The board of Heathrow Airport Holdings is reported to have authorised its management to present its case to build a 3rd runway to the Airports Commission, in July. Heathrow is considering several options for the runway’s location. It wants the runway as soon as possible. Heathrow will also tell the Commission that they should have the option to build a 4th runway at some later date, if there is sufficient demand for it. Heathrow believes funders will be willing to stump up the £10 billion or so, with sufficient certainty of the returns on their investment. But some Heathrow shareholders are privately warning they could reassess their willingness to pay for a 3rd runway if the CAA enforces an effective cut in the airport’s charges to airlines over the next 5 years. Heathrow repeatedly emphasises that a huge hub airport is best for the airlines, as that enables them to be the most profitable. The Airports Commission has the task of ensuring that the UK retains its status as a key hub for global aviation, not merely catering for UK demand for air travel. The phrase “a world class airport for a world class city” is popular with the Heathrow lobby.
Heathrow finalises case for third runway
Heathrow’s board has authorised its management to present the case for adding a third runway to the independent commission looking at solutions to the UK’s airport capacity crunch.
Heathrow Airport Holdings’ board met this week to consider what the company should say to the commission chaired by Sir Howard Davies that is looking at options to increase airport capacity, notably in the south-east of England.
The commission has set a deadline of next month for submissions on how to increase capacity over the long term. (19th July).
“Our board gave approval for Heathrow to submit proposals for a third runway to the Airports Commission,” said a company spokesman.
Heathrow is considering outlining more than one option for where a third runway could be located, close to its current site in Middlesex.
It is expected to say a third runway should be built as soon as possible, because the airport is operating at near-full capacity. However, it is also likely to say Heathrow should have the option to build a fourth runway later in the century.
A third runway is due to cost at least £10bn, and some of Heathrow’s shareholders are privately warning they could reassess their willingness to pay for the infrastructure, after the Civil Aviation Authority proposed a real-terms cut in the charges the airport can levy on airlines during the period between 2014 and 2019.
Cutting Heathrow charges would be bad for passengers and bad for the UK
Despite much remaining to be done at Heathrow, things have changed. Six years ago its then chief executive said it was “held together by sticking plaster”. Passengers don’t say that now.
By Colin Matthews ( Chief Executive of Heathrow)
26 Jun 2013
£11bn of private sector investment has delivered an airport of which the UK can be proud. Earlier this month Heathrow was named the best large airport in Europe, while passengers have voted Terminal 5 the “world’s best terminal” for two years running. Next year our brand new Terminal 2 will open.
Success comes from working with airlines, so we were sorry to read International Airlines Group chief executive Willie Walsh arguing in The Sunday Telegraph that the time was right for the regulator to slash airport charges by 40pc, with inevitable consequences for passenger service. This would be bad for passengers and bad for the UK.
It would be a familiar British mistake to under-invest and make do just as we are starting to compete head on with the best airports in Europe. Passengers have been well served by our investment in Heathrow. The proportion rating their experience as very good or excellent has increased from less than 40pc to more than three-quarters. We should be setting our sights on matching the best hubs in the world, not declaring the job done.
The UK needs a hub airport to compete as an international centre for business and trade. The markets that are growing most quickly are those that are furthest away. We are in an international race for connectivity to emerging markets. Continuing to invest in our only global hub is the best way to stay ahead.
Willie Walsh argues that Heathrow does not face competition, but we do. Not only do we compete with other European hubs, we face fierce competition for international capital. The investors who have funded Heathrow’s improvement come from the United States, Canada, Spain, Singapore, China and Qatar. They are not philanthropists. They are looking for a fair return corresponding to the risk they are taking, often to fund the pensions of those for whom they invest. If the UK does not offer a competitive rate of return they will invest elsewhere. The regulator has a duty to set returns as low as possible so that UK passengers pay not a penny more than is necessary. They also have a duty to make sure the required investment can be financed. If they set returns too low, investment will dry up and we will all lose out.
The return on capital investment allowed by the regulator five years ago was 7.75pc, and then it dropped to 6.2pc. Since then Heathrow has made a pre-tax loss in every year and shareholders have received less than 1pc per annum return on their investment. That is unsustainable. Now the regulator is proposing to cut returns further to 5.35pc.
This has so spooked investors that some are reassessing not just investment in Heathrow but whether they would invest in other regulated industries in the UK, too. It also throws into doubt the ability to privately finance new runway capacity in the UK. The Davies Commission is currently considering options for new runways. Whether its final recommendations support a new runway at Heathrow or a new hub airport elsewhere, the level of financing required will be unprecedented. Why would anyone fund tens of billions of upfront investment in UK infrastructure if the lesson from history is that your return will be cut as soon as you’ve built it?
Despite the demands of their CEOs for lower charges, airlines want to fly from Heathrow because they make money doing so. IAG and others have paid millions to acquire additional slots at Heathrow. Willie Walsh has a duty to defend his shareholders and as our biggest customer I listen to him carefully. He is making it clear to his investors that British Airways makes good returns at Heathrow. We will carry on reducing our operating costs and our modernisation of the airport will deliver further cost-efficiencies to airlines.
Politicians have been asking for years for Heathrow to get better, and now we seem to be losing our collective nerve just as we are getting there. Let’s not turn back the clock by slashing prices and returning to the out-dated, under-invested Heathrow of the past. For as little as an extra £1 a ticket each year, passengers can have world-class facilities and Britain can have a world-class airport.
Colin Matthews is chief executive of Heathrow
Forget three runways, Heathrow needs four
Students of the interminable debate over Heathrow’s future will have permitted themselves a wry smile at chief executive Colin Matthews’ submission to the Davies Commission.
By Telegraph staff (Telegraph View)
17 May 2013
For years, every senior Heathrow executive has been extolling the virtues of mixed-mode operations – a system that allows airlines to use both runways for take-offs and landings and would add a very lucrative 50,000 flights a year.
Suddenly, however – in a conversion every bit as striking as Paul’s on the road to Damascus – Mr Matthews has abandoned the idea, having discovered that it has “an impact on local communities”.
Equally surprising is the proposal to end arrivals on both runways between 6am and 7am “in return for permitting an increased number of arrivals on one runway between 5am and 6am” – something Heathrow could have done years ago if it was concerned about the impact on local residents.
Of course, Mr Matthews is playing a much longer game. His softly-softly lobbying got the third runway back on the political agenda after the Coalition had fatuously ruled it out. Now he’s calculated that playing Mr Nice Guy might actually get it built. But even here, Heathrow is being disingenuous. Buried in Friday’s document was the line: “An additional runway at Heathrow would deliver sufficient new capacity for the foreseeable future.”
That’s only half the story because if Britain wants to rival Schiphol, Frankfurt and Charles de Gaulle it will need a four-runway airport. There’s no point building a third without a plan for a fourth.
