The Coalition government is preparing to mount a fresh assault on planning laws by giving developers the power to push though applications without the need for council approval or environmental assessments. In a move described by planning experts as a “nuclear option”, developers will be allowed to ignore local authorities if they delay decisions on conditions attached to planning applications. The Coalition is also planning to remove the need for developers to assess the impact of some large housing estates, shopping centres and industrial estates (maybe including runways?) on the countryside. Opponents fear the reforms could see local communities “held to ransom” by developers and force councils to “wave through” unpopular planning applications. There is real fear that irreversible harm is being done to the countryside, and habitats, and that the Coalition’s planning reforms could become “the defining legacy of this government.” The Coalition will unveil a package of measures in April which will give developers new powers to ignore councils and push ahead with new housing. The new legislation will mean that planning applications will be automatically approved if councils “fail to discharge a condition in time”.
Government takes ‘nuclear option’ with new planning laws
Coalition accused of taking ‘nuclear option’ on planning by giving developers power to push ahead without council approval and environmental assessments
The Coalition is preparing to mount a fresh assault on planning laws by giving developers the power to push though applications without the need for council approval or environmental assessments.
In a move described by planning experts as a “nuclear option”, developers will be allowed to ignore local authorities if they delay decisions on conditions attached to planning applications.
The Coalition is also planning to remove the need for developers to assess the impact of some large housing estates, shopping centres and industrial estates on the countryside.
Campaigners on Monday night warned that the reforms could see local communities “held to ransom” by developers and force councils to “wave through” unpopular planning applications.
Details of the new reforms emerged after a senior adviser to the Prime Minister said that the “physical harm” being inflicted on the countryside by the Coalition’s planning reforms could become “the defining legacy of this government”
However Nick Boles, the planning minister, is planning a new wave of reforms which will open the way for even more development than April.
Mr Boles said that the reforms will “significantly cut the burdens of unnecessary planning applications” and “save the industry precious time and money”.
He said: “[The Department] is bringing in reforms which will significantly cut the burdens of unnecessary planning applications, help local authorities and developers reduced the administration involved in Environmental Impact Assessment cases, and simplify the listed building consent system.
“These policies will save industry precious time and money, allowing businesses to move forward productively without the constraints of heavy handed and unnecessary regulation.”
The Coalition will unveil a package of measures in April to help meet its target of building hundreds of thousands of new homes to help stimulate the economy.
One of the most significant measures gives developers new powers to ignore councils and push ahead with new housing.
When councils grant planning permission, they usually do so with conditions attached such as building flood defences, planting trees or landscaping.
However, housebuilders claim that councils are delaying tens of thousands of new homes by failing sign off the conditions.
The new legislation will mean that planning applications will be automatically approved if councils “fail to discharge a condition in time”.
Richard Blyth, the head of policy at the Royal Town and Planning Institute, said that the policy will mean developers “can hold everybody to ransom”.
He said: “We are concerned it is a very blunt instrument. Local councillors work hard to reflect public opinion in developments, and if it later turns out that a lot of these conditions have not been met residents might feel let down. It is a nuclear option.”
Councillor Mike Jones, the chairman of the local government association’s housing board, said the conditions are “vital” and help “protect communities” from unwanted developments.
However Steve Turner, a spokesman for the Home Builders Federation, said: “Tens of thousands of approved homes are being delayed by bureaucracy in the planning system – the very homes that many accuse developers of hoarding in a ‘land bank’ . The move will ensure that homes with planning permissions are not being prevented from being built by Local Authority delays.”
The second new measure will reduce the need for environmental assessments to assess of the impact of large scale developments on the countryside
At present developers have to consider carrying out an “environmental impact assessment” when a development such as a new housing estate, shopping centre or cinema covers more than an acre of land.
Under the assessments, officials take into account the impact a development will have on the landscape, animals, flora and fauna and suggest potential measures to mitigate damage to the environment.
However, the proposed legislation would raise the threshold to a significantly higher level than an acre, exempting thousands of developments from the need to have an environmental assessment.
A spokesman for the Department for Communities and Local Government said: “We are concerned that too many unreasonable conditions are imposed, which can be up to a hundred different requirements.
“In turn, these can then prevent construction works starting on sites and houses being built, sometimes adding years to the planning process.”
Related Telegraph Articles
Planning Reform Proposals
Standard Note: SN/SC/6418
Last updated: 14 January 2014
Author: Louise Smith
Section Science and Environment Section
In a story in the Telegraph on 13 January 2014 it was reported that the Government was “planning to remove the need for developers to assess the impact of some large housing estates, shopping centres and industrial estates on the countryside.”
In response to this story the Government said:
Environmental impact assessments stem from European Union law and impose significant costs on the planning system, over and above long-standing, domestic environmental safeguards. It has become apparent that some local planning authorities require detailed assessment of all environmental issues irrespective of whether EU directives actually require it; similarly, some developers do more than is actually necessary to avoid the possibility of more costly legal challenges, which adds delays and cost to the application process.
The Directive is enacted into UK law through the Town and Country Planning (Environmental Impact Assessment) Regulations 2011 (SI 2011/194), which set the thresholds for when a development project will require an environmental impact assessment. The Chancellor’s Autumn Statement on 5 December 2012 said that the Government would consult on updated guidance on conducting environmental impact assessments by Budget 2013, and would consult on raising screening thresholds set out in the Regulations later in 2013.18 In his 6 December written statement, Eric Pickles set out the Consultation on updated guidance would aim to give greater certainty about when an environmental impact assessment would and would not be required:
“It has become apparent that some local planning authorities require detailed assessment of all environmental issues irrespective of whether EU directives actually require it; similarly, some developers do more than is actually necessary to avoid the possibility of more costly legal challenges which add delays and cost to the application process. Consequently, my Department will be consulting in 2013 on the application of thresholds for development going through the planning system in England, below which the environmental impact assessment regime does not apply. This will aim to remove unnecessary provisions from our regulations, and to help provide greater clarity and certainty on what EU law does and does not require.” Eric Pickles 6.12.2013
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A year after after JAL and ANA Holdings grounded their Dreamliner fleets after separate issues with batteries overheating, there has been another battery fire incident. In 2013 all of Boeing 787s were then taken out of service for over 3 months while the plane manufacturer sought a fix for the problem. Engineers doing maintenance on a parked 787, with no passengers on board,noticed smoke or gases venting from the battery compartment.There were also warning lights that flashed, signalling a battery fault. The smoke vented from the plane and a battery cell showed signs of melting. JAL said on checking the battery, encased in steel containment box, they found 1 of 8 cells had leaked a liquid. A relief valve designed to open when pressure rises inside a cell had opened,The plane remains grounded but the other 787s owned by ANA are continuing to operate normally. The issue of who will pay for any losses incurred by keeping the jet from flying will be determined after the plane is back in the air, said a spokesman for Japan Airlines, which operates 13 Dreamliners. Eight airlines have 787s. The battery problems and groundings were expensive for Boeing last year. The cause of the battery problems has not been determined, but changes were made to enclose the batteries better.
Boeing 787 aircraft grounded after battery problem in Japan
BBC’s Rupert Wingfield-Hayes: “Warning lights were going off showing there was something wrong”
Japan Airlines has grounded a Boeing 787 Dreamliner aircraft after detecting smoke or gases that may have come from faults with the main battery.
The problem was discovered during routine maintenance, and is a reminder of the battery faults that grounded all 787s for three months last year.
The airline said engineers noticed smoke, and then warning lights flashed signalling a battery fault.
Boeing said it was aware of the issue and is working with Japan Airlines.
The aircraft maker said that early indications suggested that a single battery cell had released gases, and that the warning system had operated as planned.
No passengers were on board.
The company’s shares price initially fell 1.5%, but eased backed later.
Any 787 battery problem is a sensitive issue. The worldwide fleet of Dreamliners was grounded last year while investigators looked into why two batteries on separate aircraft overheated in less than two weeks.
Boeing redesigned the battery system, although the precise cause of the problem was never conclusively proved.
Richard Westcott, the BBC’s transport correspondent, said: “Boeing says it appears that one cell within the lithium ion battery had gone wrong. The number of cells is highly significant.
“There are eight in total for each battery, and if the chemicals spread from one to the next it can potentially start a fire.
“Boeing never did solve the battery problem that grounded the entire Dreamliner fleet last year. Instead, Boeing put in a raft of safety measures to contain any future issues.”
There are 115 Dreamliners currently in service with 16 airlines.
Boeing 787 grounded in Tokyo for checks after battery vents white smoke
BY TIM KELLY AND ALWYN SCOTT
Jan 15, 2014
(Reuters) – A Japan Airlines (JAL) (9201.T) Boeing 787 Dreamliner remained grounded at Tokyo’s Narita International Airport on Wednesday as regulators demanded checks to see if the aircraft was fit to fly, a day after white smoke vented from the plane and a battery cell showed signs of melting.
The incident comes a year after JAL and ANA Holdings (9202.T) grounded their Dreamliner fleets after separate issues with batteries overheating. All of Boeing Co’s (BA.N) 787s were then taken out of service for more than three months while the plane manufacturer sought a fix for the problem.
ANA said its 787s were operating normally on Wednesday.
“The incident only happened yesterday, so it’s difficult to say when checks, or any repairs would be complete,” an official from the Japan Civil Aviation Bureau told Reuters. The agency will oversee inspections of the power pack by battery maker GS Yuasa Corp (6674.T), JAL and Boeing.
The latest incident with Boeing’s state-of-the-art plane, which is built with carbon-fiber composite materials and a powerful electrical system to reduce weight and improve fuel efficiency, raises fresh concerns about the plane’s safety and reliability.
Boeing said it was “aware of the 787 issue that occurred Tuesday afternoon at Narita, which appears to have involved the venting of a single battery cell.” Venting is the process of fumes and heat being channeled outside the battery casing and the aircraft when the battery overheats.
It noted the issue took place during scheduled maintenance with no passengers on board. “The improvements made to the 787 battery system last year appear to have worked as designed,” it added. Boeing shares closed down 0.5 percent at $140.01 on the New York Stock Exchange.
The issue of who will pay for any losses incurred by keeping the jet from flying will be determined after the plane is back in the air, said a spokesman for Japan Airlines, which operates 13 Dreamliners.
Global regulators grounded all 50 Dreamliners owned by eight airlines on January 16, 2013. They remained out of service while Boeing redesigned the battery, charger and containment system to ensure battery fires would not put the plane at risk. The cause of the battery problems has not been determined.
Since then the number of 787s in operation has more than doubled to 115 planes at 16 carriers. ANA remains the world’s leading operator with 24 Dreamliners.
The Japan Transport Safety Board, which is probing the battery overheating on an ANA flight last year, will not directly inspect the latest damaged battery, but will gather information on it as it tries to determine the cause of the earlier incident, a spokeswoman for the agency said.
