AITO Report to the UK Parliamentary Environmental Audit Committee on the Impact of Travel and Tourism on the Environment
September 30th 2020 Noel Josephides, Director Industry Issues AITO and Sunvil Holidays
AITO, originally known as The Association of Independent Tour Operators, was established in 1976 by a group of specialist tour operators which banded together for mutual support. Originally just a handful of travel experts, current membership is 120 specialist holiday companies, together creating holidays for around 600,000 consumers annually, with a joint turnover of circa £1BN. All AITO members offer full financial protection to their customers and aim to deliver the highest of standards in every respect of tour operating.
AITO first became involved in environmental issues/sustainable tourism in 1988 (nearly 32 years ago). The organisation enshrined sustainable tourism (ST) into its Quality Charter in the early 1990s, insisting that each member should do its utmost to provide support in respect of ST issues and should work towards ensuring that all holidays sold by AITO members delivered benefits to the host destinations served. This was well ahead of the rest of the travel industry – AITO led the way in ST, as it has done on many key issues over the past 43 years.
Currently, there is an ST Committee that works in collaboration with the University of Surrey to encourage members to pledge support to Project Protect. Members agree one or more ST projects annually with their in-house ST Manager and work towards achieving their annual goals. They share information with fellow members so that others can learn from what they do, and they involve their entire workforce in coming up with ideas at the destinations with which they work globally.
We are unsure whether the total emissions impact of the entire travel and tourism industry has ever been measured. However, air travel is said to contribute in the region of 3% to total EU emissions and it is on this aspect that we wish to comment.
It is cheap air travel that both contributes to carbon emissions and is a primary cause of the blight of ‘overtourism’. Although cruise and coach travel also contribute to emissions and overcrowding in honeypot resorts, we do not know enough about these sectors to comment in detail. This paper deals only with the UK flight market and is based on the premise that the UK can – and should – act unilaterally in order to set an example to the world. Some comments will, of course, apply to the global market as well.
Compared to land use, deforestation and the continued consumption of beef, which together create approximately 35% of all carbon emissions, the figure of 3% of EU carbon emissions from air travel sounds positively benign. However, although other sectors are working hard towards reducing their emissions, this is not the case with the airline industry.
Airlines have the huge advantage of not having to pay tax on aviation fuel. The airline industry is expanding at an enormous rate and, although new aircraft are becoming increasingly more fuel efficient, the sheer volume of aircraft is negating that modest positive effect, as older aircraft are not scrapped but are instead sold on to third-world carriers which continue to fly them. As the airline industry is currently operating differently from other industries and is not reducing emissions (as a result of its continued growth), it is estimated that – by the mid-2030s – aircraft could represent up to 15% of EU emissions.
Before we consider the impact of airlines on the environment, it is important to understand how we got to where we are now.
In the past, package holidays were created using charter flights, which ensured that there was some control over total flight capacity. To base a holiday on scheduled flights was a lot more expensive but involved no risk – flights were simply booked as required. Chartering aircraft entailed considerable risk – entire aircraft were contracted for a full season, ie May to October – and these charter seats had, by law, to be linked with accommodation (still more financial commitment) for a full season. However, this created a discipline and prevented a free-for-all. Charter seats could not be sold on their own and, by and large, this was adhered to. It was therefore mostly tour operators that controlled capacity to holiday destinations.
All this changed when air travel within Europe was liberalised and ‘no frills’ carriers were allowed to blossom. These cheaper fares, combined with the continually increasing use and development of the internet, put paid to any discipline and control.
What ensued was a free-for-all on an enormous scale. As capacity increased, so fares fell and charter carriers were wiped out because the holiday industry was no longer controlled by tour operators, but by airlines. There is only one independent charter carrier (Titan Airways) now still operating in the UK. Other charter airlines are owned by vertically integrated* companies like TUI and Thomas Cook (until its demise this month, September 2019) plus Jet2. These huge companies tend to use their own airlines for their packages and do not sub-charter to independent tour operators. (*Vertically-integrated means that companies like TUI have their own travel agents at the bottom of the chain, selling their own holidays first and foremost, and use their own airlines to fly customers to their holiday destinations – and often use their own hotels too; it delivers considerable power to them versus their competitors.)