Read more »
Over 8,000 people in North Down, south and east Belfast suffer from levels of aircraft noise that are considered to cause “significant community annoyance” – over 57 decibels – according to a new report by the Parliamentary Office of Science and Technology. Belfast City Airport has published a draft action plan which includes a proposal to begin operating a noise compensation scheme for local residents affected by loud noise – but only those affected by noise levels of over 63 decibels. Residents say aircraft noise has become worse since Aer Lingus launched 3 routes from the City Airport at the end of March. There is a 6.30am take off to Faro, 7 days a week and on weekdays, there are then 5 BA departures beginning at 6.35am, and all before 7am. The planes have been getting bigger over the last ten years. A resident asked: “Surely they should stick the big jets at the International Airport and keep the regional flights at the GBCA.” Belfast City Airport Watch does not believe that an airport situated in a densely populated urban area is the right location for international flights due to the noise and health impact on local people.
Reality dawns earlier now for unhappy airport neighbours
Dr Liz Fawcett
26 JUNE 2013
Some North Down residents claim they have become early birds against their will as aircraft from George Best City Airport have been taking off earlier, seven days a week.
Over 8,000 people in North Down, south and east Belfast suffer from levels of aircraft noise that are considered to cause “significant community annoyance” according to a new report by the Parliamentary Office of Science and Technology.
Now the airport has published a draft action plan which includes a proposal to begin operating a noise compensation scheme for local residents affected by loud noise – but only those affected by noise levels of 63 decibels or more.
The report shows that 8,616 people live within a zone surounding the airport which gets an average of 57 decibels of aircraft noise.
Residents say aircraft noise has become worse since Aer Lingus launched three international routes from the City Airport at the end of March. Its timetable includes a 6.30am take off to Faro, seven days a week and on weekdays, this flight is followed by five British Airways regional departures beginning at 6.35am , but all before 7am. On Sundays, after the 6.30am flight before there’s a British Airways departure at 6.40am.
Aer Lingus has also launched a service which will run six times a week to Malaga, and a twice weekly service to Palma.
John Driscoll, who used to work in the aerospace industry, moved into his house in Kinnegar a decade ago. “I bought this house knowing the airport was there,” he said, “but there are people up and down the neighbour hood who have to stop talking when one of these planes flies overhead.
“The jets have been getting bigger over the last ten years. They may be award wining for their quietness – compared to other planes of the same size, but they’re still noisier than six or seven years ago. They make a double bang sound when they go over and then rumble. In the mornings they line up first thing and it wakes us up.
He asked: “Where does it end? Surely they should stick the big jets at the International Airport and keep the regional flights at the GBCA.”
Dr Liz Fawcett, Chair of the Belfast City Airport Watch residents’ group, said: “Many people are telling us that they’re having their sleep disrupted by early morning flights and that the noise seems to have got worse since the new international routes started up. We don’t believe that an airport situated in a densely populated urban area is the right location for international flights. We’d like to see a better balance between the commercial interests of the airport, on the one hand, and the health and quality of life of local residents, on the other.”
Local community group - Belfast City Airport Watch
Westminster committee hears from Belfast residents on aircraft noise from Belfast City Airport
October 27, 2012 A committee of MPs at Westminster has been hearing from Belfast residents affected by aircraft noise linked to George Best Belfast City Airport. The umbrella residents group, Belfast City Airport Watch (BCAW), was invited to give evidence to the Northern Ireland Affairs Committee at Westminster on 24th October as part of its inquiry into an air transport strategy for Northern Ireland. All three MPs whose constituencies are affected by the noise issue – Naomi Long MP, Alasdair McDonnell MP and Lady Sylvia Hermon MP – sit on the Committee and were present at the meeting. Dr Liz Fawcett, Chair of the BCAW Steering Group, said the group was very pleased with the reception it got from the MPs, and their interest in the issues. BCAW want the regulation of aircraft noise at the non-designated airports to be strengthened. The current proposals in the draft Aviation Policy Framework consultation do not go far enough. The consultation ends on 31st October. There is information on how to respond, and on the noise section in particular. Click here to view full story…
Aer Lingus to switch from Belfast International to Belfast City Airport
June 16, 2012 The Chief Executive of George Best Belfast City Airport has dismissed the remarks made by BALPA link , that Belfast should have only one airport, at a Commons Select Committee hearing as laughable. He said the airport is a profitable privately run company, and cannot be closed down against their wishes. BALPA had said that Belfast City airport was not needed, and was creating over capacity for Belfast. Meanwhile Aer Lingus is thought to be switching its operations from Belfast International Airport to Belfast City Airport, after the City airport lost BMI Baby. Aer Lingus flies to Heathrow and 7 European destinations, but it is thought it may expand routes to regional UK airports from the City and compete with Flybe. The move could happen soon, and the City Airport would have Belfast’s only Heathrow connection. Click here to view full story…
Cautious welcome from Belfast City residents for airport noise consultation
March 28, 2012 Local residents have given a cautious welcome to news that the Environment Minister, will hold an inquiry and consultation aimed at addressing the issue of aircraft noise linked to George Best Belfast City Airport. Belfast City Airport Watch (BCAW) want protection for local residents and their quality of life. They say: “A far higher number of residents living near City Airport have to suffer unacceptable levels of noise than is the case at major UK airports such as Stansted or Gatwick.” They also face more noise this year from several new international routes operating out of City which are likely to push up noise levels even further. BCAW wants the consultation to result in a tougher airport Planning Agreement which is properly enforced. Many thousands of Belfast people suffer levels of noise above those recommended by the WHO. Click here to view full story…
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Between November 2012 and March 2013, NATS conducted a trial (in association with BA and HACAN) of providing defined periods of noise respite to people living directly under the Heathrow flight paths. NATS says this is an example of using air traffic control to help reduce the burden of aircraft. The Heathrow noise respite trial explored routeing the 16 – 17 flights that arrive at Heathrow each morning between 4.30am and 6.00am. There were defined zones in the approach area above London and over Berkshire that were ‘active’ sequentially week by week. Pilots were directed by air traffic controllers to avoid flying through the zone that was active for that particular week. There were inner and outer quiet zones were established for each of the two runways which resulted in eight zones in total. Diagram below shows how the zones worked. The results, including community responses, will be available in the autumn and will indicate whether such noise respite would be beneficial in future.
Providing respite from noise
20 June 2013 (Blog by Ian Jopson, of NATS)
We’re very aware of the impact aircraft noise has on those who live under flight paths. That’s why we work with airports and airlines to help them minimise the effect of noise and provide respite in the vicinity of the airport.
New, quieter engines and smarter procedures are helping, and Sustainable Aviation’s recently published Noise Road Map sets out how traffic levels can continue to grow to 2050, without any increase in noise.
Noise Respite Trial at Heathrow
But there are also practical things that we can be doing now. Last year we started a trial at Heathrow designed to provide defined periods of noise respite to people living directly under the flight path. The concept was formed in partnership with the noise community group HACAN, BA and the airport itself.
On average, around 16-17 flights arrive at Heathrow each morning between 4.30am and 6.00am. The trial explored whether routeing these flights in a more defined way – particularly at the beginning of their approach into Heathrow – could offer more predictability for the people living below.
The trial, which began in November 2012, had defined zones in the approach area above London and over Berkshire that were ‘active’ sequentially week by week. Pilots were directed by our controllers to avoid flying through the zone that was active for that particular week.