The U.S. National Transportation Safety Board said it also was gathering information. The NTSB is still investigating a battery fire that occurred on a JAL 787 in Boston a year ago, and said last week it is due to complete that investigation in March. It has not said whether this week’s incident would affect the timing of the Boston investigation.
The U.S. Federal Aviation Administration, which certified Boeing’s revamped 787 battery system as safe last year, said it was working with the aircraft maker and regulators in Japan to investigate the battery malfunction. The agency has yet to release the findings of a review of Boeing’s design, manufacture and assembly of the 787 that it said would be released last summer.
United Airlines (UAL.N), the only U.S. carrier to fly the 787, was conducting precautionary checks on its Dreamliners, said a person familiar with the matter who asked not to be named as they were not authorized to speak publicly. United declined to comment on the inspections, saying only that “Our 787s are operating normally and we have not experienced any issues with our batteries.”
Air India AIN.UL, which has 11 Dreamliners, will wait to know the details of the latest battery incident before taking any action, Chairman Rohit Nandan said in a text message on Wednesday in reply to a question from Reuters.
JAL said maintenance engineers who were in the cockpit preparing the aircraft to fly to Bangkok on Tuesday, saw white smoke outside the plane. Warning lights in the cockpit later alerted them to possible faults with the main battery and charger. On checking the battery, encased in a steel containment box, they found one of eight cells had leaked a liquid. A relief valve designed to open when pressure rises inside a cell had opened, JAL said.
The liquid that leaked did not appear to breach the containment box, said a person familiar with the matter, who was not authorized to speak publicly, and it appears that any fumes vented through a port that is part of the containment system – a sign that the system likely worked properly.
PLAGUED WITH PROBLEMS
The 250-seat Dreamliner, which costs about $212 million at list price, has been plagued with problems. It was more than three years late to enter service after issues with parts, and has since suffered a series of mishaps with brakes, fuel lines, electrical panels and hydraulics, and other systems.
In July, after the 787 was cleared to return to service, an Ethiopian Airlines ETHA.UL jet caught fire at London’s Heathrow Airport, scorching the fuselage. The cause of the fire was never firmly established, but UK investigators traced the probable cause to faulty wiring of a lithium battery in an emergency beacon in the ceiling near the tail of the plane.
Also in July, Qatar Airways took one of its 787s out of service for what it said was a “minor” technical issue. Industry sources later told Reuters they were treating seriously reports that the aircraft had been grounded after smoke was seen near an electrical panel.
EXPERTS WEIGH IN
Aerospace experts said the latest incident was troubling, but were cautious about drawing broader conclusions.
Richard Aboulafia, an aerospace analyst at Teal Group in Fairfax, Virginia, said the incident raised two questions: whether the new system that contains the problem had worked, and whether the root cause of the battery problems will ultimately be discovered.
“The real issue with containing the problem, rather than getting to the root cause of the problem, concerns economics,” Aboulafia said. “Incidents can be successfully contained, but if you continue to see incidents like these, you’ve got a mounting bill from taking jets offline, and repairing their battery systems. You’ve got an image problem, too.”
Hans Weber, a former FAA adviser and president of TECOP International, an aerospace technology consulting firm, said the incident might provide more clues about the cause of the problem, such as overcharging. He said it appeared the containment system worked.
“It limited the problem to one faulty cell. It contained the problem and vented the fumes outside the airplane, as designed,” he said, basing his comments on JAL’s initial statements.
Shares in GS Yuasa closed down 0.7 percent at 582 yen in Tokyo on Wednesday, while the benchmark Nikkei average .N225 ended up 2.5 percent.
Fire breaks out on an empty, parked Ethiopian Airlines Dreamliner, at Heathrow
A fire occurred in an Ethiopian Airlines Dreamliner, parked at a remote parking stand. There were no passengers on board and the plane was not due to fly for several more hours. Pictures showed the aircraft on the runway, surrounded by fire engines and covered in flame-retardant foam; TV footage showed an area on the fuselage in front of the tail that appeared to be scorched. It is not known if the battery system was associated with the fire, and the batteries are not in that part of the plane. A statement released by Ethiopian Airlines said the jet had been “parked at the airport for more than eight hours” before the fire. The lithium batteries were the cause of the previous incidents that led to the grounding of the Dreamliner in January. Flights at Heathrow were suspended for an hour and a half. Heathrow said suspension is a standard procedure if fire crews are occupied with an incident. BA now has two Dreamliners and a BA spokesman said it was too early to say whether its two would now be grounded. On April 27, Ethiopian Airlines was the first carrier to resume flights with Dreamliners..http://www.airportwatch.org.uk/?p=3720
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Heathrow and Gatwick have both reported growth in passenger numbers for 2013. Traffic at Heathrow reached 72.3 million, an increase of 3.4% on 2012, Aircraft movements totalled 469,552 for the year at Heathrow, which was down 0.4% on 2012. Colin Matthews used the figures as another opportunity to put in a plug for another Heathrow runway, saying Heathrow is full [but it keeps adding passengers - its terminals are not full, though its runways are nearly full] and so Heathrow has to watch other European airports adding more flights. Heathrow said BRIC passengers were up 6.9% over the year, with China up 18.9%, and India up 8.7%. Meanwhile at Gatwick traffic reached 35.4 million passengers in 2013, an increase of 3.6% on 2012. Gatwick’s aircraft movements totalled 244,552, which was a rise of 1.6% on 2012. Gatwick said its European routes were the main source of its growth, and they were increasing the number of long-haul routes, with more flights to Dubai. There will be a daily A380 service to Dubai from Gatwick from March.” Gatwick had fewer charter flights to European leisure destinations, reflecting the longer-term market move towards scheduled, low cost airlines. Heathrow load factor was 76.4% and Gatwick’s 79.4%.
This is the December 2013 Heathrow Traffic Summary at 12 Dec 13 – traffic summary.pdf (20 KB)
Heathrow traffic and business commentary December 2013
13 January, 2014
- Heathrow handled 72.3m passengers over 2013, an increase of 3.4% on 2012.
- Taking account the dip in demand from the Olympic Games, underlying growth is estimated at 2.3%
- Seats per aircraft increased 2.8% on 2012 and the average load factor was 76.4%, up 1 percentage point. Passengers per aircraft rose 3.7% to 154.8.
- European traffic in 2013 grew 4.4%, in part a ‘bounce back’ from the Olympics and also benefitting from the integration of bmi into British Airways’ network.
- BRIC passengers were up 6.9% over the year, with China up 18.9%, and India up 8.7%.
- 5.8 million passengers passed through Heathrow in December 2013, up 2.8% on the previous year.
- Seats per aircraft increased 2.6% and load factors were up 1.3 percentage points on last year, to 76.7%. Passengers per aircraft increased 5.2% to 158.9.
- BRIC passengers were up by 6.1% overall, with China up 18.6%, India up 6.7% and Brazil up 4.4%.
Heathrow CEO Colin Matthews said:
“During 2013 Heathrow was named the best large airport in Europe, T5 was voted the ‘world’s best terminal’ for the second year running and we welcomed the Airports Commission’s shortlisting of Heathrow as an option for expansion. Our passenger figures reflect the growing demand for the long-haul destinations only a hub airport can support. Yet Heathrow is full, leaving European hubs to add destinations whilst we look on. We are not against expansion at Gatwick, but greater point to point capacity is no substitute for new hub capacity which only Heathrow can provide.”
Heathrow passengers over the past 17 years:
CAA airport statistics
2013 72,332,900 (up + 3.4% on 2012)
2012 69,983,139 (up + 0.9% on 2011)
2011 69,390,628 (up + 5.5% on 2010)
2010 65,745,000 (almost no change on 2009)
2009 65,908,000 (down – 1.5% on 2008)
2008 66,907,000 (down -1% on 2007)
London Gatwick traffic results for December 2013
13 January 2014
- Gatwick saw a 4.8% increase in passengers year-on-year
- Over 2.3 million passengers passed through the airport in December
- Emirates announces it will fly a daily A380 service between Gatwick and Dubai from March
December 2013 traffic performance summary
||Moving Annual Total
|Total terminal passengers (000s)
|UK + Channel Islands
|Other long haul
|Air transport movements
|Cargo (metric tonnes)
Note: Origins and destinations are classified according to ultimate origin or destination of aircraft in the case of multi-sector flights.
London Gatwick saw 2.3 million passengers use the airport in December 2013; an increase of 4.8% or 108,700 passengers over the prior year.
The growth in European routes continued with over 1.4 million passengers choosing to fly from London Gatwick to Europe – an increase of 7.8% over the prior year. The majority of this growth was on flights to key business routes with destinations such as Moscow, Istanbul, Barcelona and Copenhagen adding over 66,000 passengers. This was tempered by fewer passengers on charter flights to European leisure destinations, reflecting the longer-term market move towards scheduled, low cost airlines.
The reported loss of traffic to North America, down 17.7%, was nearly all due to US Airways ceasing services from London Gatwick earlier in the year. Next summer will see a boost to Gatwick’s transatlantic services with the launch of Norwegian’s low cost, long haul routes to New York, Los Angeles and Fort Lauderdale.
Other long haul growth was up 5.3%, mainly as a result of increases on leisure routes such as Thailand and Sri Lanka. This was complemented by growth on long haul business routes such as to Dubai and Baghdad. For domestic traffic, increases on the Belfast, Glasgow and Isle of Man routes were offset by the withdrawal of the Manchester route.
Load factors – showing how full the average flight was – were at 79.4%, 1.3 percentage points above the prior year.
Nick Dunn, Chief Financial Officer at London Gatwick said:
“European travel, particularly on business routes, continues to steadily grow at Gatwick with passengers making the most of our extensive choice of key European destinations – the largest on offer of any UK airport. This, coupled with our fast, direct connections into central London and the City, means we are rapidly developing our reputation as a business travel airport in the UK and overseas.
“Alongside European growth, we continue to see strong performance in long haul, particularly on established routes to the Middle East such as Dubai. This route will be further strengthened by December’s announcement that Emirates will fly a daily A380 service to Dubai from March.”
Gatwick passengers over the past 17 years:
CAA airport statistics
2013 35,433,900 (up + 3.6% on 2012)
2012 34,218,668 (up + 1.7% on 2011)
2011 33,644,000 ( up +7% on 2010)
2010 31,342,000 (down – 3% on 2009)
2009 32,361,199 (down – 5.3% on 2008)
2008 34,162 thousand (down -3% on 2007)
2007 35,165 (up +3% on 2006)
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In a blog for Business Green, James Murray writes on the important – and generally ignored – topic of human myopia when it comes to considering future generations, and what the impact of our current actions will be on them. Most climate models indicate that by 2100 the global temperature may be 4-6C higher than now. ”But the world will not end in 2100. Unless we get a handle on climate change in the next few decades we risk bequeathing the next century environmental challenges so great they will make our current problems look like the Garden of Eden. ” “Projections for the 22nd Century based on business as normal emissions suggest that climate change and ocean acidification could leave generations just a few decades hence with a biosphere only science fiction directors would recognise. Does any of this matter? None of us will be around to see it and we all know that economists discount future generations.” Yes, it does matter. Taking a relaxed approach to climate change and arguing “something will turn up to address the problem” is not enough. We cannot blindly take the view that the current generation must take primacy.