Traditional tour operators of any size have also disappeared. There is now so much capacity available on low-cost and scheduled carriers (there now being no difference between ‘no frills’ and scheduled carriers within Europe, as they act in the same way) that the overall consumer flying experience within the EU has deteriorated as prices have fallen.
The increased sophistication of the web has allowed bed banks, featuring tens of thousands of hotels, to be available to both the consumer and the modern-day tour operators (known as ‘Online Travel Agents’, or OTAs). These modern-day tour operators do not generally know in any detail what they are selling and have no real knowledge of their destinations. Their computers simply search other computers for the best available price on flights and accommodation. They do not carry resort overheads in the form of local staff to assist their customers. Their businesses are simply driven by price and technology. These are IT businesses; they have no real affinity with their destinations yet carry hundreds of thousands of people annually.
Why the Airline Industry is Out of Control
2019 has been something of a watershed for UK airlines. Their losses have deepened, and they are now openly admitting that they have created overcapacity in the market.
Extracts from recent first-quarter 2019 revenue reports from the main players are as follows:
- In recent results, Lufthansa issued a profits warning and reported a first-quarter turnaround from a €52 million profit in 2018 to a €336 million loss in 2019.
- IAG, owner of British Airways and Iberia, posted a first-quarter fall in profits – €820 million lower than a year ago, at just €86 million compared with €906M. This was prior to the pilots’ strike in September 2019.
- Air France-KLM’s losses in the same period rose from €257 million to €450 million.
Of the non-IATA giants, easyJet reported a half-year loss of £275 million despite a 13% rise in passengers – losing almost £6 per passenger on every seat flown last winter.
Wizz Air reported strong annual results with a pre-tax profit of €300 million, up 4.5% year on year, but warned of a “not improving, maybe deteriorating” environment despite benefiting from higher fuel prices driving out “weaker carriers”.
Ryanair reported a 29% fall in annual profits but a 7% rise in passengers, with chief executive Michael O’Leary pledging to “keep the foot to the pedal”.
And now, of course, Thomas Cook and its airline have just gone out of business (23 September 2019), with the loss of over 20,000 jobs in the UK and Europe, resulting in an enormous repatriation effort of its clients worldwide and equally enormous fall-out throughout the wider travel industry.
Load Factors and What They Mean
On a daily basis, Ryanair advertises fares as low as £15 per single flight, including taxes, to European destinations. Its ability, and that of other airlines, to fill aircraft at such low prices has become a necessity – they have introduced so much capacity that they have no option.
Nobody should be travelling on a flight for several hours at what amounts to a bus fare. What airlines should be doing is cancelling flights rather than selling them at such peppercorn rates, thereby leading the public to believe, falsely, that realistic prices are actually ‘rip offs’.
CO2 emissions would fall if there were fewer flights, sold at realistic prices. Airlines like to boast about their high load factors. Load factors are, however, quite meaningless. Any airline can sell seats on a flight at next to nothing and achieve a high load factor. One seat sold at £100 is more beneficial (with less weight to carry, less fuel is used and lower carbon emissions result) than 10 seats sold at £10. A 50% load factor at decent seat rates would not only make flying a more comfortable experience for passengers but would also lead to airlines reducing their capacity and their emissions.
What prompts airlines to put on so much capacity? Certainly, one factor is greed, and the ugly desire for world domination. The UK is now controlled by an oligopoly of airlines – British Airways, easyJet and Ryanair. By purchasing more and more aircraft and more and more airport slots, and lowering prices, these carriers have driven all other airlines into bankruptcy. Norwegian has struggled to compete and is now fading in the face of stiff competition.
The Problem of Slots at Gatwick, Heathrow and Manchester
When Monarch Airlines collapsed, the Government allowed British Airways to purchase Monarch’s slots at Gatwick at a reported price of £60 million. British Airways did not need all these slots and nor did easyJet need all the slots they, in turn, purchased at Manchester. These slots were purchased simply to give the respective airlines control over the landing slots at the airports. What the Government should have done, had it been responsible, was to release the slots into the pool so that they could be used by carriers wanting genuinely to promote new routes.