Inner and outer quiet zones were established for each of the two runways which resulted in eight zones in total (four over West London and four above Berkshire for east/west operations). The active areas appeared as shaded boxes on controllers’ displays which were to be avoided unless in exceptional conditions or for safety reasons, for example, in the event of low visibility.
Trial now complete, results in the Autumn
The trial, which completed at the end of March, is a good example of the importance of air traffic management in tackling noise. The results, including community responses, will be available in the autumn. We’re looking forward to seeing the results and understanding better how we can shape air traffic management to tackle the issue of noise.
The diagram below shows the noise relief zones trialled. Click to enlarge it.
Find our more about our Environmental work and Corporate Responsibility programme at http://www.nats.co.uk/environment.
These trials are different to the Operational Freedoms trials at Heathrow.
Operational freedoms trial at Heathrow to end a month early, on 28th February
January 24, 2013 Operational Freedom trials at Heathrow started in November 2011 and ended in February 2012. The second phase of the trial started in July 2012 and due to go on until the end of March 2013. In November 2012, BAA announced that two parts of the trails would not take place (Phase 2, Operational Freedoms 2 and 3 – about delaying flights from 4.30 to 5.00am in exchange for more flights from 5.30am to 6am; and re-directing departing aircraft from their route sooner after take-off). Simon Burns has now announced that the trials will end a month early, on 28 February 2013. Some specific tests scheduled for March will be brought forward into February, which will accommodate the space left behind by the early morning arrivals freedom being inoperable during the trial period. Simon Burns says: “The revised end date will enable the overall analysis of the trial to begin sooner and support the government’s objective, as announced in the Autumn Statement, to bring forward the consultation and final decisions by ministers on whether an operational freedoms regime of some form should be adopted on a more permanent basis at Heathrow.” Click here to view full story…
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Exeter’s airport has been sold by Balfour Beatty for an undisclosed sum to Patriot Aerospace, the aviation division of Rigby Group PLC. Balfour Beatty bought the airport in January 2007 from Devon County Council for £60m. It employs 305 staff. There are currently flights to about 40 destinations. Rigby Group said the future of the airport’s staff was secure and it hoped to add more routes. Rigby Group owns Coventry Airport, British International Helicopters, based at Newquay, and a string of hotels. Sir Peter Rigby, Chairman of Rigby Group, said he wanted to work with Exeter’s main carrier Flybe and also wanted to encourage other airlines to fly from the airport. Flybe sad it “welcomed” the purchase. A few days earlier, Flybe (based at Exeter) reported a a pre-tax loss of £40.7m for the year to 31 March, against a loss of £6.2m the year before (a 7-fold rise). It has had falling numbers of passengers, blaming the cost of jet fuel and the price of APD for domestic flights. With Flybe in trouble, the airport’s future might become dependent on other developments.
26 June 2013 (BBC)
Exeter International Airport sold to Rigby Group
Some 40 routes currently fly from Exeter International Airport
Exeter’s airport has been sold by Balfour Beatty for an undisclosed sum to Patriot Aerospace, the aviation division of Rigby Group PLC.
Balfour Beatty bought the airport in January 2007 from Devon County Council for £60m. It employs 305 staff.
Rigby Group said the future of the airport’s staff was secure and it hoped to add more routes.
Balfour Beatty chief executive Andrew McNaughton said the deal would “ensure the future viability of the airport”.
Sir Peter Rigby, chairman of Rigby Group, said: “We believe in the importance of regional airports, their value to the local and regional communities, and of their important contribution and place in the local economies.”
The company already owns Coventry Airport, British International Helicopters, based at Newquay, and a string of hotels.
Sir Peter said Exeter International Airport’s existing 40 routes would be protected and he would look to add new ones.
He said he wanted to work with Exeter’s main carrier Flybe and also wanted to encourage other airlines to fly from the airport.
Flybe told the BBC it “welcomed” the purchase.
Founded in 1975, the Rigby Group has interests in technology, aviation, property, hotels and investments.
Managers said it employed more than 6,000 staff worldwide.
Exeter airport had 709,314 passengers in 2011 and 694.963 passengers in 2012, a fall of 2%. However, in 2007 it had just over a million ( 1,012,000). UK Airport Statistics: 2012 – annual
Flybe reports deeper annual loss as fuel costs rise
21 June 2013 (BBC)
Flybe has been hit badly by rising fuel costs
Flybe, the troubled Exeter-based airline, has seen losses increase after seeing passenger numbers fall and fuel costs rise.
It reported a pre-tax loss of £40.7m for the year to 31 March, against a loss of £6.2m the year before.
Flybe has shed hundreds of jobs and is looking sell assets as it attempts to revive its fortunes.
It is selling 25 pairs of arrival and departure slots at London Gatwick to Easyjet for £20m.
The airline has also deferred the delivery of 20 Embraer aircraft, and has agreed in principle to cut its pilots’ pay by 5% in return for extra time off.
Flybe said UK passenger numbers fell by 1.1% last year to 7.2 million from 7.3 million. Fuel costs rose to £122.6m from £106.4m the year before.
“Our results for 2012-13, while expected, are nonetheless disappointing. During the year, we have taken difficult decisions as part of our turnaround plan, which have affected all our people,” said chief executive Jim French.
“Our turnaround plan has involved considerable efforts to reduce the cost base of the business. Inevitably, and sadly, this process has to date involved the departure of around 490 people from the business.”
Related BBC Stories
and the Financial Times said:
Flybe bullish despite near sevenfold surge in losses
The chief executive of Flybe has insisted that the struggling UK carrier was on track to “reclaim its position as Europe’s leading regional airline”, in spite of reporting a near sevenfold increase in its annual pre-tax losses.
Flybe lost about £4.50 for every seat flown, while its load factor rose 1% 64.1, which is still well below the 85-plus regularly recorded by Ryanair and easyJet.
FT article at
Balfour Beatty may sell Exeter airport due to financial problems
May 30, 2013
Exeter airport was sold by DevonCounty Council to the airports group of British infrastructure company, Balfour Beatty, in early 2007. Now Balfour Beatty has started looking for buyers for its 60% stake, according to Sky news. The price is not known. Balfour Beatty has not been doing well in recent years, and they issued their second profits warning in six months, blaming “extremely tough” market conditions etc. The airport has not been doing well. The number of travellers using Exeter Airport topped one million in 2007 but has been falling since then, though the rate of decline has slowed since 2009. In 2012 passenger numbers were down to 697,074, following a drop of nearly 4% in 2011. About 250 people are directly employed by the airport, with a further 50 working at car parks, catering and retail concessions on the site. The remaining shareholding in Exeter airport is owned by Galaxy, a specialist fund which is backed by French and Italian investors and the European Commission. Click here to view full story…
Exeter Airport sale: Where did all the money go?
By Beth Rose (BBC News)
From village shops to music projects, money raised from the sale of Exeter International Airport has helped more than 700 organisations
How is a one-off windfall of £48m spent?
Devon County Council answered that question five years ago when it sold Exeter International Airport to Regional and City Airports Limited for £60m.