The world does not end in 2100
Why is there so little engagement with the concept of historic legacy when it comes to climate change?
10 Jan 2014 (James Murray’s blog, at Business Green)
……. (first few paragraphs not copied here, as not directly relevant to climate ….)
The reason I’ve been thinking a lot about a lecture theatre from 10 years ago is that the past few months has seen the climate change debate informed by what I regard as a highly dubious fixation on short term concerns – and by short term I mean up to 2100.
A lot has been written in the past about the tactical and strategic lessons environmentalists can learn from successful campaigns for socio-economic transformation, such as emancipation, universal suffrage, and civil rights. But what these analyses often fail to emphasise is the way in which the success or failure of these campaigns is felt decades and centuries later.
Just to be absolutely clear I am categorically not arguing that there is an equivalence between the current carbon reliant economic system and the economic systems underpinned by slavery, sexual discrimination, or apartheid. Environmentalists can learn a lot from previous economic transitions and humanitarian campaigns, just as they can learn a lot from the industrial mobilisation achieved during the war years, but the parallels are not exact. Decarbonisation is not the same as ending slavery, just as it is not the same as mobilising for war, despite the tendency of some environmentalists to equate the green economy with these historic events.
However, there are similarities in the way that the implications of historic industrial, economic, legal, and political revolutions are measured using timescales that run into decades and centuries, not just the next quarter or the next political cycle.
When it comes to climate change, this historical perspective is hugely important and oft-ignored.
The vast majority of climate models run through to 2100 and warn that we face hugely damaging warming of between 4-6C unless urgent action is taken to curb global emissions with almost immediate effect. Throw in the “known unknowns” that could materialise in the form of runaway climate change trigger points and the last few decades of this century could end up looking extremely bleak. But the world will not end in 2100. Unless we get a handle on climate change in the next few decades we risk bequeathing the next century environmental challenges so great they will make our current problems look like the Garden of Eden. The relatively few projections that have been done for the 22nd Century based on business as normal emissions suggest that climate change and ocean acidification could leave generations just a few decades hence with a biosphere only science fiction directors would recognise.
Does any of this matter? None of us will be around to see it and we all know that economists discount future generations. Besides, some of the short term impacts of climate change may actually benefit us, as everyone’s favourite climate contrarians keep arguing.
Well, I’d argue it does matter. It really matters.
First, some of us will see it. As I’ve argued before, if I live as long as my eldest grandfather I will see the 2070s. A child born today, and you’ll probably each have your own young relative to think of here, has a good chance of seeing the turn of the century. The future is unknowable, but it is generationally true that many of the grandchildren of my coevals will be able to remember us in 2150. In this context, I’m not sure how much the precise year that we get an ice free Arctic Sea matters if scientific projections are right and it is a likely occurence at some point in the decades hence.
Writing about HS2 recently, Times columnist Matthew Parris expressed his bemusement of the attitude of those in late middle age who dismiss the project on the grounds that they will never be able to ride on it, as if there is no merit in infrastructure that will benefit future generations. As the famous Ancient Greek proverb goes: “A society grows great when old men plant trees whose shade they know they shall never see”. Exactly the same argument stands as one of the primary reasons why urgent action to tackle climate change is not just economically sensible, but morally essential.
This is one of the main reasons I find those arguments that accept manmade climate change is happening, but insist we should relax because some climate impacts may benefit us, because we are uncertain about the precise nature of the impacts, or because a silver bullet technology will make it easier to combat in the future so flawed. Not only are they guilty of blatant cherry-picking from climate models to support their case, but they operate on the reckless assumption that in just a few decades time we will somehow solve this problem and we need not worry about it too much in the meantime.
We are being asked to play Russian Roulette and the point at which we get to pull the trigger isn’t even that far away. Even if the suggestion climate change benefits outweigh costs through to the 2060s is valid – and there are plenty of scientists and economists who argue that it is not in any way valid – many of us will still be alive in 2070. I’m not sure about anyone else, but I don’t really want to live through the results of an experiment on the biosphere during my last few years on this mortal coil.
Of course, advocates of this relaxed approach to climate change would argue that something will turn up to address the problem and in the meantime the current generation must take primacy and we must do all we can to help poor and vulnerable communities now, including by giving them access to low cost dirty power.
There is some genuine merit in this argument, but it rather ignores the fact many of these communities are already being impacted by climate change, they would prefer cost effective clean power (a reality in many parts of the world) over dirty power, and regardless of short term concerns absolutely no one will thank our generation if the worst case climate scenarios prove even halfway accurate. Moreover, simply hoping that the technology fairy will save us is the very height of recklessness when the stakes are so high.
Does this matter to businesses, particularly when they face such intense short term challenges? Well, it matters to those businesses that have been around for decades and want to be around in decades hence. There are many great corporate institutions that were founded during the last industrial revolution and want to prosper during the next industrial revolution. There are even some that played a role in either prolonging or challenging slavery, much as they may like to now forget that part of their history. Virtually all businesses will want to still be around in the 22nd century. Moreover, any political or business leader who puts any truck in the concept of legacy – and don’t they all? – must realise that where they stand on climate change has the potential to echo through the ages.
There are numerous short to medium term reasons why the world should mobilise urgently to build a low carbon economy. BusinessGreen reports on them every day and they include, but are not limited to, the need to minimise the climate impacts we will experience in the next few decades, the health benefits associated with cleaner air, water and soil, the economic benefits associated with resource efficiency, energy efficiency, and less volatile energy sources, the commercial gains that will come from new green technologies, and the humanitarian benefits that could be realised through a more sustainable agricultural system and better fisheries management.
But there is also a compelling long term reason for action that can best be articulated by a simple question: How do you want the students of the 2150s to remember us?
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According an analysis by the organisation “Sandbag”, over 1,169 participating airlines and aircraft operators reported between them a total of 84 million tonnes of CO2 emissions for the first year of aviation’s inclusion in the EU Emissions Trading Scheme (EU ETS). Around 89% of eligible operators fully complied with the scheme, representing 98% of intra-EU aviation emissions. Although the one-year ‘Stop the Clock’ (STC) derogation - which started in November 2012 – allowed operators to opt out of having to surrender allowances for extra-EU international flights, a number of major air cargo carriers based inside and outside the EU chose to comply with the full scope of the scheme, enabling them to end 2012 with a windfall, says Sandbag. Also, though the majority of operators have incurred a cost as a result of their inclusion in the EU ETS, Sandbag estimates that Europe’s biggest emitter, Ryanair, stood to reap a windfall in 2012 of around €8 million through its passenger EU ETS levy. Of the 11 million offsets were surrendered, it is estimated that 5.6 million, were to CDM (Clean Development Projects) in China, while the remaining 5.3 million originated from Russia JI (joint implementation) projects – countries implacably opposed to the Aviation EU ETS.
Analysis shows 84m tonnes of aviation CO2 covered by EU ETS in 2012 as cargo airlines reap windfalls
9 Jan 2014 (Greenair online)
According a Sandbag analysis, over 1,000 participating airlines and aircraft operators reported between them a total of 84 million tonnes of CO2 emissions for the first year of aviation’s inclusion in the EU Emissions Trading Scheme (EU ETS). Around 89 per cent of eligible operators fully complied with the scheme, representing 98 per cent of intra-EU aviation emissions. Although the one-year ‘Stop the Clock’ (STC) derogation allowed operators to opt out from having to surrender allowances for extra-EU international flights, a number of major air cargo carriers based inside and outside the EU chose to comply with the full scope of the scheme, enabling them to end 2012 with a surplus of free allowances representing a windfall, says Sandbag. Although denied by the airline, Sandbag estimates Europe’s biggest emitter, Ryanair, stood to reap a windfall in 2012 of around 8 million euros ($10.9m) through its passenger EU ETS levy.
An analysis of the EU Transaction Log (EUTL) by Sandbag, a UK-based not-for-profit research and campaigning organisation that focuses on emissions trading, shows that a total of 1,169 airlines and aircraft operators participated in the first year of the EU ETS, with 1,043 fully complying. Two-thirds of the participants were international, non-EU operators with the United States having the largest country representation – 470 in all – but the great majority were small emitters, such as business jet operators. Around 89% (75 million tCO2) of 2012 emissions came from EU airlines and operators, with 42% of all emissions coming from just 10 EU airlines.
Under the full scope of the EU ETS, just under 174 million free allowances were allocated to the 1,169 operators but the number was subsequently lowered to around 71 million following the reduced intra-EU/EEA scope of the STC derogation. Thus 103 million free allowances were to be returned by the operators.
The majority of operators have incurred a cost as a result of their inclusion in the EU ETS but, claims Sandbag, there have also been airlines that have incurred a windfall through surplus free allowances as well as the opportunity of passing through the cost onto customers.
The table below ranks the Top 10 airline operators according to their 2012 emissions and includes the number of free allowances they received, the size of their surplus or deficit and the number of international offsets they surrendered.
Top 10 emitting airlines in the EU ETS in 2012, including estimated cost of compliance (source: Sandbag)
In 2012, operators were permitted to use carbon credits, or offsets, for up to 15% of their emissions, which will be reduced to a maximum of 1.5% from 2013-2020. Offsets come from clean development mechanism (CDM) and joint implementation (JI) projects located mostly outside of the EU, and are a cheaper form of compliance compared to surrendering EU aviation allowances (EUAAs). The bigger airlines were quick to take advantage and nearly 11 million offsets were surrendered, representing 87% of the total 2012 offset budget.
The overwhelming majority of CER credits (75%), which amounted to 5.6 million, were assigned to CDM projects in China, while 41% of ERUs (the remaining 5.3 million) originated from Russia JI projects – countries implacably opposed to the Aviation EU ETS.
Sandbag admits that estimating airline costs incurred by the EU ETS is difficult, with the bigger airlines likely adopting strategies that include a degree of hedging, swaps and offset usage to capitalise on arbitrage opportunities. It has therefore based its numbers in the above table on a conservative average of EUA, CER and ERU prices in 2012.
As the table shows, Thomson Airways’ free allocation was larger than their 2012 emissions, demonstrating the airline’s historical average is greater than its current emissions, says Sandbag, and indicates a reduction of capacity, an increase in fuel efficiency, or a combination of both. On top of this, it reports, the airline has also used international credits to meet its compliance obligation, freeing up free allowances in the process. Sandbag estimates the airline ended 2012 with a surplus of allowances worth €300,000 ($400,000).
