The Airports Commission may have recommended expansion at Heathrow but the issue is far from settled. Rob Gill looks at what happens next
What do Cublington, Maplin Sands, Cliffe, the Isle of Grain and ‘Boris Island’ all have in common? They have all been proposed and then dismissed as sites for a new hub airport in the south-east over the last four decades.
The Airports Commission, chaired by Sir Howard Davies, is the latest to examine this most tricky of transport questions and – to no great surprise – has recommended that existing hub
Heathrow should build a third runway to meet the country’s aviation needs by 2030. But will Heathrow get to build a new runway? The outcome is still far from certain, particularly when you consider that the last full-length civilian runway to open in the south-east was in 1946 when Heathrow, then known as London airport, was first converted from a military airfield.
Previous attempts to increase runway capacity around London have failed to win the day politically, and it’s in this arena where the issue could flounder again. After all, it’s only five years since the Conservative-Liberal Democrat coalition cancelled the previous Labour government’s approval of a third runway at Heathrow.
The business travel community has been pretty much unanimous in its support of the Airports Commission’s recommendation. Typical is the reaction of Paul Wait, CEO of the Guild of Travel Management Companies (GTMC), who calls the recommendation “hugely positive news for business travellers, TMCs and UK PLC.”
The message from the industry to the government now basically boils down to “get on with it”. But is a third runway any more likely to happen this time?
THE RECOMMENDATION
The Airports Commission was set up by the government in 2012 and finally issued its recommendation in July, just weeks after the general election, for a new full-length 3,500-metre runway at Heathrow to be built to the north-west of the airport’s existing two runways.
This proposal was recommended by the commission in preference to a second runway at Gatwick. A new Thames estuary airport, as proposed by London mayor Boris Johnson, had earlier been dismissed as being too expensive.
The decision has been primarily based on the commission’s research, which suggests that a third Heathrow runway would give the biggest boost to the UK economy – by an estimated £147 billion in GDP (gross domestic product) by 2050, compared to an estimated injection of £89 billion from a second Gatwick runway.
Heathrow is viewed as being more likely to attract key long-haul services to emerging markets such as the BRIC (Brazil, Russia, India and China) countries and other key developing destinations. Whereas Gatwick is seen as being more focused on the short-haul and low-cost markets.
This third runway plan is significantly different to the shorter 2,200-metre runway approved by the Labour government in 2009. The airport says it would be served by a new Terminal 6 and an extended Terminal 2, while part of the M25 motorway would be reconfigured. The runway would allow flights to rise from the current 471,700 per year to 740,000.
Heathrow has estimated that the runway, expected to cost £18.6 billion, could be completed between 2025 and 2029, while the commission says it “could be delivered” by 2026. Many believe this is an optimistic timescale given the strong opposition to the project.
“NO IFS, NO BUTS”
The pressure is already mounting on Prime Minister David Cameron who once, as leader of the opposition, ruled out a third runway at Heathrow using the phrase: “No ifs, no buts.”
In his response to the publication of the Airports Commission’s final report, Cameron struck a cautious tone, saying it was “important that we study this very detailed report” and not rush into making comments that could legally “endanger whatever decision is made”. Although he promised a decision “by the end of the year”.
Although the likelihood of legal challenges to a third runway is high, Cameron’s initial problem is within his own party where steadfast opponents to Heathrow expansion include Boris Johnson, London mayoral hopeful Zac Goldsmith and several ministers with seats near the airport.
The government may try to circumvent this opposition by securing a cross-party consensus, as it did with another major infrastructure project, High Speed 2. Cameron hinted at this approach when he said there was “a lot of common ground” in Parliament on the issue.
Labour’s interim leader Harriet Harman had supported Heathrow expansion but she has now stepped aside for left-winger Jeremy Corbyn, who has been taken an expansion position. While the 56 Scottish National Party MPs seem to be playing Heathrow and Gatwick off against each other in order to secure the best deal on routes to Scotland.