After using £12m to pay off bills, the council has handed out the remaining money to more than 700 organisations which requested funding. Amounts ranged from £25 to multimillion-pound investments.
The last of that money has just been spent. So where did it all go?
Council leader John Hart said: “We decided it would be better to disperse it around the county so everybody could benefit.
“It would be over and above what would normally be grant-aid available.
“We’ll never have the opportunity to do this again, realistically. It was a one-off windfall and we have endeavoured to make sure an awful lot of organisations have benefited from it.”
Having owned the airport since the end of World War II, but unable to spend money expanding it, the council wanted to get the most out of it while it could.
Mr Hart said: “The money was at least 50% match-funded, so nearly £100m went into the county on things that people wanted at a time when we were at the height of a recession.
“And what people forget is we’ve kept the building companies busy as well.”
The largest beneficiary of the funds was Haven Banks Outdoor Education Centre which received £5.6m.
The new centre, at the base of Exeter canal, will provide courses in sailing, canoeing, archery and raft-building and replace the old centre on the Quay which is now 25 years old.
Mr Hart said: “The Haven Banks project is going to be a regional if not national leader in watersports.
“The demand for watersports has increased immeasurably over the last few years, so we decided that we would take this one on.”
The grants varied enormously – from Cullompton Community College getting £25 for its Junior World Hovercraft Championships, to Averton Gifford Pre-School which got £63,600 for solar panels and a covered outdoor play area.
Pulse, a music project in Teignmouth, was given £600 to refurbish its community space.
Having gone into liquidation, another music organisation, The Cave, took over and continues to benefit from the refurbished area, which includes a kitchen.
Manager Robin Brown said: “We’re a community rehearsal space for music and I run open nights for bands and try and encourage people in the community to play music and make some noise.
“It’s hugely popular. I wish I could double up every night of the week
“In the daytime it’s getting accessed by those who are unemployed or retired.”
One sector to benefit from the funds were voluntary organisations which Mr Hart said “we don’t normally support” because “we don’t physically have the money”.
East Budleigh Community Shop, operated by 45 volunteers, accepted £12,500 to help get the shop, run by local people for local people, up and running.
Many different groups use Blackdown Healthy Living Centre
But the shop has done so well it is about to move from a temporary building to a permanent premises double the size of the current one.
Treasurer Paul Smith said: “If we hadn’t got the money it would have taken a lot longer to get started.”
Blackdown Healthy Living Centre received £265,000 for a new building. It is used by many different groups and provides a day care centre largely run by volunteers.
Chairman Paul Steed said: “It wouldn’t have happened without the money.
“We got £265,000 from Exeter Airport and £100,000 was put in from the previous day care centre which was collected in 15 years – you do the sums.”
Even though the pot is now empty, the results of the cash will continue to be seen.
Mr Hart said: “A lot of the money that’s been allocated still has not yet been spent.
“Schemes take longer than you think to get going, so we still have a number of small and large schemes that have got to come into fruition.
“But nobody would ever get that kind of money again.”
The highest and lowest grants
- £5.9m – Haven Banks Outdoor Education Centre
- £5m – Broadband UK, rural broadband
- £3.7m – Exeter Central Library
- £2m – Area based skills centres across Devon
- £1m – Playgrounds and games areas across Devon
- £429 – Cotleigh bus shelter
- £408 – Buddle Lane Youth Centre
- £400 – Bideford Town Centre for gritters and tarpaulin
- £361 – Newton Tracey Church
- £25 Cullompton Community College for the World Junior Hovercraft Championships
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Robert Peston explains the rows about Heathrow’s charges. The CAA has calculated how much Heathrow should charge airlines, based on how much profit it should be allowed to make over the next 5 years. Heathrow wants high charges, and predictably, the airlines want low charges. Heathrow has invested £11bn in improving its airport terminals and facilities over the past decade and is telling the CAA that not allowing an increase in its fees would make its future plans to invest £3bn “economically irrational”. Heathrow says its shareholders won’t put up the money for future necessary investment if the charges are too low – their owners would have no interest in financing new runways on the proposed level of allowable return. Robert Peston says the dispute is not likely to be settled quickly and there may be an appeal to the competition authorities. At the heart of the dispute between Heathrow and the CAA is the extent to which Heathrow is subject to risk and competition. In recent years, Heathrow’s owners, led by Ferrovial, have made no money at all, largely because of regulatory intervention.
Heathrow warns of investment threat
By Robert Peston (Business Editor)
As the chancellor prepares to announce tomorrow a modest shift of public expenditure away from current spending towards capital projects, a business unusual for the scale of its infrastructure investments is threatening to pull the plug.
Heathrow, which has invested £11bn in improving its airport terminals and facilities over the past decade, is today telling its regulator (the CAA) that plans to cut its allowable return would make future plans to invest £3bn “economically irrational”.
The background is that the Civil Aviation Authority (CAA) has calculated that Heathrow’s “weighted average cost of capital” or WACC has fallen from mid 2009 by 2.4 percentage points to 5.35% before tax.
This sets the return or profit that Heathrow will be permitted to make from what it charges airlines and customers for five years from April 2014.
The view of Heathrow’s management, in its response submitted to the CAA today, is that its shareholders won’t put up the money for future necessary investment on that level of allowable return.
However, as you would probably expect, the airlines take a different view – and got their revenge in early, at the weekend.
They say that price rises for them implied by the proposed new allowable return – an annual increase of inflation minus 1.3% – would “harm passengers”.
They believe that charges could be capped at inflation (RPI) minus 9.8% without undermining Heathrow’s investment plans.
It is a classic and predictable row involving a regulated business.
But it has important economic consequences, partly because, as the IMF has pointed out, most infrastructure spending has a high impact on current and future economic growth, and – perhaps more importantly – Heathrow’s role as a “hub” airport has disproportionate importance for the UK’s prosperity (especially the prosperity of the south).
The dispute almost certainly means none of this will be settled quickly: an eventual appeal to the competition authorities looks more than likely.
Also it is an added complication for the Davies review into where and whether new runways should be built in the south, since Heathrow’s executives believe their owners would have no interest in financing new runways on the proposed level of allowable return.
At the heart of the dispute between Heathrow and the CAA is the extent to which Heathrow is subject to risk and competition.
It is patently a very stable business compared to many. It does face competition, domestically and abroad, but pretty muted competition.
“There will come a moment when the owners of Heathrow tire of waiting for jam tomorrow”
However shocks to its business do occur, whether from ash clouds above Iceland, or fears of pandemics being spread by travel.
So the question is whether the CAA is correct to set the allowable return several percentage points below what airports in Rome, Frankfurt and Paris can generate.
Also, the CAA is in effect saying, with its cost of capital calculation, that Heathrow is as safe and stable as the National Grid and Network Rail – which Heathrow disputes.
There is a wider implication for the UK’s inward investment prospects from this dispute too.
In recent years, Heathrow’s owners – led by Ferrovial of Spain – have made no money at all, largely because of regulatory intervention.
That regulatory intervention has probably benefited the British economy, because prices for customers have been held down, while the airport has continued to invest significant sums in improving and expanding capacity.