Analysis of the EUTL by Sandbag reveals an interesting cross-section of carriers ending 2012 with a surplus of free allowances. One obvious reason for a surplus is that the initial free allocation was too generous. Another reason, suggests Sandbag, is that the benchmark used for setting the free allocation was disproportionately generous to airlines flying long haul, with some – mainly cargo operators – choosing not to opt for the STC derogation and instead participate in full with the scheme. This allowed them to retain and make use of all allocated allowances.
“The exact compliance strategies of these companies are not known, but it is obvious that their decision to comply with the scheme is influenced by this financially lucrative windfall,” says the report. “Airlines will be quick to point out that these allowances were given for free and will be needed for compliance at some stage. Nevertheless, these allowances represent a financial asset on the books of companies and are a windfall profit.”
Of the 1,169 operators in the EUTL, 132 have a surplus of allowances of some degree, totalling just over 10 million, and worth around €39 million based on a recent EUAA price of €3.88. However, Sandbag has some concerns over the accuracy of the EUTL in this respect and estimates the number of airlines with a surplus as closer to 70.
Some of the international carriers complying with the full scope of the EU ETS include Korean Air, FedEx, Airbridge Cargo, Nippon Air and Lufthansa Cargo. Lufthansa has been one of most vocal critics from within Europe of the EU ETS but Sandbag estimates its cargo subsidiary had a surplus of 752,193 allowances valued at nearly €3 million ($4m). Cargolux was found to have had the largest surplus of allowances, which are valued at €3.15 million.
Sandbag expresses concern that airlines passed on the cost of complying with the full scope of the EU ETS to customers but subsequently took advantage of the STC opt out, leading to a potentially bigger source of revenue for airlines than a surplus of allowances. However, establishing the size of these revenues is difficult since nearly all airlines have been less than transparent over cost pass-through. Ryanair, Europe’s largest airline in terms of passengers and intra-EU flights, is a commendable and notable exception, points out Sandbag.
Ryanair was the only carrier to publicly announce a flat EU ETS fee of €0.25 per passenger per flight. Using what it describes as a conservative calculation, Sandbag estimates the actual cost to Ryanair passengers was €0.13 in 2012, netting the airline a €8 million ($10.9m) windfall, but pointing out that Ryanair’s 2012 annual report stated that any windfall would be used to pay future compliance costs.
The airline rejects the Sandbag figures. “We don’t comment upon, or engage in, rumour or speculation. Like many such claims from environmental lobbyists, they are factually inaccurate and untrue, which is why we don’t comment on them,” a Ryanair spokesman told GreenAir, who pointed out that the €0.25 levy was only charged on non-promotional tickets, approximately 60% of total tickets, and “not all tickets, as wrongly claimed”.
In 2012, Delta Air Lines announced a $3 surcharge each way on fares between the United States and Europe, a move followed by other US main carriers, although this was not publicly linked with the EU ETS. The charge was added ahead of STC, which subsequently led to Delta only being required to pay for emissions from intra-EU flights that totalled 3,433 tonnes of CO2 in 2012. Sandbag says it is unclear whether the charge was, or still is, being levied on passengers, noting only that since STC, Delta had said it was monitoring and evaluating developments.
“Our hope is that Delta did not levy this charge,” says Sandbag. “As for other international airlines who complied with ‘Stop the Clock’, the cost was, as described by Air Canada in its annual report, insignificant.”
Identifying those airlines and aircraft operators who should have complied but did not is difficult, admits Sandbag. A failure to provide data and open a registry account effectively makes operators invisible from public scrutiny as they do not appear in the EUTL, although the European Commission has put a figure of 12 million allowances against these operators. As was well publicised, all Chinese and most Indian airlines did not comply following instructions from their authorities.
A second form of non-compliance is that of operators reporting emissions data and having a registry account, thus appearing in the EUTL, but then failing to surrender allowances. Such operators are given a non-compliance status in the EUTL and Sandbag has identified 126 of them, but there may be factors that make this status unreliable due to issues such as technical errors or late submissions, it says.
Sandbag urges EU Member States to enforce the statutory fine of €100 for every tonne of CO2 operators have failed to surrender during 2012, as well as to have to make up the shortfall, as set out in the EU ETS directive. “We fail to see why exceptions should be made for airlines just because they dislike this particular EU legislation. Member States’ failure to enforce the ETS for airlines in 2012 would simply give the impression that they are a special case and merit special treatment. This is far from the truth. Evoking the ‘polluter pays’ principle on which the ETS is based, all companies should pay for their externalities,” says the report.
The organisation backs current proposals by the European Commission to replace the one-year STC derogation with new legislation that would see all emissions occurring in European airspace regulated. “The EU must, as a bare minimum, control pollution in its own sovereign airspace,” says Rob Elsworth, Sandbag Policy Analyst, who also calls for a reinstatement of the full, original scope of the EU ETS “as soon as politically possible”.
Sandbag’s Phil MacDonald, who co-authored the report, added: “Until the international community can agree on a global measure for tackling aviation pollution, the scheme remains an important trailblazer. The EU must not back down any further if it wishes to retain international credibility. An airspace-only approach is a fair and workable compromise for now, and is the best route towards global action on aviation and climate change.”
Sandbag report: ‘Aviation and the EU ETS – What happened in 2012 during Stop the Clock?’(pdf)
Sandbag report at http://www.sandbag.org.uk/site_media/uploads/Sandbag_Aviation_and_the_EU_ETS_2012_171213.pdf
Sandbag is an NGO that says it: ”shines a light on what is really going on in emissions trading and we push for improvements so that it delivers.”
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The CAA has published its final decisions on economic regulation at Heathrow, Gatwick and Stansted after April 2014. They say the new situation, with each airport having a different owner, reflects the unique circumstances of individual airports. Considering the market power of each airport means passengers would not benefit from further regulation of Stansted, but that Heathrow and Gatwick will both need further airport licences from April 2014 onwards. Current landing charges are £20.71 per passenger at Heathrow and £8.80 (2014 prices) at Gatwick. CAA says: “At Heathrow, the CAA’s price control decision will see prices fall in real terms by 1.5% per year between 2014 and 2019 (RPI-1.5%). This has changed from the CAA’s Final Proposals published in October, which suggested prices rising in line with inflation. The changes have been made as passenger traffic forecasts have strengthened since October, and the cost of capital has been revised. The CAA supports more diversity in what Gatwick offers to its various airlines, so passengers receive a tailored service. It has therefore based regulation on the airport operator’s own commitments to its airline customers.” Heathrow is deeply displeased. Gatwick is mildly displeased. Stansted is happy. Ryanair’s share value fell.
“Good news for air passengers as prices set to fall at UK’s largest airports”
10 January 2014 (CAA press release)
The UK Civil Aviation Authority has today published its final decisions on economic regulation at Heathrow, Gatwick and Stansted after April 2014 – with passengers benefiting from lower prices and high service standards.
The decisions announced today have been made using powers set out in the Civil Aviation Act 2012, which requires a more flexible approach so regulation reflects the unique circumstances of individual airports. The CAA has therefore assessed the market power of Heathrow, Gatwick and Stansted (passenger market only for Stansted). It has decided passengers would not benefit from further regulation of Stansted, but that Heathrow and Gatwick will both require airport licences from April 2014 onwards. More details about today’s decisions are set out below:
At Heathrow, the CAA’s price control decision will see prices fall in real terms by 1.5% per year between 2014 and 2019 (RPI-1.5%). This has changed from the CAA’s Final Proposals published in October, which suggested prices rising in line with inflation. The changes have been made as passenger traffic forecasts have strengthened since October, and the cost of capital has been revised.
This decision places affordability centre-stage, while ensuring there is still a supportive environment for capital expenditure (with provision for nearly £3bn of investment).
The CAA supports more diversity in what Gatwick offers to its various airlines, so passengers receive a tailored service. It has therefore based regulation on the airport operator’s own commitments to its airline customers. These and various airport-airline contracts cover price, service quality, investment and other issues normally covered by a regulatory settlement, and should enable a more flexible and commercial approach.
The CAA is backing the commitments with a licence, to allow the CAA to step in to protect users, for instance if there are reductions in service quality that are against the passenger interest. The CAA will monitor the application of the new framework to ensure that prices are fair and that service quality is sustained. The licence will also provide for CAA scrutiny of most second runway costs before they can be passed on to airlines and passengers.
The airport licences will ensure that issues like cleanliness, queuing times, seating availability and information provision are addressed in the passenger interest. For the first time, there will be a requirement for Heathrow and Gatwick airports to put in place robust plans to ensure they are better prepared for disruption and can manage it effectively when it does occur.
The CAA has completed its assessment for Stansted’s passenger market, taking into account the long-term contracts the airport now has in place with its main airline customers, and determined that the airport does not have substantial market power. This means the airport will not be economically regulated by the CAA from April 2014 onwards. We will publish our decision on Stansted’s cargo market power before the end of March 2014.
Commenting on the decisions, Dame Deirdre Hutton, Chair of the CAA said:
“Today’s decisions are good news for air passengers. They will see prices fall, whilst still being able to look forward to high service standards, thanks to a robust licensing regime. London’s airports have benefited from substantial investment over the past decade, which has created world-class facilities for passengers. But prices have risen substantially in that time, with service quality sometimes failing to match the standards passengers have every right to expect.
“We have focused on putting the passengers’ interest at the heart of our decisions and today’s announcement means passengers can look forward to lower prices and high service quality from London’s busiest airports.”
• An overview of the CAA’s decisions for the airports can be seen here, with links through to the separate documents:
• The decision document for each airport along with several associated documents can be found here:
• A briefing about airport economic regulation, setting out why regulation is necessary and the CAA’s approach is available here:
For more information contact the CAA press office on 020 7453 6030.
Notes to Editors
1. Airport licences for Gatwick and Heathrow are currently due to be published on 14 February 2014 and would then come into effect from 1 April 2014 (subject to appeal).
2. The CAA is the UK’s specialist aviation regulator. Its activities include: making sure that the aviation industry meets the highest technical and operational safety standards; preventing holidaymakers from being stranded abroad or losing money because of tour operator insolvency; planning and regulating all UK airspace; and regulating airports, air traffic services and airlines and providing advice on aviation policy.
Heathrow’s response to CAA’s Q6 price control decision
10 January, 2014 (Heathrow airport press release)
Today the Civil Aviation Authority (CAA) has published its decision on the economic regulation of Heathrow, cutting airport charges by RPI -1.5% from 2014-2019. This will see Heathrow’s per passenger airline charges fall in real terms from £20.71 in 2013/14 to £19.10 in 2018/19.
The CAA’s decision in April 2013 of RPI -1.3% was revised up to RPI +0% in October and has now been revised down again to RPI -1.5%. Heathrow had already described the October decision as the toughest price review it had faced.
