South East MP clash over Thames Estuary airport plans

Proposals to build an airport in the Thames Estuary airport were called both “preposterous” and essential in a debate between two South East MPs. During a parliamentary debate, MP Mark Reckless said plans by Boris for an estuary airport were outdated and  proposterous, and “I think there’s a very strong case for Gatwick”. I think many regional airports can help with the load. MP Jo Johnnson (Boris’s brother) predictably backed Boris in saying more capacity was needed, and a large new hub – pushing the usual line about the need for connections to “11 cities in mainland China that are expected to be among the 25 biggest cities in the world by 2025 and that only a hub airport can deliver that sort of connectivity?”


4 July 2012

South East MP clash over Thames Estuary airport plans

Impression of Thames Hub from the east
Two plans have been put forward for Thames estuary airports – one on an artificial island and another on the Isle of Grain

Proposals to build an airport in the Thames Estuary airport were called both “preposterous” and essential in a debate between two South East MPs.

Rochester and Strood MP Mark Reckless said plans for an estuary airport were outdated during a parliamentary debate on UK aviation.

Mayor of London Boris Johnson favours the idea of an airport on an artificial islnd, known as “Boris Island”.

His brother, Orpington MP Jo Johnson, said the extra capacity was essential.

During the debate about the future of aviation in the UK, Mr Reckless said: “I think there’s a very strong case for Gatwick. I think many regional airports can help with the load.

“I think this debate we’ve been having about aviation has been horribly distorted by preposterous, I’m afraid, efforts by the Mayor of London to put the Thames Estuary airport on the agenda 10 years after it was categorically ruled out.”

‘Without direct connections’

In 2002, a new airport at Cliffe on the Hoo peninsula was one of several options being considered by the Labour government for airport expansion in the South East.

However, in December 2003, it decided to leave Cliffe out of its airport expansion plans.

Jo Johnson replied: “I’m a bit depressed by the combination of nimbyism and sticking-plaster solutions that he’s putting forward.

“Is he not aware that the UK remains without any direct connections at all to 11 cities in mainland China that are expected to be among the 25 biggest cities in the world by 2025 and that only a hub airport can deliver that sort of connectivity?”

Two plans have been put forward for Thames estuary airports – one on an artificial island, known as “Boris Island”, and another on the Isle of Grain proposed by architect Norman Foster.

On Sunday, a report, commissioned by the South East Local Enterprise Partnership (LEP), said an estuary airport would be too expensive and would take too long.

It recommended expanding other airports such as Gatwick and Heathrow to meet increasing air travel demands.

Birmingham Airport recently urged the government to do more to promote regional airports across the country rather than a hub airport in the South East.

The government will begin a consultation later this summer on a document setting out aviation strategy.

http://www.bbc.co.uk/news/uk-england-18705143

 


Private Members debate: Aviation competitiveness in the UK – Mark Reckless MP

The debate in Parliament on 4th July is at

http://www.theyworkforyou.com/whall/?id=2012-07-04a.249.0&s=speaker%3A24899#g272.1

The debate today was sought by Mark Reckless, MP for Rochester & Strood. It was very interesting indeed and you can see a video of the debate at: –

http://www.parliamentlive.tv/Main/Player.aspx?meetingId=11027

It was encouraging, for those against an estuary airport, that there was a lack of conviction behind any suggestion of an estuary airport scheme. But it was less encouraging that a number of speakers appeared to have been taken in by BA and BAA lobbying for greater airport capacity. It wasn’t until Dr Julian Hubbard MP spoke, at around 56.30, that it was explained that the 7 runways in 6 airports around London make our capital the best connected city in the EU, possibly the world. It was also explained that if the government’s carbon targets are to be achieved, capacity must be capped at 368 MPPA by 2050 – and the UK has capacity for that now.

This being a parliamentary debate there was a real knock around between Labour and other MPs, which begins at around 1.10.00.   The response by the Secretary of State, Theresa Villiers, at the end, is worth looking at.  (at 1.20.43 on the recording above).

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Parliamentary debate at  

http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm120704/halltext/120704h0001.htm#12070471000001

It is well worth reading, on air links between the UK and China. There is a bi-lateral agreement between China and the  UK, limiting the number of flights, and this suits BA well:

China—restricted to six points in the UK and six points in China since 2004 with a current limit of 31 passenger services per week by the airlines of each side allowed;

 

 

Jo Johnson (Orpington, Conservative)

I congratulate my hon. Friend on securing this debate, but I am a bit depressed by the combination of nimbyism and sticking-plaster solutions that he puts forward. Is he aware that the UK remains without any direct connection to 11 cities in mainland China that are expected to be among the 25 biggest cities in the world by 2025? Only a hub airport can deliver the sort of connectivity for which businesses in Orpington, and doubtless in my hon. Friend’s constituency, are crying out.

