Although APD increase fears in this week’s budget could damped demand

There was great news for the global and UK aviation industries last week with the announcement of the restarting of long haul routes to the US and Australia.

Heathrow may have faced criticism from IATA Willie Walsh for being a “greedy monopoly hub” due to its “outrageous” proposal to raise airport charges by 90%. The CAA has allowed the airport to raise fees by 53% for 2022 – the £19.60 per passenger charge increasing to £30 on New Years’ Day. Heathrow wanted to charge passengers £43 per person, although early next year the CAA could increase the charge further to £34.40 per passenger.

Despite the passenger fee increase both Qantas and Virgin Atlantic have announced the restarting or routes from the airport.

Qantas has bought forward the restarting of its London – Melbourne route six weeks to 6 November. Melbourne is celebrating ending its sixth lockdown during the pandemic – it was the last state capital to open up having spent a total of 262 days under restrictions. The carrier is reporting “extremely strong” bookings on Sydney to London route, with Australian’s looking to return home for Christmas. It bought forward the restarting of the route by six weeks to November 1.

Furthermore, Virgin Atlantic will restart flights to the US on the day restrictions lift (November 8). Flights to Orlando from Heathrow and Manchester will restart on that day, as will the Heathrow-Las Vegas route. Manchester will also regain its New York service on 8 November.

Juha Jarvinen, Virgin Atlantic Chief Commercial Officer, said: “Our customers are ready to begin their US adventures, whether it’s to enjoy the magic of Orlando or to party the night away in Las Vegas, therefore it’s only right that we offer them the opportunity to fly as soon as we can.

Virgin’s move is supported by findings from the WTM Industry Report 2021 which has the US in Brits top five getaway destinations for 2022.

Hopefully, this is the start of further announcements of routes re-starting across the world.

I’m sure the deals done at WTM will further increases in airport capacity for the 2022.

We just need to hope that potential price increases do not dampen consumer pent up demand. The WTM Industry Report highlights fears of price increases from both the industry and UK consumers. Other cost also need to be taken into consideration. From Monday (1 November) Heathrow is introducing a £5 fee vehicles – except for some taxis –  to enter terminal drop off zones.

Pre-pandemic Heathrow was the busiest airport in Europe, now it’s is struggling to stay in the top 10. Most of the major airports charge similar drop off fees, with research from Direct Line claiming Brits will pay out £105 million in drop off charges next year.

PC Agency, CEO, Paul Charles, said: “Charges like this simply make people think twice and question how easy it is to travel. Access has to be opened up for all, without charges, if travel is to recover more quickly post-pandemic.”

Furthermore, every time the industry appears to take one step forward circumstances seem to put it two steps back. This could again be the case due to the dreaded Air Passenger Duty (APD). Easily forgotten about over the last 18 months, APD is the per passenger tax that the industry has lobbied and fought against for as long as I can remember.

It will come to no surprise that as the UK Government looks to ways to claw in extra tax it has set it sights on a APD increase to do so. Wednesday’s Budget is expected to bring bad news for long haul carriers as part of the Government’s bid to show its ‘green’ credential before Glasgow hosts COP26 at the weekend.

Lets hope the APD increases do not damped the obvious demand for global travel.