address climate change

On APD specifically, the airport urges the government to invest some of the annual £4 billion it already raises from air passengers in the form of APD in the production of sustainable fuels.


“The revenue raised is not used to help manage the environmental effects of aviation,” said Heathrow.

 

“Given the scale of the challenge and society’s desire to address climate change, it is right the money air passengers are already paying should be spent alongside contributions from industry to scale-up alternative sustainable fuels and develop new clean technologies sooner.


“We will continue to use our position as one of the world's top aviation hubs to drive this important change by the wider industry.”


APD is currently paid straight into the Treasury and redistributed to the government departments in greatest need, despite being introduced in the 1990s as a supposed “green” or environmental charge.

2019 'shaping up to be strong year'

Passenger numbers at Heathrow, meanwhile, increased 1.8% year-on-year to 38.8 million – a record high for the airport.

 

African traffic has grown 9.5% year-on-year from 1.6 million to 1.8 million annual passengers, which Heathrow said came off the back of increased flight frequency to Johannesburg and new routes to Marrakech, the Seychelles and Durban.


North American traffic was the fastest-growing market through “increased load factors, flight frequency and aircraft size” to a number of destinations including New York JFK, Boston and Miami, and new routes to Las Vegas and Dallas.


Heathrow claims to have invested more than £400 million improving passenger experience, including trials of new security scanners allowing passengers to leave laptops and liquids in their bags.


Elsewhere, its near £1.5 billion revenue to date this year will continue to contribute to the £14 billion it requires to pay for a new third runway, permission for which was granted last summer.


“2019 is shaping up to be a strong year for Heathrow,” Holland-Kaye added. “We’re investing millions to improve the airport and secure new skilled jobs for the future and we’ve set out our plans to expand Britain’s hub airport sustainably and affordably.

 

"We support the goal of net-zero carbon emissions by 2050, and are working to ensure that global aviation plays its part.”

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