But there will come a moment when the owners of Heathrow tire of waiting for jam tomorrow.
Those owners include the sovereign wealth funds of China, Singapore and Qatar (CIC, GIC and Quatar holdings), which collectively own 40% of Heathrow.
As it happens, the British government hopes this immensely deep-pocketed trio of investors will be persuaded to back the modernisation of Britain’s economy and infrastructure in other important ways.
Though, to coin a City phrase, if they feel done in by the airports regulator, they are unlikely to have a nice warm feeling about investing their wonga anywhere else where regulators or the government can determine their profits.
British Airways and other airlines attacks 40% Heathrow price rises to airlines
Date added: June 23, 2013
Willie Walsh, chief executive of International Airlines Group, the owners of British Airways, has attacked Heathrow for applying to the CAA to be allowed to charge airlines 40% more to use the airport over the next 5 years. The CAA is expected soon to announce the new regulated costs of using the UK’s airports for the next 5 years. Heathrow has said it needs the large increases to pay for more capital investment and improving the facilities for passengers. Willie Walsh is complaining about this and making out that BA cares about lower fares for its passengers: “In the interests of air travellers, we believe it is high time these charges started to come down.” British Airways has its hub at Heathrow and has the largest number of flights and passengers there. Mr Walsh said the airport had failed to get to grips with costs and that as the only hub airport in the UK it was acting as a monopoly provider. Virgin and IATA have also complained about the increase in charges. How will Heathrow manage to build another runway, or even two, when its airlines don’t want to pay for it? Click here to view full story…
Heathrow Airport produces its 5 year business plan with large rise in landing charges to pay for £3 billion investment
February 12, 2013
Heathrow Airport has produced its business plan for Q6 (which is the 6th period of 5 years, from April 2014 -2019). It plans to spend some £3 billion on infrastructure, like work on Terminal 2. As Heathrow and the CAA over-estimated the number of passengers using Heathrow over the past 3 years, their income has been lower. Therefore Heathrow plans to raise its landing charges per passenger, by as much as 30 -40% by 2019 – much more than inflation. It said its prices “inevitably” had to rise in order to ensure a “fair return” to its investors. The CAA will publish its final decision on whether it has approved Heathrow’s proposals in January 2014. Launching the investment plans, Colin Matthews said the airport envisaged passenger numbers increasing from just under 70m now to around 72.6m by 2018-19. Heathrow’s 5-year plan is separate from any decision on whether a 3rd runway is built. Maximum airport charges allowed by the CAA are calculated using a complex formula taking into account the total value of Heathrow’s assets, return on capital invested and forecast number of passengers. Click here to view full story…
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The Transport Secretary Patrick McLoughlin has launched the start of an £80 million project to re-develop Stansted’s terminal building. Stansted says the way passengers travel by air has changed over the last decade, as now the overwhelming majority of passengers check-in online and over half travel without checked-in baggage. The airport aims to “improve the passenger journey.” There will be new security facilities and an enlarged departure lounge. Stansted, now owned by MAG, says it has “used research by psychologists to understand the points when passengers feel confused, stressed and relaxed during their time at the airport.” MAG is investing £40 million in the project with a further £40 million invested by commercial partners..
Transport Secretary launches £80 million Stansted terminal redevelopment
20.6.2013 (Stansted Airport press release)
The Transport Secretary Patrick McLoughlin today joined M.A.G chairman, Mike Davies OBE and Stansted Airport MD, Andrew Harrison to launch the start of an £80 million project to transform Stansted’s iconic terminal building and meet the demands of modern air travel.
The way passengers travel by air has dramatically changed over the last decade. For example, the overwhelming majority of Stansted passengers check-in online and over half travel without checked-in baggage. To reflect this, Stansted is undertaking the biggest transformation since the terminal opened in 1991 to improve all aspects of the passenger journey.
Stansted’s state-of-the-art Lord Foster designed terminal building will be enhanced by making better use of existing space and providing passengers with new security facilities and an enlarged departure lounge.
New owners M.A.G have wasted no time in identifying ways to improve the passenger experience, with the long-term ambition of becoming the best airport in London. To inform its approach to the redevelopment, M.A.G has used research by psychologists to understand the points when passengers feel confused, stressed and relaxed during their time at the airport. They also analysed changing trends and passenger expectations over recent years and in the future to inform the plans.
To ensure Stansted’s award winning terminal continues to provide passengers with award winning levels of service, M.A.G is investing £40 million in the project to redevelop the terminal – supported by a further £40 million that will be invested by commercial partners.
The transformation will provide a more intuitive and easier journey through the airport, a bigger and relocated security area, double the amount of seating, better restaurants and more shopping choice alongside improved way-finding and additional flight information screens. The new design will also provide flexibility to accommodate future airline requirements as Stansted grows it existing customer base and begins to attract a broader range of airline partners.
Transport Secretary Patrick McLoughlin said:
“Just three months into its ownership of the airport M.A.G. has shown it is prepared to invest in the infrastructure to improve passenger services and provide new facilities. The millions invested in this project will transform Stansted Airport’s terminal building and the way passengers use it. That’s not just good news for travellers, it’s also good news for the country because this sort of improvement to our transport infrastructure helps to make the UK more competitive in the global economic race.”
Stansted’s Managing Director, Andrew Harrison, said:
“Today marks the start of a significant investment programme to transform the terminal and help deliver our ambitious plans to radically improve Stansted and make it the airport of choice in London for airlines and passengers alike.
“The way airlines and passengers use the airport has dramatically changed over recent years with far fewer passengers using check-in desks or travelling with hold baggage but spending more time in the departure lounge.
“This exciting transformation project responds to these changing trends and will create a quicker and more efficient security process and bring some sparkle to what is already a fantastic terminal.
“Our focus is to provide great service and facilities and put Stansted in the strongest position to compete effectively for new routes, airlines and passengers and this transformation of our terminal is a critical element in achieving this aim and central to our future growth plans for Stansted.”
There will be several potential airport schemes, involving Stansted airport, submitted to the Airports Commission, by the deadline of 19th July. One scenario the Commission will no doubt have to consider is developing Stansted as a hub airport with more runways. That is not a popular option with airlines etc. – which would much prefer Heathrow.
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Newcastle Airport has been at the Court of Appeal battling to convince top judges to overrule a previous decision not to punish a law firm (Eversheds) which the airport said was to blame for under-the-radar awards to its former chief executive and finance director. The airport says contracts which handed airport bosses a controversial multi-million pound pay package were “dramatically inconsistent with the principle of fair and responsible remuneration”, a judge has heard. The airport’s leadership group NIAL suffered a stinging defeat last year when a High Court judge ruled that responsibility for the debacle lay not with Eversheds LLP but with non-executive directors sitting on the company’s remuneration committee. They had inadvertently permitted the executives to “dictate” the terms of their contracts and had not read them properly before signing them.” Newcastle airport is majority-owned by 7 North East councils, who did not know about contract negotiations & bonus deals in 2005 & 2006.
Newcastle Airport bonus deal ‘unfair’ hears Court of Appeal judge
Newcastle International Airport
CONTRACTS which handed airport bosses a controversial multi-million pound pay package were “dramatically inconsistent with the principle of fair and responsible remuneration”, a judge has heard.
