Heathrow boss rules out footing the £5 billion bill for road and rail works – wants taxpayer to pay
Date added: 24 July, 2015
The Airports Commission left the matter of who would pay for the approximately £5 billion needed to tunnel a section of the M25, and other surface access improvements, vague. The assumption has been made that the taxpayer would have to fund this, though the Airports Commission suggested that Heathrow would be able to find the funding from its investors for this. Now the CEO of Heathrow has dismissed the suggestion that the airport foots the £5 billion bill for road and rail work if a 3rd runway is built. Huge motorway engineering would be needed, to have the runway going over the motorway. John Holland-Kaye has ruled out paying for the surface access work. Though the government funds road and rail improvements under normal circumstances, tunnelling the M25 and dealing with hugely increased road traffic using an airport 50% larger than at present are not normal circumstances. Especially in times of huge economic savings being necessary in public finances. The Commission’s final report said it considered the runway was commercially viable “without a requirement for direct government support. This remains the case even in a situation where the airport is required to fund 100% of the surface access costs.” This would be by Heathrow “raising both debt and equity finance. This finance is then serviced through subsequent revenues and refinancing by the airport operator.”
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Heathrow boss rules out footing the bill for road and rail works
John Holland-Kaye has dismissed the Airports Commission’s suggestion that it pays the £5bn in road and rail upgrades if a third runway is built
The boss of Heathrow has dismissed the suggestion from Sir Howard Davies, the chairman of the Airports Commission, that the airport foots the £5 billion bill for road and rail work if a third runway is built. [See page 224. Point 11.7 of Airports Commission final report].
A new runway in west London would require significant transport upgrades, including encompassing part of the M25 in a tunnel.
Speaking at the airport’s half-year results on Friday, chief executive John Holland-Kaye ruled out the idea.
“Those are things that the Government should be paying for anyway,” he said. “That’s the way these things work, that government funds road and rail, aviation is funded privately, so that’s what we expect to happen here.”
Surface access aside, the commission estimated that a third Heathrow runway would cost £17.6bn. The airport on Friday posted 5.9pc increase in first-half revenues to £1.3bn. Pre-tax profits for the six months to the end of June climbed to £120m from £23m a year earlier.
http://www.telegraph.co.uk/finance/newsbysector/transport/11761196/Heathrow-boss-rules-out-footing-the-bill-for-road-and-rail-works.html
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The Airports Commission’s final report
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This report includes the comment (pages 227 and 228):
“Financeability – the scheme capital costs are paid for by the airport as incurred through raising both debt and equity finance. This finance is then serviced through subsequent revenues and refinancing by the airport operator. In this context, the peak levels of debt and equity required are key outputs of the analysis, which have been subject to further scrutiny by investors, lenders and other market participants as part of the assessment.
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11.16 The commercial viability of the three schemes is based on the ability of the airport users to bear the additional costs (weighted average aero charge figures above in Table 11.4) and the ability of the airport operator to raise and service the additional finance (peak equity and peak debt figure).
11.17 In considering the ability of the airport users to bear the costs, analysis undertaken by the Commission suggests that all of the three shortlisted schemes are commercially viable propositions, without a requirement for direct government support. This remains the case even in a situation where the airport is required to fund 100% of the surface access costs, which would not increase the weighted average aero charge by more than two pounds for any scheme (the Commercial Case and the report Cost and Commercial Viability: Sources of finance discuss this in more detail).”
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Total of £20 billion of surface access improvements needed??
See also a briefing on the costs of surface transport needed, to support a Heathrow 3rd runway, from the RHC (Richmond Heathrow campaign)
This says:
“What impact would a new runway at Heathrow have on Surface Transport?
“Demand for road and rail transport in London is set to rise substantially. 52 million passengers currently end or start their journeys at Heathrow. This, without a third runway, is set to rise to 90 million by 2050. With a third runway it will be 112 million – a 100% increase on today.
“Transport for London (TfL) has calculated that an investment of up to £20 billion will be needed to support this increase. The consequences of inadequate investment would be poor travelling experience on public transport and increased resort to road transport, generating more air pollution and traffic congestion.”
Reference TFL response to APPG on surface access (27 March 2015)
http://www.heathrowappg.com/tfl-response-to-appg-on-surface-access/
from RHC
http://www.rhcfacts.org/surface/
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Heathrow is already wriggling on other conditions for its runway:
See also:
Heathrow hints it may oppose ban on night flights as price for third runway
Chief executive says airport needs to discuss Davies commission requirements, including outlawing fourth runway, with government
23.7.2015 ( Guardian)
Heathrow is to press the government to loosen the conditions attached to a third runway going ahead, with the airport reluctant to accept a proposed ban on night flights or legislation against further expansion.