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

I encourage my hon. Friend to listen to the rest of my speech, and not merely to recycle briefings that I, too, have received. There are many arguments for a hub airport, and I do not deny that some are valid. Many, however, are recycled by industry players with strong vested interests that are not necessarily those of the country as a whole. However, I will address my hon. Friend’s point later in my remarks.

Finally, some estimates suggest that the cost of the proposal will be £40 billion, £50 billion or even £100 billion. The Parsons Brinckerhoff report, a substantive piece of work, argues that “even the £70 billion being discussed is a conservative estimate.”

Boris tells us that that money will come from private investors. Yes, but they will want a return. Even if we are looking at a 5% interest rate over a 50-year period, a return on that sort of money will add at least £50 to the cost of every plane ticket from the airport. Why would airlines, passengers, the Government, indeed anyone, want to pay that sort of money when the cost of expanding existing airports—including some that Members present may be promoting—is so much smaller?

The coalition Government were right to reverse the policy that the previous Government decided on in 2003. To recap, the then Government’s recommendation was a second runway at Stansted by 2011-12, a third runway at Heathrow by 2015 to 2020 and, following our judicial review, a second runway at Gatwick from the mid-2020s. The strongest reason why we were right to overturn that is that the projections on which theLabour Government operated from 2003 were, as I and many others set out clearly at the time, wholly unrealistic. They were based on a low case of 400 million passenger movements for the UK by 2030, and a high case of 600 million.


I am listening with great attention and fascination to my hon. Friend’s speech, but he has not addressed a very pertinent point raised by my hon. Friend Joseph Johnson: at present we do not have access, or cannot fly directly, to those cities in China. I know that my hon. Friend Mark Reckless will come to that in his speech, but I am conscious that it is probably one of the most important questions that he could address, and I would very much like to hear his thoughts on it.Kwasi Kwarteng (Spelthorne, Conservative)

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

In deference to my hon. Friend, I shall bring forward my remarks on that point.

Photo of Theresa VilliersTheresa Villiers (Minister of State (Rail and Aviation), Transport; Chipping Barnet, Conservative)

Before my hon. Friend does so, will he say if he welcomes the fact that Heathrow delivers more flights to China than any of its continental rivals, meaning that we have excellent connectivity to important emerging markets such as China?

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

Yes, I hugely welcome that. From listening to the debate that is dominated by a small number of players with the strongest vested interests and the most public relations consultants, one would get almost the reverse impression. When we talk about flights to China, it is important to remember that the reason why we have relatively few different city destinations—that is separate from the overall number of flights, which the Minister was right to raise and I think is more important—is that it is for the convenience of British Airways, the dominant player at Heathrow, to use Hong Kong as a hub airport for China, in exactly the way that it uses Heathrow as a hub here, through the Oneworld alliance and Cathay Pacific.

Photo of Jo JohnsonJo Johnson (Orpington, Conservative)

First, on a point of fact, according to BAA, London has only 31 flights a week to two destinations in mainland China, whereas there are 56 to three such cities from Paris Charles de Gaulle airport, and 51 to four such cities from Frankfurt. Furthermore, my hon. Friend references Hong Kong and Shanghai. Surely he is aware of the additional cost that comes from having to route products, goods and services through Shanghai and Hong Kong, as opposed to sending them directly to where the market is, in mainland China. Our businesses are crying out for connectivity. That is an obstacle.

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

I made no mention of Shanghai. The reason why there are only 31—

Photo of Jo JohnsonJo Johnson (Orpington, Conservative)

Hong Kong is a transhipment point.

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

I mentioned Hong Kong, and the reason why Hong Kong is used so much is that that is hugely to the economic benefit of BA, Cathay Pacific and the Oneworld alliance. They use Hong Kong for exactly the same reasons why my hon. Friend promotes Heathrow—these great hub economics, which are certainly to the benefit of the airline providing a service. There are arguments for hub airports, but the arguments that my hon. Friend makes for point-to-point services to more cities are very strong ones. As for why we do not have them, I refer to a written answer from the Minister in March 2012. I do not know whether my hon. Friend Joseph Johnson has seen it. It states:

“China—restricted to six points in the UK and six points in China since 2004”— according to a 2004 treaty— “with a current limit of 31 passenger services per week by the airlines of each side allowed”.—[Hansard, 14 March 2012; Vol. 542, c. 239W.]

