Newcastle Chronicle asks: “Could Heathrow expansion hurt the North East and Newcastle Airport?”

Because Heathrow hopes to get support from the Newcastle area for its hoped-for 3rd runway, it held one of its “business summits” there. The airport has elaborate projections, based on extremely weak and shaky premises, of the economic benefit – and the jobs – that its runway would bring to the north east.  However, the No 3rd Runway Coalition has pointed out (which came as news to the local press, that has been starved on the real facts) just how few jobs the runway would probably bring, and how Heathrow has used unreliable estimates based on out of date, discredited, numbers. While Heathrow takes one figure (all the UK over 60 years) of economic benefit of £147 billion, the DfT downgraded this figure in 2016 to £61 billion. Even that is hugely inaccurate, with the actual number taking all costs into account, more like £1 – 2 billion at most. Heathrow implies (based on the incorrect £147 bn) that the north east region would get some 5,000 jobs  The other harsh reality is that a 3rd runway is unlikely to do much to increase domestic links to Heathrow, as these are only maintained if subsidised. What is much more likely to happen is that Newcastle airport would have fewer long haul flights, with even more of a concentration of these at Heathrow. The Coalition said that for good connections between the north east and international markets, the Government should be working to get direct flights into airports such as Newcastle.
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Could Heathrow expansion hurt the North East and Newcastle Airport?

One campaign group say that a third runway and too much focus on the North East could hurt airports such as Newcastle

BY SEAN SEDDON  (Chronicle Live – Newcastle)
13 SEP 2017

A campaign group opposed to the expansion of Heathrow Airport has cast doubt on projections it could boost the North East economy.

The No 3rd Runway Coalition accused the Government of playing fast and loose with the future of regional airports with their focus on the South East.

One of the Government’s arguments for expanding Heathrow, despite vocal opposition, has been that the financial benefits would be felt across the country.

But the anti-expansion group rubbished these claims, saying any benefit would be “negligible” and that focusing on Heathrow rather than supporting domestic routes could actually cause harm to airports such as Newcastle in the long-term.

Paul McGuinness, chair of No 3rd Runway Coalition, said: “If economic growth in the North East is to come through connections with international markets, the Government should be working to get direct flights into airports such as Newcastle.

“Instead, they’re using the largesse of taxpayers from across the UK, including the North East, to subsidise Heathrow’s expansion, to the benefit of Heathrow’s shareholders and the South East, yet again.”

A report by the Airport Commission in July 2015 said Heathrow’s expansion could create a £147bn economic benefit over 60 years.

But in October 2016, that was downgraded to a maximum of £61bn by the Department for Transport (DfT), leading the No 3rd Runway group to dismiss initial estimates that expansion could create more than 5,000 jobs in the North East by 2050.

The July 2015 report also found that, despite claims Heathrow’s expansion would increase the number of domestic links, routes between the South East and the regions could actually vanish if support wasn’t provided by to make them economically competitive.

Mr McGuinness said: “Rather than relying on the discredited figures that Heathrow continue to quote, politicians and business people from the North East will want to ask serious questions of Heathrow about how they can come anywhere close to delivering the jobs and investment, that they continue to promise, based on the now trusted, downwardly revised economic benefit figures.

“The Government needs to be more ambitious and ensure that regional airports receive significant investment, to deliver an internationally well-connected North East.

“Flights from Heathrow effectively compete with those from regional airports, so boosting Heathrow’s near monopoly position can only advance the interests of the South East, to the further detriment of the North of the country.”

A Newcastle International Airport spokesperson said connectivity was important for the region’s economy and are supportive of the third runway, signalling they hope it increases existing links between the two.

They added: “Newcastle Airport acts as an international gateway and we will continue to seek additional routes to help ensure the region remains well connected.

“We currently enjoy good connectivity to Heathrow, with up to 6 British Airways flights per day and approximately 0.5million passengers using the service each year.

“We were pleased the government supported a third runway, and hope that through the increased capacity our connections can not only be safeguarded but increased.”

The DfT defended its position, pointing to a recently-launched a review into the aviation industry which will address how links between London and airports such as Newcastle can continue.

A spokesperson said: “A new runway at Heathrow would boost economic growth throughout the whole of the UK.

“Regional airports also help connect people to global destinations – both via Heathrow and directly – creating jobs and boosting local economies.

“The Government supports growth of aviation across the country where there is demand and where environmental impacts can be managed.”

http://www.chroniclelive.co.uk/news/north-east-news/could-heathrow-expansion-hurt-north-13611492#ICID=sharebar_twitter

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The Heathrow “business summit” in Newcastle https://www.neechamber.co.uk/events/1273/heathrow-business-summit-2016-connecting-ne-smes-with-the-heathrow-supply-chain 

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See earlier:

SNP misled by Heathrow inflated claims of number of jobs for Scotland due to a 3rd runway

The SNP decided to give its backing to a Heathrow runway, rather than one at Gatwick – having been led to believe that the only choice on offer was between these two. They were led, by Heathrow PR, to believe there would be greater benefits for Scotland. The SNP hoped to get exports from Scotland (salmon and razor clams) shipped through Heathrow. The Airports Commission came up with a figure of economic benefit from a Heathrow runway of UP TO £147 billion to all the UK over 60 years. Heathrow got a consultancy called Quod to work out the number of jobs. They came up with the figure of 16,100 jobs for Scotland (over 60 years) from the runway. The DfT has now downgraded the £147 billion figure, as it included various speculative elements, and double counted benefits. The new figure (also still far higher than the reality) from the DfT is UP TO £61 billion for the UK over 60 years. That, pro rata, would mean up to about 9,300 jobs for Scotland – not 16,100. It is unfortunate that the SNP were misinformed, as were other MPs, Chambers of Commerce etc across the regions.  Heathrow also pledged benefits for Scotland such as using its steel for construction, and using Prestwick as a base. The Scottish Green party see the SNP backing of a Heathrow runway as a betrayal of those badly affected by it, and of Scotland’s climate commitments.

