These are turbulent times for the airport business. The Airports Commission has just launched a 12-week public consultation on the proposed schemes for expanding London’s air transport capacity. In anticipation, perhaps, of the coming Nimby onslaught, the Commission has thrown the public a bone by revealing its analysis of the proposals’ viability.
The most striking thing about it is that the Airports Commission thinks the optimistic folk behind both Heathrow and Gatwick have got their sums wrong, underestimating the cost of expansion by several billion pounds each. It says a new runway at Gatwick would cost £9.3bn rather than £7.4bn, an extended runway at Heathrow would cost £13.5bn instead of £10.1bn, and a third runway there would cost a whopping £18.6bn not £15.6bn. Whoops.
Although the Commission said it had made no decision on the relative merits of the proposals, its analysis arguably represents a bigger setback for Gatwick than for Heathrow. The reason is that it sees these higher construction costs translating into higher landing costs. These could rise to an average of £15-18 at Gatwick and £28-29 at Heathrow, up from roughly £9 and £20 currently.
Even though Heathrow's costs would still be higher, Gatwick’s current success and proposal both depend on low-cost carriers. That means the price hike could represent a genuine problem. It might also present a challenge to boss Stewart Wingate, who recently told MT that Gatwick's landing charges would rise to no more than £13. On the other hand, of course, Gatwick would still be cheaper than Heathrow. If carriers like EasyJet don't like the hike, there aren't many other places for them to go.
The main headline argument for Heathrow is its economic impact, especially regarding its significant but little discussed freight business. A new or expanded runway there could add between £101bn and £214bn to the British economy, according to the report, compared to between £42bn and £127bn for Gatwick.
It’s not all bad news for Gatwick, however. The Commission, chaired by MT columnist Sir Howard Davies, not only identified Gatwick as the cheapest of the three options, but also the most easily deliverable.
Expansion there would ‘enhance competition in the London airport system’ and cause disruption to fewer local people than Heathrow, according to the report. Indeed, those who live within 5km of the airport might be surprised to know that the ‘bundled impact’ on their quality of life is predicted to be ‘broadly neutral’.
A third runway at Heathrow, the Commission says, would be especially beneficial for the freight sector, as many companies already have a presence at the airport, which handles 25% of the country’s freight and over ten times more than Gatwick. This would make it easier to gain ‘connectivity to growth markets, which would be particularly important for maintaining London’s status as a global city,’ the Commission added.
Most of this was already known to both camps, of course, and does little to indicate which way the Airports Commission will eventually lean. Davies did recently make an interesting point, however, which might prove telling. Speaking on BBC Radio 4, he said that the recommendation would be influenced by how the Commission expected the air travel industry to develop, towards hubs like Heathrow or low-cost centres like Gatwick.
‘There’s a very interesting choice of model here,’ Davies said. ‘We have never said we don’t need a hub. The issue is how big that hub needs to be and whether the growth will be the point-to-point – the Ryanair model – or the British Airways-type global network.’
This decision could be about more than merely West vs South for London, then, but the expected future of air travel generally.
The final recommendation will come only after the general election, but the decision will still be seen largely as a political one. Whatever is decided, it will upset a lot of voters. However, it’s hard to see any party hearing out the Airports Commission’s recommendation and then ignoring it. So if you have something to say, MT’s sure they would just love to hear from you.
