Leading article: Time to end the indulgence

A irline passengers might be experiencing some mixed emotions today. The European Union-United States "Open Skies" agreement, which came into force yesterday, should be a cause for optimism. The agreement is expected to increase competition and improve the deal offered to customers. But after the disastrous opening of Terminal 5 at Heathrow, many people will understandably be wondering if this will make any real difference to the overall quality of service. After all, what is the point of liberalising the market if a leading player such as British Airways is apparently incapable of delivering bags to planes on time?

The events at Heathrow are a timely reminder to both passengers and policymakers that, despite the glamorous image of air travel that still lingers, many airlines and airport authorities are actually rather badly run companies. Without the de facto public subsidies of untaxed air fuel, exemption from VAT charges and, in several cases, the protection from foreign ownership, many of them would have gone bust long ago.

The lesson is a simple one: the time has come to stop indulging the airline industry. The Open Skies deal is a step forward in this respect. There was, after all, no good reason why Virgin, British Airways, and a handful of American airlines should have enjoyed a monopoly on transatlantic flights between the United States and Heathrow.

But this liberalisation needs to be accompanied by a global deal to tax airline fuel and charge VAT on flights. The case for this on environmental grounds is overwhelming. By failing to tax air travel properly, governments are privileging it over other forms of transport, such as rail. With aviation the fastest growing source of greenhouse gases, this is unsustainable.

The behaviour of the budget airline Flybe, which advertised for actors to fly on one of its under-subscribed routes to avoid a fine from airport authorities, is a perfect example of the Alice-in-Wonderland economics of the aviation industry. There is something seriously wrong when it is cheaper for an airline to fly a planeload of people for free to a destination that they do not want to visit than it is to leave that plane grounded.

Yet imposing reality on the aviation industry will mean more than fair taxation. It will entail resisting lobbying for more infrastructure, such as the proposed new runway for Heathrow.

The debacle at Terminal 5 has been a national embarrassment, but if any good can come from the episode, it will be a realisation from our political leaders that blind trust in the wisdom and public relations of the aviation industry is no way to run a sustainable transport system.

Interesting? Click here to explore further