Heathrow Chief Executive Colin Matthews said:
“We are concerned by the degree of change since the CAA’s final proposals just a short while ago. In October the CAA accepted the need for changes to their April proposals, but has now reverted to a draconian position.”
“We want to continue to improve Heathrow for passengers. We will review our investment plan to see whether it is still financeable in light of the CAA’s settlement.”
Heathrow’s rate of return on capital investment (or WACC), was set by the CAA at 5.35% in its initial proposal, increased to 5.6% in its October final proposal, and has now been reduced again to an unsustainable level of 5.35%.
The CAA’s final decision includes aggressive operational, commercial and passenger forecasts. It requires Heathrow to reduce operational expenditure by more than £600 million, stretches commercial revenue targets by in excess of £100 million, which includes revenues from retail and car park charges, and assumes significant passenger volume growth over Q6. The settlement leaves little spare resource available to manage the consequences of potential disruption at Heathrow.
Heathrow has invested £11 billion in the airport over the last ten years and passengers say they have noticed the difference. In 2013, Heathrow was named the best large airport in Europe and passengers voted Terminal 5 the ‘world’s best terminal’. This year the new £2.5bn Terminal 2 will open, continuing the transformation of Heathrow.
Notes to editors
- The CAA’s proposal for RPI -1.5% compares to RPI +4.6% in Heathrow’s Alternative Business Plan and to RPI +0% in the CAA’s final proposals. The annual tariff increase during Q5 was RPI +7.5%.
- The CAA’s cost of capital (WACC) of 5.35% compares to 6.7% in Heathrow’s Alternative Business Plan and 5.6% in the CAA’s final proposals.
- The current price per passenger of Heathrow’s charges is £20.71 (for 2013/14). Heathrow’s Alternative Business Plan would have seen charges rise to £25.72 in 2018/2019.
Heathrow hits out at CAA for ‘draconian’ cut to landing charges
Airport says it will review its investment plans after regulator’s surprise move, but CAA says passengers should benefit
British Airways planes at Heathrow. The CAA is limiting price rises below inflation for the next five years at Britain’s biggest airport. Photograph: Matt Dunham/AP
Heathrow has said it will review its investment plans after the regulator made a surprise cut to the landing charges proposed at the airport, a move the airport describes as “draconian”.
The Civil Aviation Authority (CAA) decided to limit price rises below inflation for the next five years at Britain’s biggest airport, allowing an annual increase of RPI minus 1.5%, saying passengers should benefit.
The final decision comes three months after the CAA said it intended to raise the cap in line with inflation – a proposal Heathrow then described as the toughest it had faced.
Heathrow chief executive Colin Matthews said the CAA had taken a “draconian position”. He said: “We are concerned by the degree of change since the CAA’s final proposals just a short while ago.
“We want to continue to improve Heathrow for passengers. We will review our investment plan to see whether it is still financeable in light of the CAA’s settlement.”
Heathrow said the decision greatly stretched targets and left few resources spare to manage the consequences of potential disruption.
But Iain Osborne, director of regulatory policy at the CAA, said the settlement allowed for nearly £3bn of expenditure to increase resilience and improve facilities and the passenger experience. “We don’t accept that they can’t carry out their investments and make money. If they don’t build things passengers need, then we will put obligations in their licence we can enforce.”
Proposed charges were curbed due to lower borrowing costs and higher passenger forecasts, calculated through actual baseline figures for 2012-13 that outstripped predictions, as well as improved Treasury GDP forecasts. Current landing charges stand at £20.71 per passenger at Heathrow.
Airlines, which had sought deep cuts to charges, claimed to be disappointed by the ruling. A British Airways spokesman said it was “a step in the right direction” but added: “The fact remains that our customers will still be paying more than is warranted and there is plenty of scope for further efficiencies to be made.”
Virgin Atlantic’s chief executive, Craig Kreeger, said: “Today’s decision is a far cry from the reduction needed to mitigate the incredibly steep price rises customers have seen in Heathrow airport charges in the last few years.” He said the airline would be considering its right to appeal.
The CAA infuriated Ryanair by deciding that price regulation will no longer be required from April at Stansted airport, where the low-cost airline is by far the biggest customer. Ryanair said the regulator had “put the fox in charge of the chicken coop”. The airline’s director of regulatory affairs, Juliusz Komorek, said it regretted the “unsupported claim by the CAA that Stansted does not have substantial market power”.
But Osborne of the CAA said the recent deals struck with its major airline customers showed the weakness of the airport’s position. “The fact is that Ryanair and EasyJet together have over 90% of the traffic at the airport and have both signed 10-year deals. Price and volumes are locked in there for the next decade. We’ve concluded that Stansted doesn’t have market power.” Luton and Southend airport both provided alternative bases for low-cost carriers, he said.
Stansted’s owner, MAG, which bought the airport from Heathrow last February, welcomed the move. Chief executive Charlie Cornish said: “The CAA’s decision today to step back from regulating Stansted is a welcome endorsement of the changes we’ve made, and a positive recognition that in Stansted’s case competition rather than regulation will deliver the best outcomes for passengers and airlines.”
Meanwhile, Gatwick will continue to be regulated but without price caps , as the CAA accepted the airport’s commitment to reach individual agreements with airlines while restraining overall average charges. But Gatwick chief executive Stewart Wingate said he was disappointed that the airport was still to be regulated, and he hit out at the CAA for having lowered its benchmark for average charges, which it judged as a cut in real terms by 1.6% annually until 2019. Wingate said: “We are also disappointed at the CAA’s view of a fair price, as well as the intrusive nature of their monitoring requirements. The airport will need to review the detail of the CAA final decision and consider its position.”
Gatwick will be handed new statutory obligations to maintain resilience. The airport was the scene of chaos on Christmas Eve after flooding caused power failures.
EasyJet, which has accused Gatwick of lacking sufficient contingency plans, said it welcomed the news that “robust plans to deliver operational resilience in major disruption will also be under CAA regulatory oversight”.
London Gatwick responds to the Civil Aviation Authority’s final decision on economic regulation from April 2014
10 January 2014 (Gatwick airport press release)
London Gatwick acknowledges that the CAA has continued to accept its Contracts and Commitments framework as the best way forward for regulation and we are pleased that the CAA has recognised the significant progress the airport has made under new ownership.
However, Gatwick is very disappointed with key elements of the CAA’s final decision, including the over-optimistic long term passenger forecasts, the reduction in the cost of capital, and the more onerous monitoring regime. We are surprised by these major changes, which have been made since the CAA published its final proposals just three months ago.
With the progress London Gatwick has made in negotiating commercial agreements with our airlines we continue to disagree with the CAA that the airport has Substantial Market Power (SMP), and as a result requires an economic licence. We are also concerned that the CAA has changed, yet again, the definition of the Gatwick airport market.
Stewart Wingate, CEO of London Gatwick, said:
“I am delighted in the progress that the airport is making to bring more competition to the London aviation market through the commercial arrangements currently being negotiated with its airlines. These discussions have only been possible under our Contracts and Commitments framework, which has latterly been supported by the CAA.
“However, I am disappointed that the CAA’s final decision appears not to acknowledge the importance of these ground-breaking commercial negotiations and has concluded, under its new definition, that the airport does have market power and requires an economic licence. We are also disappointed at the CAA’s view of a fair price, as well as the intrusive nature of their monitoring requirements. The airport will need to review the detail of the CAA final decision and consider its position.”
Notes to Editors
Airport charges per passenger at Gatwick are currently £8.80 (2014 prices) and would remain unchanged (2014 prices) for seven years under Gatwick’s Contract and Commitments framework.
The CAA’s price assessment at RPI – 1.6% p.a. would equate to airport charges per passenger in 2018/19 of £8.07 (2014 prices).
M.A.G responds to CAA economic regulation announcement
10 Jan 2014 (Stansted Airport – MAG)
The CAA has today announced its decision to remove Stansted Airport from economic regulation from April 2014 onwards. Following a two-year review, the CAA has concluded that Stansted does not have substantial market power and the airport should be free to compete with other airports without the need for price regulation.
Responding to the CAA’s announcement, M.A.G Chief Executive Charlie Cornish commented:
“Since MAG acquired Stansted in February last year we’ve focused on building strong commercial relationships with airlines and delivering a better experience for passengers.
“After just ten months, our approach to running Stansted is already yielding big benefits for passengers and airlines. The long term growth deals we’ve agreed with airlines – including Ryanair, easyJet and Thomas Cook – will see Stansted continue to grow rapidly over the next decade, offering passengers more choice in terms of destinations and frequencies.
“The CAA’s decision today to step back from regulating Stansted is a welcome endorsement of the changes we’ve made, and a positive recognition by the CAA that in Stansted’s case competition rather than regulation will deliver the best outcomes for passengers and airlines.
“Stansted is flourishing in a competitive environment, as we build long-lasting commercial partnerships with airlines and deliver excellent service to our customers.”
CAA Final Decision on Airport Charges and Regulation – BATA Reaction
Simon Buck, Chief Executive of the British Air Transport Association (BATA), responding to the publication today of the CAA’s final decision on airport charges and regulation for Heathrow, Gatwick and Stansted, said:
“BATA airlines remain disappointed overall with the final decision on airport charges published by the CAA today.
“BATA supports improving the passenger experience and we believe this can be done without a repeat of the incredibly steep price rises we have seen in airport charges in the last few years. Prices at Heathrow are triple the level they were ten years ago and we believe there should be far deeper cuts in charges applied to each passenger at this airport for the next five year period instead of a further hike as is being permitted.
“At Gatwick, BATA airlines welcome the CAA’s decision that the airport requires continued regulation through an airport licence and that the costs of any second runway would be included in the licence in order to allow for scrutiny by the regulator.
“CAA’s announcement that its regulatory oversight will also now extend to the development of robust plans to deliver operational resilience to major disruption should also be welcomed.”
Ryanair shares fall as Stansted controls altered
By JOHN MULLIGAN (Irish Times)11 JANUARY 2014
Shares in Ryanair fell yesterday as the UK’s aviation regulator paved the way for higher charges at Stansted — the airline’s biggest base.
The UK’s Civil Aviation Authority (CAA) is deregulating Stansted effective from April, releasing it from price controls. The watchdog said that Stansted lacks “substantive market power” in light of the long-term contracts it has in place with its airline customers.
Ryanair is Stansted’s biggest customer, accounting for 75pc of its annual 17.5 million passengers. Stansted has been owned since last year by Manchester Airports Group (MAG).
Last year, Ryanair signed a 10-year deal with MAG to increase its passenger traffic at Stansted from 13.2 million passengers a year to over 20 million by 2023, in return for lower costs and more efficient facilities at the airport.
Yesterday, Ryanair lashed out at the CAA’s decision to deregulate Stansted amid a review of three major London airports, also includingHeathrow and Gatwick.
“Today’s deregulation decision by the CAA will allow Stansted to increase charges in future and will result inyet more damage to UK consumers and competition,” it claimed.