Newcastle International Airport was yesterday at the Court of Appeal battling to convince top judges to overrule a previous decision not to punish a law firm which the airport said was to blame for under-the-radar awards to its former chief executive and finance director.
The airport’s leadership group NIAL suffered a stinging defeat last year when a High Court judge ruled that responsibility for the debacle lay not with Eversheds LLP but with non-executive directors sitting on the company’s remuneration committee.
The row first developed after new contracts signed with chief executive John Parkin and finance director Lars Friis in 2006 entitled them to bonuses totalling £8m on achieving a £337m re-financing deal for the airport.
NIAL reacted with shock when it realised the size of the bonuses and took legal action against Mr Parkin and the estate of Mr Friis, who died of cancer later the same year. That case was settled confidentially in October 2008.
The company went on to accuse Eversheds of acting negligently in taking instructions from Mr Parkin and Mr Friis. However, clearing Eversheds of all blame last year, Mrs Justice Proudman said the firm had acted honestly and in good faith. The judge was particularly scathing of NIAL’s non-executive chair, eminent economist Rosemary Radcliffe, and said: “The real reason that NIAL suffered loss was because its non-executive directors failed to carry out their obligations to NIAL.”
Challenging that ruling yesterday, Nicholas Davidson QC acknowledged that executive remuneration is often “a thorny and controversial issue” but said the company had “followed good practice” in setting up a remuneration committee entirely made up of non-executive directors.
But he added: “The apparently sound arrangements had their Achilles heel.
“Unfortunately, Eversheds took their instructions as to what the contracts should say from the executive directors and had no direct communication with any member of the remuneration committee…the separation of interests was negated.”
Insisting that “highly capable and conscientious” Ms Radcliffe had performed her role in “a logical and sensible fashion”, the barrister pointed out that she was only part time, had no office of her own within NIAL, and that she was entitled to rely on the Eversheds’ advice. Ben Patten QC, for Eversheds, said NIAL had been “comprehensively defeated” at the High Court for good reasons and that its appeal should be dismissed.
There was no duty on the law firm to go behind the apparent authority of Mr Parkin and Mr Friis to negotiate their contracts and, even had the Ms Radcliffe been directly consulted, it would have made no difference to the outcome, the barrister said.
Insisting that NIAL was “the author of its own misfortune”, the QC claimed Ms Radcliffe had permitted the executives to “dictate” the terms of their contracts and had not read them properly before signing them.
The Appeal Court hearing is due to last up to three days. Lords Justice Moore-Bick, Rimer and Underhill are expected to reserve their decision on NIAL’s appeal until a later date.
Newcastle Airport begin last-grasp court fight over bonus blame
Planes at Newcastle International Airport
NEWCASTLE Airport has begun a last-gasp effort to claw back money lost when its former boss walked away with a multi-million bonus.
The airport last year lost a case against its former legal advisors Eversheds over the £8.5m paid to former chief executive John Parkin and the now deceased finance director Lars Friis relating to a huge remortgaging deal.
Last October, the law firm was cleared of any blame in the way it advised the airport over Mr Parkin’s contract.
But the airport has appealed that decision, with its case opening yesterday at the Appeal Court in London.
The row dates back to 2006 when Mr Parkin was paid £6m and Mr Friis £2.5m for securing a £377m refinancing package with the Bank of Scotland.
Those pay-outs were later reduced but the airport took court action against Eversheds, saying that the firm should not have taken instructions from Mr Parkin and that it should have known he was not allowed to negotiate his bonus terms directly.
The High Court rejected the claims, however, saying that airport’s non-executive directors failed to check legal documents sent to them and adding the head of a crucial remuneration committee had a “blindspot of massive proportions” over the bonuses.
The airport is majority-owned by the seven North East councils, who were kept in the dark for large parts of the contract negotiations in 2005 and 2006. The airport decided to appeal despite the extra cost of fresh legal action.
Yesterday a spokesman for the airport said: “As previously stated, Newcastle International Airport Limited is appealing against the High Court judgement in respect of its legal proceedings against Eversheds LLP.
“The appeal is being heard in the Court of Appeal this week and, due to the legal nature of the proceedings, Newcastle International Airport is unable to comment further at this time.”
The appeal is likely to be heard this week but a decision is not expected until later in the summer.
Last year’s ruling was heavily critical of the chair of the remuneration committee, Rosemary Radcliffe, an experienced accountant who was paid in excess of £25,000 for her role but failed to read legal advice sent to her and effectively allowed Mr Parkin to rewrite his contract.
The court case also revealed that the airport’s then part-owners, Copenhagen Airports, could have acted to warn the North East councils but failed to do so.
Copenhagen has since sold its share in the airport to Australian investment firm AMP Capital.
Newcastle Airport loses bonus battle with Eversheds
2.10.2012 NEWCASTLE Airport has lost its battle with a city law firm over multi-million-pound bonuses. The airport had claimed Eversheds Solicitors had failed to prevent two executive directors taking higher-than expected bonuses. A spokeswoman for Eversheds said: ““The judgment clearly states that Eversheds acted in good faith on the basis of instructions which it was entitled to accept. Furthermore it adds that the real reason Newcastle Airport suffered loss was because its non-executive directors failed to carry out their obligations to the company.“ Newcastle Airport International Ltd are suing Eversheds over bonuses awarded to former chief executive John Parkin and his then finance chief Lars Friis for securing a £377m mortgage deal linked to a re-financing package with the Bank of Scotland. Initially Mr Parkin was paid £6m and Mr Friis £2.5m, but the pay-outs were reduced later in an out-of-court settlement. At the heart of the dispute are the two contracts that underpinned the deal, which resulted in the duo receiving bonuses totalling 3% of £162m. Article …
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The Gatwick Area Conservation Campaign (GACC) has submitted a response to the Airports Commission’s discussion document on Airport Operational models – on the rival merits of hub airports vs. point-to-point airports. GACC suggests that, if the number of passengers per plane continues to increase, there will be no need for any new runway. In 2011 the average number of passengers per flight at Heathrow was 146 compared to 138 at Gatwick. But if – with ever larger planes - over the next 20 years the average number of passengers per aircraft were to increase to 200 that would be roughly equivalent to two new runways in the South East. GACC suggests estimates of greatly increased demand for runway capacity may be exaggerated. At London’s airports the number of flights was exactly the same in 2012 as in 2002. The total number of aircraft movements at Gatwick has only increased by 2% in the past 10 years. And the number of business flights abroad by UK residents has fallen by 20% in the past 10 years. GACC gives examples of where the creation of over-optimistic ‘models’ have resulted in ‘castles in the air’ – desolate and empty airports.
Gatwick Area Conservation Campaign (GACC)
A Response to Discussion Paper 04, Airport Operational Models, published by the Airports Commission
June 2013 (GACC)
Airport Operational Models
This discussion paper is a closely argued depiction of how airports might function in future: we welcome the distinction made between focal airports and hubs, or airports providing direct point-to-point services. GACC has studied the paper carefully but we do not have the technical expertise, nor the access to the relevant statistics, to be able to add value to the analysis.