COMPROMISE SOLUTION
The political machinations around Heathrow seem to have given hope to Gatwick that it could still triumph as a compromise solution. The airport has been quick to rebut much of the data and analysis used in the commission’s final 344-page report, and has written to Cameron to express its concerns.
Sir Roy McNulty, chairman of Gatwick’s board, says: “The many strengths of Gatwick and the many challenges of Heathrow are underplayed, leading to a conclusion which we believe is flawed.”
But is Gatwick really still in the running to provide the extra hub capacity that the UK needs? Aviation analyst John Strickland, from JLS Consultants, believes not.
“Gatwick is nearly full and if we were operating in a free market it would have some justification to be allowed to expand over time,” he says. “But there is only the investment case for one runway and Gatwick’s claim that it can be the gateway to deliver future aviation hub capacity is not true.”
Mark Cuschieri, UBS travel buyer and chairman of the Institute of Travel & Meetings (ITM), says that while Heathrow expansion is a “top priority”, more needs to be done to keep up with the UK’s European competitors.
“A second runway is also needed at Gatwick and investment must be made to improve capacity at other airports in the south and across the regions,” he adds.
Some still believe that this process will ultimately lead nowhere – Willie Walsh, CEO of British Airways’ parent company International Airlines Group, is “sceptical about the deliverability of any runway expansion at Heathrow”. Even if Heathrow gets clearance for a new runway, a row is brewing over who will pay for it. Walsh has vowed that IAG will “not pay” for the runway, adding it would be “outrageous to burden passengers with the cost of such expensive infrastructure”.
The British Air Transport Association (BATA), which represents UK-based airlines, is concerned a new runway would be “pre-funded” with passengers paying higher airport fees before construction is completed.
IATA has also fired a salvo in Heathrow’s direction on this subject, with CEO Tony Tyler saying: “Pre-funding the construction is not an acceptable option for airlines. Pre-funding would mean that airlines serving Heathrow today would foot the bill for new competitors to come into the market.”
This seems to explain Easyjet’s enthusiastic support for Heathrow expansion at the expense of Gatwick, where it is currently the largest operator. CEO Carolyn McCall says Easyjet would establish a base at Heathrow if a new runway is built offering domestic and short-haul European destinations.
So who will pay for a third runway? Will corporate travel budgets ultimately pick up a big chunk of the bill? Julie Cope, operations director for Chambers Travel Management, believes that “ultimately the cost will sit with the consumer” through higher airfares and airport taxes, although fares could eventually come down due to the extra capacity provided.
Paul East, chief operating officer of Wings Travel Management, says there is a “fine balance” for airports when choosing how to fund expansion. “If Heathrow believes it is going to be able to increase landing charges to pay for it – the airport will become uneconomical,” he adds.
INTERIM PLANS
With a new runway at least ten years away, what happens in the interim with Heathrow full and Gatwick approaching capacity? Other airports have suggested they can step into the breach during the next decade, including London City (LCY).
The airport is allowed to increase flights from 75,000 to 120,000 annually, but cannot utilise this new capacity because mayor Boris Johnson has blocked permission for the extra aircraft stands needed. A decision which the airport is appealing against.
“We simply require a permission to expand the airport’s existing infrastructure in order to inject much-needed capacity into the London system,” says the airport’s CEO Declan Collier. “Extra capacity could be in operation at LCY within 18 months.”
Meanwhile Birmingham has urged the government to “move ahead with caution so as not to damage the ability of regional airports to grow”, with the airport’s CEO Paul Kehoe highlighting its flights to Beijing as a sign of the importance of direct routes from UK regional airports. “The Midlands is a powerful engine of growth and needs direct aviation to succeed,” he adds.
Now the Airports Commission has finally made its long-awaited – and fairly predictable – recommendation, the fundamental political arguments have resumed after several years in the long grass. Over to you, Mr Cameron….we will be watching.