Ryanair shares fell 2.3pc.
But MAG said the CAA decision was “positive recognition” that competition rather than regulation will deliver the best outcome in Stansted’s case.
At Heathrow, the CAA has decided to cap fees at 1.5pc below inflation between April this year and 2019.
It said stronger passenger forecasts had informed its decision, and that there would still be a “supportive environment” for capital expenditure atEurope‘s busiest hub.
Shares in Aer Lingus, the third biggest operator at Heathrow, edged slightly higher.
“In October, the CAA accepted the need for changes to their April proposals, but has now reverted to a draconian position,” Heathrow chief executiveColin Matthews said. “We will review our investment plan to see if it is still financeable.”
Also FT at
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Airlines are hoping the global economy is recovering, and continues to recover. Airlines make a disproportionate of their income from premium travel, so do all they can to compete for it. IAF and Air France-KLM have recently reported increases in their premium traffic, and a survey by “Buying Business Travel” indicated that some companies may be increasing their corporate travel budgets in 2014, and also plan to fly as much, or more, than in 2012. John Strickland, a consultant at JLS Consulting, said long-haul premium traffic should be the airline’s biggest focus – it makes most profit. He said: “Short haul is not the area where [premium travel volumes] are critical. Those glory days have gone.” EasyJet and Ryanair are trying to get the price-sensitive business passengers in Europe. Traffic out of emerging markets in Asia, the Middle East and Latin American would be increasingly significant with more premium travel. There is likely to be more growth in “premium economy” which is useful for people whose budgets won’t extend to fully fledged business class. IATA premium traffic data each month indicates that the international growth is around 4 – 5% on average, with growth in 2012 of 4.8% over 2011.
IATA Premium Traffic Monitor (international)
Analysis of high-yield traffic growth by major market (in pdf format).
PREMIUM TRAFFIC MONITOR
OCTOBER 2013 - 5.6% up on October 2012
International premium air travel recorded a rise in October with the number of passengers up 5.6% compared to a year ago. This is an improvement on September, when premium air travel rose 4.3% year-on-year.
PREMIUM TRAFFIC MONITOR
SEPTEMBER 2013 – 3.3% up on September 2012
Growth in premium air travel moderated in September, after a strong rise in August. International premium passenger numbers were up 3.3% in September compared to a year ago, down on the 8.6% spike in August.
PREMIUM TRAFFIC MONITOR
AUGUST 2013 – up 8.6% on August 2012
Growth in premium air travel improved in August, after months of sluggish expansion. International premium passenger numbers were up 8.6% in August compared to a year ago, a significant pick-up on July growth of 1.4%.
PREMIUM TRAFFIC MONITOR
JULY 2013 - up 1.4% on July 2012
Growth in premium air travel during July continued recent sluggish expansion, but there were more positive signs of faster growth in business travel in the months ahead. International premium passenger numbers in July were up at a similar rate to the growth seen so far this year, after accounting for the impact of holidays.
The number of passengers travelling in premium seats on international markets was 1.4% higher in July compared to a year ago, down on June growth of 4.1%. The slower year-on-year growth in July is a result of the timing of Ramadan, which took place mostly in July this year, a month earlier than in 2012
PREMIUM TRAFFIC MONITOR
June 2013 – up 4.1% on June 2012
PREMIUM TRAFFIC MONITOR
MAY 2013 - up 2% on May 2012
Air travel markets showed signs of deterioration in May. The number of passengers traveling in premium seats on international markets was 2.0% higher in May compared to a year ago, a slowdown on the April result of 3.8%.
Economy class passenger travel rose at a faster pace, up 3.9% in May year-on-year, close to the 4-5% growth in April after adjusting for the timing of Easter.
PREMIUM TRAFFIC MONITOR
APRIL 2013 – up 3.8% on April 2012
The number of passengers traveling in premium seats on international markets was 3.8% higher in April compared to a year ago, slightly down on the March growth of 4.4%. Economy class passenger numbers were up just 0.9% in April on a year ago, a sharp fall from the 7.4% growth in March.
The 6.5% point drop in economy class travel in April is not due to a slowdown in demand over the month. ….largely due to distortions from the timing of the Easter holiday.
PREMIUM TRAFFIC MONITOR
MARCH 2013 – up 4.4% on March 2012
Growth in premium travel picked up in March. The number of passengers traveling in premium seats on international markets was 4.4% higher in March compared to a year ago, improving on the February growth of 1.2%. Economy class passenger numbers were up 7.4% in March on a year ago, compared to 3.7% in February.
PREMIUM TRAFFIC MONITOR
FEBRUARY 2013 – up 1.2% on February 2012
The number of passengers traveling in premium seats on international markets was just 1.2% higher in February compared to a year ago, down on the January result of 3.3%. Economy class passenger numbers were up 3.7% in February on a year ago, a small improvement on the 2.9% growth in January.
PREMIUM TRAFFIC MONITOR
JANUARY 2013 – up 3.3% on January 2012
Growth in premium travel slowed in January. The number of passengers traveling in premium seats on international markets was 3.3% higher in January compared to a year ago, down on the December result of 4.5%. Economy class passenger numbers were up 2.9% in January on a year ago, also slowdown on the December growth of 4.2%.
PREMIUM TRAFFIC MONITOR
DECEMBER 2012 - up 4.5% on December 2011
Up 4.8% for the whole year of 2012 compared to 2011
The number of passengers traveling in premium seats on international markets was 4.5% higher in December compared to a year ago, in line with the solid November result of 4.4%. Economy class passenger numbers were up 4.2% in December on a year ago, a slowdown on the November growth of 6.0%.
During 2012, expansion in economy and premium travel numbers slowed from the faster growth trend seen in late 2011 and early 2012, with the Eurozone crisis affecting demand for air travel throughout the middle months of the year. Nonetheless, for the year as a whole premium travel expanded 4.8%, which was only slightly down on 2011
when the market grew 5.4%. Economy international travel grew at a strong rate of 5.9% in 2012, and in fact improved on 2011 growth of 4.7%.
PREMIUM TRAFFIC MONITOR
NOVEMBER 2012 - up 4.4% on November 2011
The number of passengers traveling in premium seats on international markets was 4.4% higher in November compared to a year ago, an improvement on the October result of 2.7%. Economy class passenger numbers were up 5.8% in November on a year ago, also an increase on the October when year-on-year growth was 3.4%.
PREMIUM TRAFFIC MONITOR
OCTOBER 2012 – up 2.3% on October 2011
The number of passengers traveling in premium seats on international markets was just 2.3% higher in October compared to a year ago, down on the September result of 3.8%. Economy class travel numbers were 3.1% higher in October compared to a year ago, weaker than the September year-on-year growth of 5.0%.
Focus on premium for 2014
by Martin Ferguson (Buying Business Travel)
9 Jan 2014
As the global economy recovers airlines must overcome complacency if they are to maximise their share of business travel traffic, according to one of the UK’s leading aviation consultants.
This week the International Airlines Group (IAG) and Franco-Dutch Air France-KLM both reported encouraging year-on-year rises in premium traffic for December.
While a survey conducted by The Business Travel Show in London also revealed corporate travel budgets would increase this year.
John Strickland, a consultant at JLS Consulting, predicted a lot of competition between carriers, and said those focused on the business development of premium products should capture the biggest share.
“If [corporate travel] budgets are improving airlines can’t be complacent. There is now a good argument for travelling in business class because people are going out to look for new customers and contracts and there is more justification to travel comfortably on a long haul flight,” he said.
“You can’t do business if you’ve been squashed up in economy for 12 or 24 hours. Airlines have to make sure they deliver the right destinations and a quality service.”
Strickland said long-haul premium traffic should be the airline’s biggest focus.
“It is the most valuable [cabin] for airlines. Short haul is not the area where [premium travel volumes] are critical. Those glory days have gone.
“Low-cost carriers have turned it around and people are focused on price more than anything.
“But even going through the recent tough economic times in Europe and, to a slightly lesser extent the US, we’ve seen pretty good premium flows and they’re starting to firm up even more.”
Strickland said traffic out of emerging markets in Asia, the Middle East and Latin American would be increasingly significant.
“And it’s not just traffic from traditional companies that are based in Europe,” he said.
Premium economy cabins would continue to be more prevalent, said Strickland, as carriers try to emulate the model made so successful by Virgin Atlantic.
“We’re still seeing this development of premium economy, which for those carriers that have got it, is a bridge for people whose budgets won’t extend to fully fledged business class but don’t want the-knees-in-your face experience in economy.”
“Premium traffic, IAG’s most profitable traffic, increased 7.3% [year on year] in December. Load factor in the premium cabins increased more than in the non-premium cabins, IAG said, without giving figures. link
Buyers set for higher budgets in 2014
By Rob Gill (Buying Business Travel)
7 Jan 2014
The majority of travel buyers will have higher budgets in 2014 than last year – even though only 49 per cent are buying more trips.
Some 76 per cent of buyers said they would have more money to spend this year, according to a survey of more than 180 buyers by the Business Travel Show, which takes place at Earls Court in London on February 4-5.
The figure is an increase on the 72 per cent of buyers who said budgets would rise or stay the same in 2013, which was itself a rise on the 67 per cent seen in 2012’s poll.
The survey found that airline budgets were set to rise or stay the same this year for 76 per cent of buyers and 74 per cent said the same of accommodation budgets. While 83 per cent said that they would be buying more or a similar number of trips as last year.
Buyers said that the biggest issue for them over the next year would be the introduction of IATA’s New Distribution Capability (NDC), which is set to change the way airfares are distributed through TMCs, [Travel Management Companies] followed by travel management 2.0, data, sustainability and meetings management.
David Chapple, event director of the Business Travel Show, said: “The survey results are great news for buyers, who have faced intense pressure over the last couple of years to cut costs and stretch budgets.
“The figures in our survey also support the GBTA’s own predictions that the UK business travel industry is heading for very strong growth in 2014 and 2015 and, following a trying few years, western Europe’s major markets should see a bounce back over the next five years.”
Fewer premium class airline seats being bought across Europe
The rate of increase in demand for premium air travel (any seats that are not in economy class) is not growing as much as economy. Globally there around 8% of seats are in premium classes, though this was 9 – 9.5% in 2008. The demand for premium seats is not rising in Europe, and also not rising on transatlantic routes. However, in the rest of the world, especially in Asia, there is more growth in premium sales. The North Atlantic market between Europe and North America is the most lucrative premium airline market in the world – accounting for around 15% of all passengers and 22.9% of airlines’ total premium revenue. Premium demand within the Far East rose by about 9% in 2012 and now accounts for about 12% of the global premium air travel market. It appears more business flights within Europe are being made on economy flights, eg on easyJet, as European companies cut back on spending.http://www.airportwatch.org.uk/?p=2451 IATA’s Premium Traffic Monitor report November 2012
IATA’s Premium Traffic Monitor report August 2012
IATA’s Premiym Traffic Monitor report July 2012
This contrasts to the news in May 2013 by CAPA saying how premium travel was down.