What we do have, however, based on fifty years involvement in the debate on UK airports policy, is the ability to warn when the enthusiasm for producing models runs ahead of reality. In this paper we give some examples of where over-enthusiastic model-building by Governments, airports or airlines has led to damaging consequences.
All public servants are trained to seek the national interest, and to discount arguments put to them by bodies which have a clear commercial interest. Gatwick Airport Ltd (GAL) is a vigorous proponent of the point-to-point model – for obvious reasons. Their arguments, however, need to treated with scepticism since they are driven by the fact that Global Infrastructure Partners, the owners of the controlling share in Gatwick, have stated that they wish to sell their share in around 2018. Obviously the best way to talk up the share price is to persuade the Commission that Gatwick’s point-to-point model is the way forward.
No need for any new runway
The Discussion Paper asks: Do you consider that the analysis supports the case for increasing either hub capacity or non-hub capacity in the UK?
The answer is NO.
~ As the Discussion Document states: The London airports system is estimated to be larger than that of any other city in the world – serving more than 140 million passengers in 2010 compared to approximately 103 million passengers at New York airports and 98 million passengers at Tokyo airports.
~ There is more runway capacity in this country than in Germany, France, Spain or Italy.
~ We have more runway capacity than Japan – also an island trading nation – which has twice our population and twice our GDP.
~ And to quote the Discussion Paper again: Taken together the capital’s five major airports served more destinations in 2012 than any other European city – over 360 with a least a weekly service.
So much for the situation at present – but will there be a need in future? The DfT forecasts show that the London area airports will be full by 2030. But it has been shown that these forecasts are flawed because they do not fully reflect the continuing trend towards more passengers per aircraft.
It was this trend that demolished previous ambitious airport operational models initiated by successive Governments: a six runway Stansted (1968); a new airport at Cublington (1969); a two runway Gatwick (1970); a four runway airport at Maplin (1974); a new runway in the South East (1993); a five runway airport at Cliffe (2003). In almost every case, when it came to the crunch, it was found that the level of demand for more flights did not justify the implementation of the model.
The scope for a further increase in the average number of passengers per aircraft is revealed in the Discussion Paper which states that: in 2011 the average number of passengers per flight at Heathrow was 146 compared to 138 at Gatwick ….. These figures are obviously small, even after taking the load factor into account, compared to the 220 seating capacity of, say, an Airbus 321, or to the new Boeing 787 Dreamliner which can seat up to 290 (or in its new version, 323), to the A350 which when it comes into service is due to carry up to 550 passengers, to the long-serving 777 which can seat up to 440, let alone the Airbus380 which can seat 500 – 800.
If over the next twenty years the average number of passengers per aircraft were to increase to 200 that would be roughly equivalent to two new runways in the South East.
Demand for extra runway capacity is not increasing rapidly. Taking a ten year period to cover the recession and recovery:
~ at London’s airports the number of flights was exactly the same in 2012 as in 2002. (3% rise. link to CAA data)
~ the total number of aircraft movements at Gatwick has only increased by 2.6% in the past ten years.
~ the number of business flights abroad by UK residents has fallen by a fifth in the past ten years. link
The press has been full of ideas for new airports or new runways. It seems that every firm of under-employed architects has been putting forward grandiose plans for airport developments. The Discussion Paper panders to this tendency.
Castles in the air 
There is a risk that the process of constructing models of how airports might function in some imaginary future is liable to lead to the construction of unnecessary runways at substantial economic and environmental cost. Some examples are given below.
Castle in the air number 1. Manchester. When the second runway at Manchester Airport was planned in the early 1990’s the airport operational model was that it would enable Manchester to become a focal airport, a northern version of Heathrow. Yet, despite now having two runways and a capacity of 60 million passengers a year, Manchester is actually handling fewer passengers and fewer flights than when the runway was opened in 2001.
Castle in the air number 2. Mirabel airport, Montreal. When opened in 1975 Mirabel was to be the largest airport in the world in terms of surface area, with a planned area of 40,000 hectares, fifty-eight (58) times as large as Gatwick. The airport operational model conceived by the Canadian Government was that it should be a focal airport with six runways and six terminal buildings. But Mirabel has never managed to exceed 3 million passengers per year!
Castle in the air number 3. Stansted. The 2003 Air Transport White Paper set out an airport operational model with a new runway at Stansted to be constructed by 2012, and a third runway at Heathrow by 2020. Yet in 2012 Stansted handled 15 % fewer flights than in 2002. If the new runway had been constructed – at great environmental cost – it would now be standing empty and unloved.
Castle in the air number 4. Spanish regional airports. The Government of Spain conceived an airport operational model which involved building new regional airports. Yet now many of them are entirely empty. Only 11 out of 48 regional airports are profitable. The story is graphically described in the following press articles:
“Spain’s white elephants – how country’s airports lie empty” Telegraph. Oct 2011
“Spain’s ghost airport: The €1BILLION transport hub closed after just three years that’s now falling into rack and ruin” Mail. July 2012
The Gatwick graveyard
The Discussion Paper says: We do not consider that spreading one airline’s hub operations over multiple airports in the London metropolitan area is likely to be a successful approach. History shows that the same is true of the operational model which has Gatwick acting as a subsidiary hub for a separate airline:
~ Freddie Laker’s airline failed in 1982.
~ British Caledonian was taken over by British Airways in 1987.
~ Dan Air was sold in 1993 to British Airways for £1.
~ British Airways used the former Dan-Air operation to form the nucleus of a low-cost short-haul feeder for its Gatwick long-haul scheduled services. That airport operational model failed, and all BA long-haul services were moved back to Heathrow. As noted in the Discussion Paper: Gatwick’s share of transfer passengers has decreased very sharply since 2000, from over 20% to under 10% in 2010. 
Gatwick Airport Ltd are now putting much emphasis on their success in attracting a few services to the Far East as evidence to support the airport operational model which has Gatwick expanding as a point-to-point airport. But in the past several such services have proved short-lived, for example:
~ Etihad. Services from Gatwick started 2004, ended 2007.
~ Air Namibia. Services from Gatwick started 2005, ended 2009.
~ Hong Kong Airlines. Services from Gatwick started March 2012 but ended September 2012.
~ Flybe. The Discussion Paper quotes Flybe as an example of how passengers can ‘self-connect’ in order to transfer flights at Gatwick. But Flybe has now announced that all operations at Gatwick will cease next March, and that it is selling its slots to easyJet . easyJet will probably use larger aircraft thus reinforcing the case argued earlier in this response – that the trend towards more passengers per plane will render the search for a new runway otiose.
 ‘Castles in the air’ are defined as: To imagine visionary projects or schemes; to daydream; to have an idle fancy, a pipe dream or any plan, desire, or idea that is unlikely to be realized.
 Paragraph 4.29
Otiose means ineffective, futile, and serving no useful purpose.
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“Financing additional capacity at Heathrow
entirely from the private sector will be
challenging and will need an appropriate
investment framework. The recent difficulties
in securing investment for new UK nuclear
power stations are a reminder of the
difficulty in securing commercial finance
for major infrastructure projects without an
attractive and stable return.