Its chief executive, John Holland-Kaye, said he was confident Heathrow would be given the green light to expand and that “it wouldn’t make sense” for the prime minister, David Cameron, to oppose a new runway now.
Speaking on the busiest day for passengers in the airport’s history, Holland-Kaye said it was still considering how to respond to the Davies commission’s recommendation. The commission gave clear backing to expand the west London airport rather than Gatwick, but stressed that it should only go ahead with measures to address concerns about noise and air quality.
However, Holland-Kaye signalled that Heathrow is not yet prepared to accept all such measures: “We need to talk with government and airlines. There’s a conversation to be had over the next few months as the government assesses the report.”
While most of the commission’s 11 requirements, including compensation topping £1bn to buy out homeowners or provide for insulation schemes, echo Heathrow’s own pledges, the airport is particularly concerned by a ban on scheduled night flights between 11.30pm and 6am. Holland-Kaye said banning early-morning arrivals would impact on lucrative business routes: “We have a significant number of routes to Hong Kong and Singapore. That’s getting key trading partners into the UK to start their business. It’s very popular because it’s an important route: we have to have some time to reflect on those and discuss them with government and airlines.”
Heathrow has said that proposed legislation to bar any fourth runway can only be a decision for government – but in 2013, the airport outlined how it could expand further, as opponents including Boris Johnson, the London mayor, made the case for a four-runway hub. The commission’s earlier analysis said a further runway in the UK would likely be demanded by 2050, and Heathrow projects its own passenger numbers to almost double to 130m annually with a third runway. Holland-Kaye said the airport would “comment later on the package of conditions as a whole”, but he noted that “we do have the ability, physically” to build a fourth runway.
He said he was confident the debate between Heathrow and Gatwick had been won, despite the rival airport’s claims that the process was “flawed and unfair”. Holland-Kaye said the airports commission recommendation “was absolutely clear … it has come up with a package that meets everyone’s objections.”
Heathrow has scheduled planning summits with suppliers and discussions with local schools and colleges about apprenticeships, although the government has yet to endorse the commission’s verdict. But given the recommendation, Holland-Kaye asked: “How can the prime minister do anything other? He set up the commission, we’ve met all the criteria. How could he then choose something else? It doesn’t make sense.”
Cameron is chairing a cabinet subcommittee which opponents of Heathrow have condemned for omitting all its prominent cabinet critics, predominantly ones with constituencies in west London. Holland-Kaye said it was “a good sign that the wheels of government are starting to move towards a decision” and welcomed the inclusion of the Scottish and local government ministers “because it underlines it’s a national decision”.
Heathrow is reviewing its security in anticipation of further action by anti-expansion protesters, after 13 activists from the campaign group Plane Stupid broke in and blocked a runway earlier this month, resulting in 22 cancelled flights. Holland-Kaye said it caused “minimal disruption” because the protesters were contained at the end of the runway but added: “These are anti-aviation protesters, they are professionally organised and they’ve been rehearsing this; it was a military-style operation.
”We are reviewing our security not just in response to this incident but other things they could do. Other things we do not want to advertise.”
He said: “We completely support the right to protest, but this was putting themselves at risk and other people.”
Passenger numbers were set to pass 242,000 on Friday as families started the summer holidays, making it the airport’s busiest day of all time. The first six months of this year saw total numbers rise 1.3% to 35.5 million and pre-tax profits increase to £120m.
http://www.theguardian.com/uk-news/2015/jul/24/heathrow-airport-third-runway-discussions-government
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Heathrow wants “discussions with government” to negotiate runway conditions set by Airports Commission
July 14, 2015
The Airports Commission recommended a 3rd runway at Heathrow, subject to a number of conditions (noise, compensation, local consultation, air quality etc). But Heathrow is not keen on these conditions, and now says it is “seeking discussions with government ” on them. John Holland-Kaye, Heathrow chief executive, said Heathrow “would have to consider” the demand from the Commission that there should not be night flights, and that there should be a legal prohibition on a 4th runway. The point of conditions is that they are, well as they say, conditions. But Heathrow says: “We will work with the government to make sure we have a solution that can be delivered. I am not saying today that we will accept all the conditions that have been put down.” Airlines would not like night flights, as they make long haul routes less profitable and problematic. Heathrow’s hope of getting conditions, all recommended for good reasons, removed or reduced will only increase the level of hostility towards the airport by its opponents. Whitehall sources say the government will state its preference for the location of a new runway before Christmas (could be November?) — but will then launch a fresh consultation.
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Posted: Friday, July 24th, 2015. Filed in General News, News about Airports, Recent News.