If my hon. Friend would like to see more flights to more Chinese cities, the way to do it is to rip up that treaty, and for the UK to move to a unilateral open-skies position that allows any Chinese airline to fly to any city in the UK.

Photo of Kwasi KwartengKwasi Kwarteng (Spelthorne, Conservative)

I am trying to work through the maze of complicated arguments that my hon. Friend is presenting, but I have just a simple question. Does he believe that the United Kingdom as a whole needs more aviation capacity?

  • Photo of Tracey Crouch

Tracey Crouch (Chatham and Aylesford, Conservative)

There is an argument about competitiveness, and that argument is for today. Our colleagues are arguing that businesses in their constituencies require the opportunities now. Therefore we should be making the most of our existing airports, rather than waiting two decades for a new airport to be built to maximise opportunities.

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

I agree. There is huge scope for what my hon. Friend describes. It would hugely benefit not just the Medway towns and the south-east region, but the country as a whole.

I want to talk about one other area where the lobbyists have a certain position. I received a document yesterday from the Mayor of London, who tells me that he is delighted that I am having this debate. He says:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week).”

The reason is that we have a bilateral treaty with Brazil, with a current limit of 35 passenger services a week between the two countries. Again, that is vastly to the benefit of BA, which routes flights to Latin America, including Brazil in particular, through the joint hub that it now has in Madrid, through Iberia following the merger. We do not get pressure from BA to change that, because it hugely benefits its profits, but BA’s market capitalisation is in the low billions. The idea that our whole airline policy and the network of treaties negotiated by the previous Government should restrict those flights and prevent Brazilian or Chinese airlines from flying into our large cities is a huge mistake.

Photo of Paul MaynardPaul Maynard (Blackpool North and Cleveleys, Conservative)

Even if we were to rip up every treaty that my hon. Friend has identified as a block, does he seriously believe that there is sufficient capacity at our hub airport? Will a hub airport alone sustain newly developing point-to-point routes? Does he seriously argue that Heathrow could suddenly accommodate more routes to developing countries?

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

Yes, I do argue that. The limit on Heathrow’s routes to developing countries is largely because of the fact that those who have the slots find it most profitable to put on vast numbers of flights toNew York and almost as large numbers to Hong Kong. It would benefit the country as a whole much more if there were a wider network of routes, rather than just what happens to benefit British Airwaysand maximise its profits. To get to what my hon. Friend suggests, the treaty we need to rip up is the treaty of Rome, because it is under European directives—[ Interruption. ] The reason why the slots are organised as they are is that they have been capitalised into property rights for the airlines that historically happen to have used them, and it is because of European legislation that that has been allowed to happen. If we want a more effective route network for

our country as a whole, within the existing constraints of Heathrow—of course, others will argue that it needs to be bigger or we need a hub somewhere else and so on—European legislation prevents us from having that. Anyone who wants to set up a marginal route to an emerging market needs to buy out, at vast expense, one of the existing airlines, particularly BA, which has a near monopoly power. They have to give BA a huge amount of money to take the slots they need for those routes. The reason why they cannot do that is cost, yet we have treaties that restrict the amount of access that overseas airlines have into the UK. They could otherwise be flying into Gatwick, Stansted or Birmingham as city pairs, but the routes and slots are at Heathrow, and the regulation creates that monopoly power.

Is my hon. Friend seriously suggesting that the key to our aviation problems is ripping up the treaty of Rome?

Photo of Mark RecklessMark Reckless (Rochester and Strood, Conservative)

It would certainly help. There are other ways in which the issue could be addressed; for instance, the air passenger duty regime. Many lobbyists are against the size of air passenger duty, but in operating conditions where there is an almost perfect monopoly at Heathrow and, at peak and to an extent shoulder periods, a monopoly at Gatwick, what happens through the increase in air passenger duty is that some of the monopolised value of those slots and the power of the grandfather rights are given instead to the public purse. It is not a situation of perfect competition in which costs are passed on. To the extent that costs rise, whether they are landing fees or APD, that will largely be absorbed into the price, giving greater public benefit, and possibly driving some of the marginal leisure stuff out of Heathrow and Gatwick.