Below are the current regulations appertaining to slots:
‘Grandfather Rights’ describe the rights of airlines to use take-off and landing slots (ie times at which aircraft can leave and arrive) at an airport at which they have always owned these slots. The ‘Grandfather Rights’ therefore entitle a carrier to continue using the same slot in the next scheduling period, provided that it has used that allocated slot for at least 80% of the previous period. This is called the ‘80/20’ or ‘Use it or lose it’ rule. Every flight cancellation or adjustment therefore may have an impact on the right to use this respective slot for the next season. The slot co-ordinator for each co-ordinated airport decides if an airline can keep using its ‘Grandfather Rights’ by applying the ‘Use it or lose it’ rule.
When British Airways and easyJet purchased Monarch slots they did not have the flying to match the slots. They had not researched any potential new routes, and nor were they waiting to use the purchased slots to fly such routes. They were faced with the dilemma of either using those slots, for which they had paid a great deal, or losing them. In some cases, they managed to find other airlines to ‘babysit’ some of the slots, ie to use them on a short-term basis to satisfy the 80% rule.
However, to avoid losing the slots, in 2019 they proceeded to fly routes to which they had never flown before – but only to honeypot destinations where they knew they were likely to have most demand. The result has been over-capacity, increased emissions and a substantial contribution to overtourism.
At times, what airlines also do to maintain ownership of slots is to fly empty aircraft on domestic routes, simply to demonstrate that the slots are being used – again, totally unacceptable when considered in the light of the current climate emergency.
The Government made a grave error in not releasing the Monarch slots back into a pool. By allowing British Airways and easyJet to buy slots that they did not immediately need, Government has not only permitted the generation of wholly unnecessary emissions but has also allowed continued domination by the leading airlines.
Slot allocation needs to be reformed urgently. The current system leads to overcapacity, increased emissions and overtourism.
Airlines, Taxation and Emissions
Air Passenger Duty (APD) is loathed by the airline industry. In economy, on short haul routes, the duty is now £13 per passenger per flight leg and, for distances over 2,000 miles (with one or two exceptions), the rate climbs to £78 per outbound sector from the UK. Business and first-class passengers are charged more.
APD is not an environmental tax. It must be one of the easiest taxes for the Government to collect and is scheduled to contribute £3.7 billion to the Exchequer in 2019/2020 from approximately 110 million passenger flights taken annually (figures from the Office for Budget Responsibility).
Airlines always argue (and the tourism sector supports them) that, if there were no APD, fares would fall and jobs would be created around the world as there would be increased activity. However, it should be remembered that there is no tax on aviation fuel and no VAT on airline tickets. Should both those taxes be imposed, the benefit to the Treasury would be enormous. Equally, the resultant fall in demand for air traffic would be hugely beneficial to the environment.
The reality is, unfortunately, that if APD were to be abolished, most of the benefit would probably simply go into increasing airline profit margins. There might well be an increase in traffic too – but, if so, this would simply increase emissions from the airline sector.
Fares are so low, because of heavy competition and overcapacity, that a charge of £13 is hardly noticeable. As long as fares are so low and demand is not being curtailed, then there really is no reason for the Government to abolish APD. In fact, as there are no other taxes, it could even consider increasing APD. If this tax does put some people off travelling, then it would probably help reduce emissions from aircraft.
The EU maintains that aviation represents 3% of the total EU greenhouse gas emissions and more than 2% of global emissions. They also say that, if aviation were a country, it would rank in the top ten of emitters. The EU Emissions Trading System (EU ETS) already includes airline emissions. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) aims to stabilise CO2 emissions at 2020 levels by requiring airlines to offset the growth of their emissions after 2020. Does offsetting have the same beneficial impact on the environment as simply not flying? No – most environmentalists would say that we should simply not fly as often as we do.
The fact is that nobody should expect to fly round the world at next to no financial cost. Airlines argue that those who agree to increased taxation, which would serve to increase prices, are ‘elitists’ in that they (the airlines) have created an industry where the poorest can afford to take a holiday abroad, and any attempts to increase prices would deny the poorest the ability to do so.
