David Starkie is an economist and author. He was a member of the Airport Commission’s expert advisory panel.
It will come as a surprise to many passengers flying from London Heathrow to far flung corners of the globe that by doing so they are helping to directly export British goods; return flights assist international trade in general. Aware accompanying heavy bags are stored in the aircraft’s hold, travellers are much less appreciative of ‘belly-hold’ freight also carried on the same aircraft beneath their feet. And, on a long-haul flight there can be lots of it; wide-bodied airliners can accommodate below the passenger deck as much as 20 tonnes or more of freight packed into smallish containers or conveyed on pallets.
This hidden aviation-flown cargo is vital for world trade in general, but for the UK market, Heathrow with its extensive route network plays a crucial role; as befits Europe’s premier international airport, each year more than a quarter of the nation’s export of goods, over £100bn worth, depart discretely, along with passengers, to all parts of the globe. Imports of a similar value are flown into Heathrow. Total airlifted exports and imports at the airport exceed an impressive 1.50mn tonnes, nearly all carried on passenger jets.
Just over half the world’s air cargo is carried in this manner, hidden away in passenger jets. The remainder is conveyed in specialist all-cargo aircraft that have become the modern tramp ship, but of the skies. This relatively inconspicuous means of shipping freight worldwide, either beneath passenger’s feet or in dedicated freighters, overshadows its enormous significance. Although ocean shipping dominates international trade in terms of the less important metrics of weight and volume, air cargo remains the vital cog in the world-wide flow of high value or perishable goods, a point well illustrated during the Covid pandemic when personal protection equipment crammed the holds of aircraft bound for a panicking Europe.
In more normal times electronic goods, organic chemicals, pharmaceuticals, fruit and clothing load-up the cargo space. IATA, the airlines trade association, estimates that over a third of the global trade in goods by value is transported by air, an astonishing statistic underlining the critical importance of this mode of transport for world trade in general and especially for the numerous integrated production lines that are a feature of modern international commerce. Moreover, because of this crucial trade role, recent analysis by the US National Bureau of Economic Research indicated, air cargo, by helping to create and foster economic interdependencies between nations, has been a force for world peace.
Aviation, however, is also a focal point in the global warming controversy, for which the mixing of air passengers and air cargo has important implications. Belly-hold freight, a useful source of revenues for both airline, and airport landlords, from otherwise unutilised, wasted capacity, adds significantly to an aircraft’s weight and thus its fuel consumption. Emissions attributed wholly to passengers flying long-haul are thus easily overstated, exaggerating the case for fiscal levies on airline tickets, levies which lead to reduced passenger demand, potentially restricting the scope of trade-related airline networks and possibly a country’s trade intensity.
The wish to levy environment-related taxes on aviation is understandable. The downside: such taxes are yet another, albeit barely recognised, impost on global trade. And there are several such fiscal measures, often overlaying each other, some failing their intent, or having unintended consequences. Questionable are those like the current EU duty on North American supplied sustainable aviation fuels (SAF), or the UK’s relatively high, tiered duty on departing air passengers (APD), further increased last April. The rate of APD increases with distance which means it bears indirectly but potentially more heavily on trade cargoes sharing the capacity of wide-bodied, longer range passenger jets.
Aviation’s environmental impacts require further reduction. Yet it is crucial to recognise also the strong link between aviation and global trade and the important role of the large passenger jet as a trade facilitator. A chorus of damnation is heaped upon aviation by environmental campaigners apparently blind to this fundamentally important trade role of larger modern jets. When lobbied by them, governments might point to this nuance of modern civil aviation and, importantly, consciously take account of air cargo when designing environmental measures to be imposed on the aviation sector. Currently, airfreight is, at best, an afterthought for governments until, of course, the next pandemic arrives.