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Simon Calder gives some insights into how airlines manage transit passengers,and “Origin & Destination” (O&D) passengers – which is at the heart of the hub / point-to-point airport question that will be influential in the Airports Commission recommendations. Heathrow and BA want a larger hub at Heathrow, so they can lay on more flights to more destinations, with higher load factors and hence more profit – by sucking in transit passengers. However, many passengers prefer to pay a bit more and fly direct, without a transit. Calder says what BA wants is for every seat on every flight from Heathrow to its long haul destinations would be filled, by people starting their journey in London ….. BA has little trouble filling the plane with O&D passengers on some days, but on others the demand simply isn’t there. BA’s extensive network allows it to turn transit traffic on and off like a tap, putting lots of tempting fares into the market when loads are light – or raising them. Hence fares vary hugely day to day. Calder says the biggest threat to Heathrow is now coming from Istanbul, to where direct flights using smaller 737s can connect from many UK regional airports, for onward transfers. Heathrow says a 2nd Gatwick runway would dilute transit traffic at Heathrow, making many BA routes unviable.
Simon Calder: Transit traffic and the airport problem
The shopping bags and reading matter of my fellow passengers on flight BA245 to Buenos Aires, and the debate about where to put the next runway in the London area, may not seem related. But bear with me a moment.
Of the 100 or so people around me in the rear of the plane, I reckon at least 80 were transit passengers at Heathrow Terminal 5. My evidence is the exotic range of bags from cities such as Berlin and Zurich, and a discreet survey of their books and newspapers which suggested few have English as a mother tongue.
The vast majority of passengers started their journeys outside the UK (as, technically, did I, but more of that later). And they provide, say supporters of a third runway at Heathrow, essential evidence of why only a single hub airport can be sustained.
In a perfect world, British Airways would fill every seat on every flight to the Argentinian capital with people starting their journey in London – so called “origin and destination” (O&D) passengers. People who are prepared to pay a premium for flying non-stop, rather than going via continental Europe or North America, are ideal targets for the airlines.
BA has little trouble filling the plane with O&D passengers on some days, but on others the demand simply isn’t there. BA’s extensive network allows it to turn transit traffic on and off like a tap, putting lots of tempting fares into the market when loads are light. Anyone flying from Copenhagen to Los Angeles, for example, may find on one day that the fare is low, say £540 return, but on the next it is unavailable except at a silly price of £1,500 or so.
The argument goes that this reservoir of passengers helps BA optimise its operation, to the benefit of everyone. The airline can afford to offer a daily service to a wide range of destinations, which is what business travellers demand, only because Tomasz, Dirk and Harald help keep the planes reasonably full, year-round.
British Airways is the chief beneficiary of Heathrow’s hub status, but there are a couple of ways in which this could be jeopardised. The first is if other airlines develop superior hubs that lure traffic away. This is already happening, but could soon accelerate. The biggest threat is not the traditional foes – Amsterdam, Paris and Frankfurt – that are accused of eating the UK’s inflight lunch. Nor does it come from the Gulf, though Emirates, Etihad and Qatar Airways provide mighty competition. It is Istanbul – the biggest city in Europe by population, and home to Turkish Airlines.
Turkey’s national carrier has been slow in exploiting its location, but is now expanding relentlessly – serving more places in Africa than any other airline. Unlike its Gulf-based rivals, which have to decide if they could fill a wide-bodied plane, Turkish Airlines can deploy smaller 737s to places such as Birmingham and Edinburgh, with Bristol tipped to be next. This provides an exotic short-break destination, but it also unlocks Asia, Africa and (soon) Australia to passengers from these airports.
From BA’s perspective, the solution is to build another runway at Heathrow, allowing the airline to grow, rather than merely shuffle its destinations from the same pack of slots.
The second threat is a second runway at Gatwick – creating a two-hub system rather like New York (with JFK and Newark). Heathrow enthusiasts insist transit traffic would be diluted, making many routes unviable and therefore damaging the interests of UK travellers.
Financial sense, but environmental idiocy
So much for the case for expanding an existing hub. But there is a powerful counter-argument. I once flew from Madrid to Moscow, and concluded I was the only non-Spanish-speaking passenger – and the only one whose final destination was the Russian capital. Everyone else seemed to be Spanish or Argentinian, en route to Moscow in order to fly on to Buenos Aires, probably directly over the Spanish capital.
From the passenger’s perspective, it is perfectly rational to trade extra hours in the air for saving hundreds of euros. But from the planet’s point of view it is madness. If lots of Madrileños want to go to South America for a reasonable fare, they should be able to find a non-stop, low-cost flight rather than squandering time and resources on a connection.
In the UK, Gatwick has always been the main base for long-haul budget airlines. From Laker Airways to Zoom, many have gone bust, but Norwegian is seeking to reverse the tradition when it launches low-cost links from Gatwick to Florida, New York and Los Angeles in July. Gatwick’s owners say a second runway would allow the breed to expand.
On Thursday, Sir Howard Davies – chairman of the Airports Commission – may offer hints about which argument he favours at the Runways UK conference. I will try to interpret the tea leaves to discern where the next runway may be.
A short break in Geneva courtesy of the airline
Back aboard BA245: like practically everyone else, I had started my journey outside the UK. When you switch from being an “O&D” passenger to a transit traveller, you tend to pay a lot less for off-peak tickets. It was well worth my while to buy a one-way flight to Geneva, enjoy a short break there, and commence my journey from Switzerland’s westernmost city rather than London. In effect, the airline bankrolled my entire stay in pricey but lovely Geneva.
Gatwick competes with Heathrow for more transfer passengers
Gatwick airport is preparing to step up its battle against rival Heathrow with a new scheme that will allow low-cost airline passengers to transfer more easily to long-haul flights.
The move will be a potential game-changer for Gatwick and will help it to compete for a bigger slice of the UK’s lucrative transfer passenger market, which is currently dominated by Heathrow.
Increasing transfer traffic at Gatwick will also bolster the airport’s argument that a network of enlarged point-to-point airports can help alleviate London’s aviation capacity problems without the need for a controversial third runway at Heathrow. Gatwick recently commissioned a study into building a second runway.
At present, less than 10pc of Gatwick’s passengers are on transfer compared to a third at Heathrow, where travellers can more easily connect to a flight with the same airline, or with another carrier that is part of the same aviation alliance.
Gatwick has so far been held back from growing its proportion of transfer passengers due to the fact much of its business comes from low cost carriers such as easyJet. Customers wishing to transfer to a different flight at Gatwick often have to collect their bags and go through the whole check-in and security process again.
A new system that will allow passengers to check into their next flight “air side” – the part of the terminal past the security gates – will be rolled out from the summer.
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GACC – the Gatwick Area Conservation Campaign – has set out its reaction to the Airports Commission decision to short-list Gatwick. One of the main negative impacts at Gatwick is seen as the urbanisation of the area, which would be the result of an influx of around 40,000 new families attracted into the area from other parts of the UK and the EU. GACC does not believe an additional Gatwick would bring large economic benefits to the existing residents of the area. The Gatwick area has a comparatively low level of unemployment. A new runway would certainly bring new workers, moving into the area – who would get most of the new jobs, first in construction (building the airport and the required housing) and then at the airport. The in-comers would derive economic benefits. The hundreds of new firms (which the Gatwick Diamond business association believes would follow) would also need to import most of their staff. So almost all the extra income would go to the newcomers. In all probability existing local residents would just experience more road congestion, more pressure on local infrastructure, more more pressure on health services and schools, as well as more noise, and fewer green fields.
Runway benefits debunked
The GACC newsletter of 6.1.2014 GACC Newsletter January 2014 sets out the considered reaction of the environmental campaign group to the decision by the Airports Commission to restrict their study of locations for a new runway only to Heathrow and Gatwick, ruling out Stansted and almost ruling out ‘Boris island’. One of the main impacts at Gatwick is seen as the urbanisation of the area as a result of an influx of around 40,000 new families attracted into the area from other parts of the UK and the EU.
The GACC executive committee is meeting on Wednesday 8th to plan their campaign for the coming 18 months, that is for the period until the Commission is due to produce its final recommendations in June 2015.
As a first step the newsletter sets about demolishing the claims by Gatwick Airport that a new runway would bring huge economic benefits. It is shown that virtually all the extra income would go to the new workers moving into the area, not to existing residents.
Since the Gatwick area has a comparatively low level of unemployment, it is suggested that for the first few years, thousands of construction workers, followed by thousands of house-builders, would need to move into the area. There would be economic benefits for them. Once the airport was up and running, and operating at full capacity, there would be thousands more airport workers, but they too would need to migrate into the area. And the hundreds of new firms (which the Gatwick Diamond business association believes would follow) would also need to import most of their staff. So almost all the extra income would go to the newcomers.
As Brendon Sewill, GACC chairman, says: ‘There is no reason to expect that ordinary families living in Crawley, or Horsham, or East Grinstead, or wherever, would be a penny better off.’
A vote for a new runway is a vote for a worse quality of life for local residents !
The newsletter states that: ‘It was the lure of economic benefits which persuaded West Sussex County Council in July to pass their rushed, undemocratic, un-thought-through vote in favour of a new runway. It is true that a new runway would mean more people coming to live in Sussex, more new companies, existing firms expanding, higher total income, and higher council tax receipts. But for most ordinary people living in the Gatwick area at present there would be no economic benefit, just longer queues at road junctions, longer queues at the doctors and at the hospitals, larger classes for their children, more noise, and fewer green fields.’
It is significant that similar claims for the economic benefits of HS2 are also coming unstuck. See http://www.telegraph.co.uk/news/uknews/road-and-rail-transport/10551060/HS2-Government-ministers-sat-on-critical-report-by-Department-for-Transport.html (copied below).
 Based on research commissioned by West Sussex County Council and the Gatwick Diamond
Several County and Borough councils have held debates on the Gatwick runway issue. For a summary of their decisions (and comments by GACC) see council debates. A survey of local residents by West Sussex CC has been quoted as supporting a new runway, but in fact this was not so. See note.
HS2: Government ministers sat on critical report by Department for Transport
The case for HS2 has been further undermined after a report is shown to have exaggerated its benefits
Even after the 60 years, significant CO2 savings depend on the UK closing almost all its coal and gas power stations, which appears increasingly unlikely Photo: PA
A key report used by the Government to make the economic case for the HS2 high-speed rail line has been critically undermined by the Department for Transport’s own research, which suggests the study’s methods exaggerated the benefits of the project.
The report, by the accountants KPMG, has been repeatedly quoted by ministers — including the Chancellor, George Osborne — to defend their £43 billion scheme.