However, if we are to reduce global warming and preserve the world for future generations, the cost of flying must increase substantially. If that means that more people will be forced to holiday in their own country, so be it. Higher seat rates will mean a more sustainable approach. Capacity must initially be reduced or remain static and can only be allowed to increase when the technology exists for airlines to grow without harming the environment. It is unlikely that airlines will behave responsibly on a voluntary basis, so Governments will have to act to restrict growth.
Over the next few years, there is a distinct possibility that global warming will accelerate, and that Governments will be forced to take very drastic action to reduce emissions. Public opinion towards the harmful effects of flying (as has already happened in Sweden) may lead to a ‘refusal to fly’ which, to some extent, may solve the problem of overcapacity. Airlines will have to learn to exist in a no-growth market.
The Government may well resort to quotas, with all citizens only allowed to take a reduced number of flights per year. This is likely to cramp the style of the middle classes, who take more than one holiday a year abroad. In a 2014 Government Survey, it was revealed that 70% of all flights were taken by 15% of adults and that 57% of the population took no flights at all.
A quota system will therefore not disadvantage the poorer section of society or those who do not travel so frequently, contrary to current perceptions.
The Link Between No-Frills Airlines, the So-Called Sharing Economy and Overtourism
Airbnb, the main player in so-called home stays, which began the sharing economy revolution, is really nothing but a ruthless, unregulated American internet player which Governments across the world – but especially in the UK – have failed to regulate in good time. It is unfortunate that this company has been allowed, by our Government, to continue to feature properties which do not comply with UK Health and Safety Regulations, so putting the public at risk.
Although the company still insists that most of its hosts simply rent rooms in their houses, it is quite clear that the majority of hosts are in fact multi-listers, featuring sometimes hundreds of properties on the site. In a recent investigation by The Sunday Times (4th August 2019, in a two-page Home Section article) it was found that 59% of listings were multiple. In every big city in the world there are whole blocks of flats dedicated to Airbnb guests. Any notions of living like a local disappeared a long time ago and a guest is far more likely to speak to another guest than a local. Barcelona, Amsterdam, Paris, Dubrovnik, Prague, Venice, Florence, Rome and London, to name but a few – and their residents – are suffering at the hands of Airbnb and overtourism, with locals finding they are priced out of the rental market and that their lives are being disrupted by the constant coming and going of visitors and their sometimes unruly behaviour.
On any given night, two million people are staying in a property they have booked on the Airbnb site. So how do all these guests reach their accommodation? For those travelling outside their country of residence, it is by no-frills carriers. Without the cheap seats provided by these airlines, the likes of Airbnb would be starved of bookings and, without Airbnb, these airlines would suffer from considerably lower load factors. (And, of course, overtourism problems, etc., would be reduced considerably.)
The sharing economy is still largely unregulated. In Greece, out of the 70,000 residents who act as hosts on the site, 20,000 pay no tax and work completely under the radar. All over the world, Governments have left it too late to regulate this market, which is a substantial contributor to overtourism, to a poor visitor experience and, of course, to harmful emissions.
Governments must begin to understand that higher-margin visitors, who stay in hotels and eat out in restaurants, will not only increase overall revenues and employment levels but will also help to maintain the quality of destinations’ tourism offering. Numbers may fall, but revenue will rise, and infrastructure will cope better. Controlled numbers will lead to fewer flights and therefore harmful emissions will be reduced.
In concluding, below are some answers to the specific questions which the Committee has asked, which should be read in the context of the previous more detailed paragraphs.
1. What can Government do to support a sustainable inbound tourism industry in the UK?
The Government should begin by enforcing its Health and Safety Regulations on the thousands of short-term rental properties that do not comply. This would enormously increase the Government’s tax take, ensure the health and safety of visitors and would also maintain the health of those UK organisations that play by the rules. The increased tax revenue could be used to better manage tourism.
Far more regulation is needed in the tourism sector. Properly enforced regulation will solve many sustainability issues. The laws are there; Government must enforce them.