http://www.airportwatch.org.uk/2016/11/snp-misled-by-heathrow-inflated-claims-of-number-of-jobs-for-scotland-due-to-a-3rd-runway/

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See also

Airports Commission report shows fewer, not more, links to regional airports by 2030 with 3rd runway

The Times reports that analysis by Transport for London (TfL) of the Airports Commission’s final report shows that, with a 3rd runway, Heathrow would only serve 4 domestic destinations by 2030, compared to the 7 is now serves.  It would serve only 3 with no new runway by 2030. (The Gatwick figures are 7 domestic destinations by 2030 with a 2nd runway, compared to 10 now). Heathrow has been claiming that its runway will be important for better links to the regions, and improved domestic connectivity by air. The Heathrow runway has been backed by Peter Robinson, the first minister of Northern Ireland, Derek Mackay, the Scottish transport minister, and Louise Ellman, the chairwoman of the transport select committee – on the grounds that it would help the regions. The Commission’s reportsays: (Page 313) “15.8 ….without specific measures to support domestic connectivity even an expanded Heathrow may accommodate fewer domestic routes in future….”  The Commission cannot see effective ways to ensure domestic links are not cut in future, as less profitable than long haul, but they suggest public subsidy by the taxpayer for these routes. This is by using PSO (Public Service Obligations) which could cost £ millions, is a bad use of public money, and may fall foul of EU law.  So if the taxpayer has to pay, that means the runway costs us even more.

http://www.airportwatch.org.uk/2015/07/airports-commission-report-shows-fewer-not-more-links-to-regional-airports-by-2030-with-3rd-runway/

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Government needs to provide clarity on possible jobs across the UK created by 3rd runway

When the Government announced Heathrow as its preferred option in October 2016 it downgraded the economic benefits of a 3rd runway substantially. The Airports Commission Final Report assessed the economic benefit to the whole of the UK, over 60 years, might be up to £147 billion (their assessment of need scenario). Heathrow often uses a much higher figure of “up to £211 billion” and omit to say it is for all the UK, over 60 years. In October, the DfT, calculating the possible economic benefits in a different way, thought a more likely figure was £61 billion. This is benefits only. But if the costs are taken off, the benefit falls to something more like £6 billion (£2 – 11 billion or so range). Heathrow, and the DfT, say there will be huge benefits to the regions, and large numbers of future jobs. The figures Heathrow has on its website are based on the £147 billion estimate.  These have not been corrected, in the light of the reduced DfT estimate. So what is the actual value of a third runway to the English regions, Scotland, Wales or Northern Ireland? All that we do know is that it will be considerably less than the promises made by Heathrow to so many MPs and local councillors. The onus is on Heathrow and the DfT to come up with revised estimates of the employment benefits to the regions. So far, it has failed to do so.   

http://www.airportwatch.org.uk/2017/02/government-needs-to-provide-clarity-on-possible-jobs-across-the-uk-created-by-3rd-runway/
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The table below is from the Quod report, for Heathrow (undated but somewhere before November 2015)

(these numbers are still on the Heathrow website here)

However, all these estimates were based on a presumption of about £147 billion of economic benefit (which does not deduct costs to the UK of the runway).

The actual regional benefits, and the actual number of extra jobs that might – or might not – materialise in the regions has not been amended, even though the DfT reduced the assessment of benefit from £147 to £61 billion.

The Government has not provided a break-down for the English regions, Scotland,
Wales or Northern Ireland.

The government estimates that, overall, the aviation sector currently contributes around £18bn – £21bn per annum to the UK. Even if the 3rd runway contributed £61 billion (over 60 years) rather than just the NPV of £6 billion, that comes to all of £1 billion per year.

That is an increase of 5%.

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New DfT report indicates number of local jobs from Heathrow 3rd runway about 37,700 by 2030 – not “up to 77,000”

The Airports Commission’s Final Report said the Heathrow NW runway would lead to an additional 59 – 77,000 jobs [direct, indirect and induced jobs – ie. supply chain etc] in 2030 for local people. Indeed, Heathrow “astroturf” lobby group got membership partly on the strength of the jobs claims. But now, having looked at the details, the DfT has come up with much lower figures. While the statement on the DfT website on 25th October still says “up to 77,000” local jobs, its more considered assessment “review and sensitivities” document accepted these figures were exaggerated. Instead they now say, using a more accurate method, the number of local jobs might be 37,740 by 2030, not 77,000. By 2050, the DfT now estimate the number of jobs might be 39,100 – while the Commission expected 78,360.  The DfT say the 2050 figure is the cumulative total, and cannot be added to the number of jobs created by 2030.  The DfT “assessment and sensitivities” report states that it had “identified a number of uncertainties with the approach taken” to assessing jobs by the Commission, which used job multipliers from the airports. These “could lead to significantly different results”. The new DfT figures use Berkeley Hanover Consulting Ltd (BHC) and Optimal Economics Ltd survey data rather than airport assumptions to generate estimates of the indirect job multipliers, which are likely to be more robust.

http://www.airportwatch.org.uk/2016/10/new-dft-report-indicates-number-of-local-jobs-from-heathrow-3rd-runway-about-37700-by-2030-not-up-to-77000/

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NB. The DfT makes no assessment of the numbers of jobs created in the regions. The 37,700 are just locally to Heathrow.