Patrick McLoughlin, the Transport Secretary, said he was “pleased to publish” the study, commissioned by HS2, saying it showed the new line would deliver a “£15 billion annual boost to the economy, with the North and Midlands gaining at least double the benefit of the South”.
Mr Osborne said the KPMG report “showed that HS2 will provide a boost to the economy of £15 billion a year”. The figure was said to be the value of higher employment, better productivity and “gross value added” (GVA), increased production of goods and services, caused by the new line.
However, even as the Department for Transport promoted these supposed benefits, it was sitting on a second study which showed them to be grossly exaggerated, The Sunday Telegraph has learnt. This report, by experts including Tom Worsley, the man who developed the DfT’s own transport modelling, criticised KPMG and its method directly and by name, saying it produced “implausibly high” estimates of the effect of high-speed rail projects on the economy.
“There is no evidence that the direction of causation claimed in the model —between an increase in rail connectivity and an increase in productivity, employment density and GVA — has been established,” the second report said. This had a “crucial” impact on the “robustness” of the figures, it added.
The experts said: “There is no explanation provided for the impact of the transport proposal on other geographical areas, i.e. winners and losers … no explanation is given of the original locations of those jobs that shift [as a result of high-speed rail].”
Their report, entitled Assessment of Methods for Modelling and Appraisal of the Sub-National, Regional and Local Economy Impacts of Transport, is dated September 2013 but was published on the DfT website at the end of October, seven weeks after the KPMG research. Unlike the KPMG report, it had no publicity.
The KPMG research has already been substantially discredited, with one former member of the Government’s HS2 advisory panel, Prof Henry Overman, saying it was “technically wrong” and “essentially made up”.
Another statistician, Prof Dan Graham, of Imperial College London, said the KPMG methodology was “not reliable”, while freedom of information requests by the BBC revealed that KPMG had found many parts of the UK stood to lose, not gain, from HS2, but this was never spelt out in its published research.
The disclosure that the Government was warned by its own experts even before publication will bolster concern that the benefits of the costly high-speed scheme have been significantly oversold.
Mr McLoughlin has also claimed that HS2 will be “one of the most potentially beneficial infrastructure projects on the planet” and that it will be “fully integrated into the existing rail network”.
In fact, according to Prof Overman, the economic benefits may be as little as an eighth of those claimed by KPMG, and HS2 will not even run to the main rail station in five of the seven major provincial cities it serves.
Mr McLoughlin claimed in October that HS2 could “reduce carbon emissions” by diverting passenger and freight traffic from road and air to rail. This is also untrue.
The same month, a previously unpublicised 63-page “assessment of carbon emissions” by the consultants Temple-ERM was slipped out on the HS2 website. The report makes clear that the massive CO2 emissions created by building the new line will outweigh any carbon savings from modal shifts in transport for at least six decades.
“Over the construction and the first 60 years of operation of HS2, it is likely that carbon savings … will be less than the carbon emissions, resulting largely from the construction phase,” the report says.
Even after the 60 years, significant CO2 savings depend on the UK closing almost all its coal and gas power stations, which appears increasingly unlikely. High-speed trains consume vast amounts of electricity, which is currently generated largely by burning CO2-producing fossil fuels.
There are around 1.5 million long-distance car journeys in Britain each day. The HS2 environmental statement says just 2,500 of them, less than 0.2 per cent, will transfer to HS2, bringing infinitesimal reductions in traffic congestion, pollution and CO2 emissions. A “small” CO2 saving “may” be delivered after 120 years, it says.
HS2 claims almost 700 air trips a day, four planeloads of people, will transfer to HS2, even though there are no flights between London and Birmingham and few between London and Leeds or Manchester.
It can also be revealed HS2’s former legal advisers have attacked the project, accusing it of using “scare tactics” to win public support.
In a blog post on the Bircham Dyson Bell website, one of the firm’s public affairs staff, Stuart Thomson, said there was a “real problem” with “failings in the statistics” used by HS2 to make its case, including a “fairly transparent scare tactic” of claiming that upgrading existing lines instead would cause 14 years of weekend closures.
Bircham Dyson Bell was legal adviser to HS2 until March 2013. Mr Thomson said: “Opponents have been allowed the space to make the running because of the perceived faults in the justifications and the way that the public consultation was undertaken.”
He said the problems with HS2 “go deeper” than the communications, and the Bill to build the line would have a “difficult journey” through Parliament as a result.
The DfT stood by the KPMG research on Saturday night, saying that its criticism related only to a previous study the firm had done on high-speed rail. However, the method used in both studies was substantially the same and economic benefit produced was similar.
A DfT spokesman said: “The 2013 KPMG study was peer-reviewed and highlights the real economic benefits regions across the country could see thanks to the creation of a new North-South rail line.
“HS2 has drawn support from employers, unions and the construction industry and will deliver essential new capacity to the national rail network freeing up space on the East, West and Midland mainlines, benefiting the thousands of commuters who currently stand travelling into London and Birmingham.”
Cheryl Gillan, Conservative MP for Chesham and Amersham, said the case for HS2 was “smoke and mirrors”.
“This is an example of how the project is being bulldozed through as opposed to being discussed in the open on the basis of its merits. But you cannot take the general public for being fools. Particularly given the difficulties of the rail network in the last few days, people do not understand why the money is being spent on a shiny new toy and not on the services they actually use.”
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The world’s addiction to flying shows no signs of slowing, despite increasing concerns over the industry’s impact on climate change. New data from the Worldwatch Institute shows the number of people taking flights in 2012 hit 2,957 million, a 4.7% increase on 2011. That’s triple the number of people flying in 1986. Boeing predicts world passenger numbers and air cargo traffic will rise 5% annually until 2032. The“insatiable” desire for air travel is bad news for climate change, as growth in the sector is faster than fuel efficiency improvements – giving a large net increase in CO2 emissions each year. In 2012, aviation produced 689 million tonnes of CO2, or around 2% of the global total. A 2009 paper in the Atmospheric Environment journal calculated air travel was responsible for 4.9% of man-made climate change. As their affluence increases,people travel more and more. International flights are responsible for the majority of air miles travelled. In 2012, while only 39% of passengers were on international flights, they accounted for 62% of the overall distance travelled. The world’s aircraft fleet is expected to grow to 36,500 carriers by 2032, says Airbus, or to more than 41,000, says rival Boeing.
Aviation industry set to expand 5% per year
2 January 2014 (RTCC)
“Insatiable” desire for travel bad news for climate change, as aviation sector grows faster than fuel efficiency improvements
Souce: Flickr / Vyacheslav Bondaruk
By Sophie Yeo
The world’s addiction to flying shows no signs of slowing, despite increasing concerns over the industry’s impact on climate change.
New data from the Worldwatch Institute reveals that the number of people taking flights in 2012 hit 2,957 million, a 4.7% increase on 2011.
That’s over nine times the population of the USA, and triple the number of people flying in 1986. Leading plane manufacturer Boeing predicts world passenger numbers and air cargo traffic will rise 5% annually until 2032.
In 2012, aviation produced 689 million tonnes of CO2, or around 2% of the global total. A 2009 paper in the Atmospheric Environment journal calculated was responsible for 4.9% of manmade climate change. ( link )
“The desire for travel is insatiable. We love to see foreign countries and if we can afford to do it we will,” Guy Turner, chief economist at Bloomberg New Energy Finance, told RTCC.
“Air technology is improving so they’re getting quieter, more efficient, which is allowing people to travel more and more as their wealth increases.”
International flights are responsible for the majority of air miles travelled. In 2012, while only 39% of passengers were on board international flights, they accounted for 62% of the overall distance travelled because of the greater number of kilometres clocked up by each flight.
Air travel punches above its weight as far as environmental impact is concerned, since emitting CO2 high up in the atmosphere has a greater greenhouse impact than on the ground, yet policy attempts to control the industry are as slow as they are acrimonious.
Last year, attempts to regulate the industry through a carbon trading or offsetting scheme fell through at the International Civil Aviation Organisation’s (ICAO) meeting in Montreal, and will not be discussed again until 2016.
This is in spite of warnings from scientists that a market-based mechanism is the most effective way to regulate the emissions from the industry.
Meanwhile, the expansion in unlikely to stop any time soon, with the world’s commercial aeroplane fleet expected to explode to 36,500 carriers by 2032, according to forecasts by aircraft manufacturer Airbus, or to more than 41,000 according to their rival Boeing.
The UK is currently debating a controversial extra runway at either Heathrow or Gatwick airport, three years after previous plans were shelved.
According to ICAO, this fleet has already risen by 33% since 2003, up to a total of 25,252 aircraft. The US dominates this market, with a total 6,000 in service, followed by China, which has just fewer than 2,000. Most of these planes are used to carry passengers.
The growth of the industry has only ever stalled on two occasions: the September 11 attack in 2001 and just after the onset of the global financial crisis in 2008.
Efficiency not enough
The sector will continue to play a disproportionate role in the worsening climate crisis over coming years; Turner points out that improvements in the efficiency of airlines is not enough to combat the growth projected over the coming years
“Yes, aircraft are getting more efficient, but the increase in the demand for travel is growing faster than the improvements in efficiency of the aircraft. The net effect will be a gradual increase in emissions from aircraft,” he said.
“The only way the industry can achieve a stabilisation of emissions or even a reduction would be by offsetting emissions by paying for emission reductions elsewhere in the economy.”
Recent research by Bloomberg New Energy Finance indicated that the cost of the credits required to meet 50% of the aviation industry’s needs would cost less 0.5% of the industry’s total revenue.
But while economically achievable, co-author Turner added that offsetting enough emissions to achieve the aviation sector’s goal of carbon neutral growth by 2020 “is not trivial to implement”, and would require a gesture of political will from all the countries and airlines involved.
Air Transport Keeps Expanding
In 2012 the number of people traveling on airplanes reached 2,957 million, which was 4.7% more than the previous year.1 (See Figure 1.)
Although this figure includes a substantial number of people who travel multiple times during the year, it is equivalent to 42% of the world’s population.2
The number of passengers is up 95-fold from 31 million in 1950, when flying was a luxury few could afford, and it is triple the 960 million passengers in 1986, when air travel was already quite common.3
The average length of a flight doubled from 903 kilometers in 1950 to 1,816 kilometers in 2000, but it has not changed much since then and stood at 1,827 kilometers in 2012.4
Longer flights and expanding passenger numbers generated a strong expansion of total passenger kilometers (pkm) traveled— up 193-fold from the 28 billion pkm in 1950 to 5.4 trillion pkm in 2012.5 (See Figure 2.)
The only pauses in an otherwise inexorable expansion came in 2001–02 (following the September 11 attacks in the United States) and in 2008–09 (after the start of the world financial and economic crisis).6
Like passenger air travel, air freight transport has expanded strongly. In 2012, some 49.2 million tons of goods were transported by plane worldwide.7 Even though this is down 1% from 2011, it is 71% more than in 2001.8
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