2. How should the UK tourism industry balance the need to encourage tourism whilst protecting fragile environments?
Government should not be frightened to regulate visitor numbers to fragile locations. A mixture of proper tourism flow mixed with higher/lower charges will help preserve fragile environments. As an example, Thailand has banned all visitors to Maya Bay on the island of Ko Phi Phi Leh until the environment has recovered. Indonesia has also closed the island of Komodo to enable its population of dragons to recover, therefore protecting the long-term future of local people.
3. How well is the UK industry managing its tourism impact in line with its obligations under the sustainable development goals at home and abroad?
We are not well enough informed to comment as we are not aware exactly what these obligations are.
4. Should the UK Government take more responsibility for the impacts of outbound tourism, for example waste and resource management, protecting habitats and species, and community and cultural impacts?
No, the UK Government should not take responsibility, but it should give a good example to other less sophisticated destinations and help them with advice and resource. It should also police UK operators and airlines more carefully/closely.
It is the responsibility of the outbound tourism organisations to behave responsibly. However, as the market leaders – the likes of Expedia, Booking.com, Airbnb and their many sub-brands, which now control the market – are technology companies and not traditional tour operators, it is unfortunately highly unlikely that they will do so and, having escaped tax and so many other legal liabilities imposed upon the traditional tour operating sector, they may well – possibly rightly – believe that Government will not concern itself with them.
It is therefore up to the host destinations to take responsibility and to act to ensure their future wellbeing.
5. How can the Government reach its net zero emissions targets through influencing sustainable travel patterns? Is there a role for offsets in sustainable tourism?
Offsets do not address the real problem, which is overcapacity and too many people travelling. There is no easy way. As described in the main body of this paper, the whole slot situation should be reviewed urgently.
Another key issue is reform of European Air Space Control to alleviate the waste of time and aviation fuel caused by its inefficient routing procedures; this would considerably reduce emissions. Quotas should also be considered.
Will self-regulation work? We doubt it. There is too much greed for power and control within the airline and tourism industries to provide a solution. Government regulation is therefore a must.
6. Where should the balance lie between affordable travel and influencing sustainable travel choices? Are taxes and incentives needed?
The bulk of this paper deals with this subject. Government policy, tax and incentives all must be used. Whether travel is affordable to all does not come into the equation. This whole issue is too important for our future to worry about whether people can afford to travel or otherwise; it is about the survival of the world as we know it. Unless the airline industry accepts that it must control its excesses then only Government quotas will ensure that all travellers, whether rich or poor, have the opportunity to travel.
7. How effective are sustainable tourism practices by large tourism companies such as cruise ship and package holiday operators?
This question should be asked of airlines, which now control capacity, and cruise ship owners.
Package tour operators are dying as technology companies take over. Only TUI amongst the large package tour operators has any notable sustainability policies, although most now have policies on waste, single-use plastics, animal welfare and modern-day slavery. Others, airlines generally, do little except to say that they use fuel-efficient aircraft, are starting to use sustainable fuels and have modern fleets; that is not good enough. Airlines must go much further in the short term if we are to reduce emissions. Aiming for 50% reductions by 2050 is probably, quite simply, too late.
Cruise ship owners have been fined heavily for dumping waste material in the English Channel. One unfortunately must wonder what goes on in the high seas, out of sight; Carnival Corporation’s recent admission of guilt and consequent $20M fine for ocean pollution is probably but a minor part of what is currently happening. Ways of monitoring dumping in any and all marine environments must be brought into play, and quickly.
Fuel used by cruise ships is of a low grade, high-pollutant type; it affects both members of the public living in port towns and the seas in which the ships cruise. It is vital that the use of better-quality, less environmentally damaging fuels is driven – and quickly! – by a mix of taxes and fines.
It is also important that the lack of environmental credentials in the vast majority of these huge cruise ships, run by equally large corporations, is both brought to the public’s attention (to bring public pressure to bear on them) and that environmental issues become strictly regulated as quickly as possible.
Cruising is a high-growth market and it is vital to influence/control the design of new ships and to regulate those already cruising in our fragile ocean and river environments, for the benefit of the human – and marine – populations worldwide.
Director, Industry Issues, AITO
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AITO Report to the UK Parliamentary Environmental Audit Committee on the Impact of Travel and Tourism on the Environment
September 30th 2020 Noel Josephides, Director Industry Issues AITO and Sunvil Holidays