Heathrow may seek public funding for expansion plan
Airport argues that scheme would still be cheaper for taxpayer than alternatives at Stansted or Thames estuary
Heathrow averaged 1,288 daily takeoffs and landings in 2012. Photograph: Steve Parsons/PA
Heathrow has admitted that the taxpayer may have to contribute funds for expansion plans that would mean at least one extra runway at Britain’s largest airport and hundreds more flights over London daily. But the airport said a rejection of its proposals could consign a generation to economic stagnation.
Heathrow said it was still considering its options before the deadline of 19 July for submissions to the government-appointed airports commission, but indicated that schemes for three or four-runway models could be put forward.
It said that competing with rival hubs such as Amsterdam’s Schiphol and Madrid would require having similar capacity of up to 800,000 flights a year, which would equate to a daily average of about 2,000 takeoffs and landings, compared with 1,288 at Heathrow in 2012.
John Holland-Kaye, Heathrow’s development director, said the airport “couldn’t rule out” public funding for its plans, depending on the findings of the commission.
The airport has previously been keen to stress that expansion would be paid for by private investment. But Holland-Kaye said it would still be cheaper than alternatives at Stansted in Essex or the Thames estuary. “It’s fairly intuitive that there would be greater need for taxpayer support going east,” he said.
The London mayor, Boris Johnson, has put the bill for a new hub at £70-80bn, including public funding of £25bn.
A Heathrow report titled Best Placed for Britain noted that 202 of the UK’s top 300 companies had headquarters within 25 miles of its site, compared to seven for Stansted and two for a possible Thames estuary airport. It said twice as many people lived within an hour’s journey of Heathrow, whether by car or public transport.
Heathrow warned against assuming that the jobs it sustained could be easily transplanted or that the site would quickly be regenerated if the airport was replaced. It pointed to the decades that elapsed while even prime central London locations such as Battersea and Bankside power stations lay unused, while Hong Kong airport is yet to be redeveloped after 15 years.
The airport is increasingly confident that the political debate has turned. Holland-Kaye said: “The mood has changed. The economic downturn has brought a bit of a reality shock, encouraging people to think about how we can rebuild the economy in the short term, and plan long-term to remain an economic powerhouse. We can’t take for granted that we will have the same economic success unless we do the right thing with our national infrastructure.”
Bigger Heathrow ‘better and faster’
Expanding Heathrow would be cheaper, quicker and better for the economy than creating a new hub airport, according to a report from Heathrow bosses.
Adding capacity at Heathrow would also be better for passengers and for jobs than a new hub airport at Stansted or in the Thames Estuary, said the report. Expansion at Heathrow could be delivered around seven years quicker than the time taken to build a new hub airport.
Creating a new airport would increase travel times for 90% of hub passengers, with the economic cost of longer journeys amounting to a possible £26 billion. The report said that adding capacity at Heathrow would also be better for taxpayers, with a new airport needing around £25 billion of public money [for roads etc].
More than 76,000 people directly employed at Heathrow would face re-location or redundancy if Heathrow was replaced by a new airport. The report also said that the area around Heathrow in west London was home to 202 of the UK’s top 300 company headquarters.
Mayor Boris Johnson is one of the leading supporters of a new Thames Estuary airport and vehemently opposes the building of an extra, third, runway at Heathrow.
Labour backed the third runway plan in 2009 but the expansion was scrapped by the coalition Government, which has now set up an Aviation Commission under former CBI chief Sir Howard Davies to look into the whole question of airport capacity.
The report has been compiled by Heathrow Airport with architectural and planning consultants AECOM and Quod. It will form part of Heathrow’s submission to the Davies Commission. The commission will publish its interim report by the end of this year and its final report in the summer of 2015.
Heathrow chief executive Colin Matthews said: “Britain already has one of the world’s most successful international hub airports in Heathrow. Expanding Heathrow will put Britain ahead in the global race, connecting UK business to growth more quickly and at less cost to the taxpayer than any other option for new capacity.”
Mr Johnson’s chief adviser on aviation, Daniel Moylan, said: “We need a grown-up debate about the desperate need for new aviation capacity, not scaremongering to serve a vested interest. A four-runway, 24-hour-a-day airport to the east of London would create tens of thousands of new jobs, and businesses and workers would have 12-15 years in which to plan for that opportunity.
“Heathrow accounts for around 3% of the vibrant economy of west London and if the role of the airport was to change then new businesses would rapidly spring up in an area that offers huge opportunities for new homes and jobs.”
New research shows replacing Heathrow with a new hub airport would leave passengers, taxpayers, and business worse off
18 June, 2013 (Heathrow’s press release)
Heathrow is better located for passengers, business and jobs than a new hub airport at Stansted or in the Thames Estuary according to new analysis published today.
The new report, entitled “Best placed for Britain”, says that expanding Heathrow is the quickest way for Britain to get ahead in the global race, connecting the UK to growing markets around the world faster and at less cost to the taxpayer than any other hub option. The report has been compiled by Heathrow Airport with architectural and planning consultants AECOM and Quod, and was commissioned as part of new evidence to present to the Airports Commission under Sir Howard Davies.
The report shows that compared to a new hub Heathrow is:
Best for passengers. Building a new hub airport to the east of London would increase travel times for 90% of hub passengers. Even if a new hub airport came with a major investment in new transport infrastructure, Heathrow would still have 4 million more people within 60 minutes travel time. The economic cost of longer journeys to a new hub could be £26bn net present value – the equivalent to cancelling out all the benefits of reduced journey time delivered by High Speed 2.
Best for business and the economy. The area around Heathrow is home to some of the world’s most highly productive business clusters in industries like IT and pharmaceuticals. In total 202 of the UK’s top 300 company HQs are in close proximity to Heathrow. The area has 60% more international businesses, twice as many US businesses, and three and a half times as many Japanese businesses than the national average.
Best for local jobs. The 76,600 people directly employed at Heathrow would face re-location or redundancy if Heathrow was replaced by a new airport. Direct job losses would be far greater than those that occurred when the largest single redundancy in the UK took place at Shotton Steel in 1985 and MG Rover closed its factory at Longbridge in 2005 (both 6,500 jobs), or the worst year of pit closures in the UK, 1984 (30,000 jobs).
Best for speed of delivery. Additional capacity at Heathrow could be delivered around 7 years more quickly than any new hub airport could be built. Any delay is critical, as the UK is losing some £14bn a year in trade and export earnings due to constraints in aviation hub capacity. Each additional year of delay would see the UK fall further behind European hub competitors in the global race for growth and jobs.
Best for taxpayers. Adding capacity at Heathrow will cost the taxpayer much less than building a new hub airport. The report calculates for the first time that £20-£25bn of sunk rail infrastructure cost has been committed around Heathrow since the 1970s. Any new hub would need to build vast new infrastructure from scratch using public money. Mayor of London Boris Johnson estimates that a new hub airport would cost in the region of £70-80 billion of which £25 billion would require public subsidy.
Colin Matthews, CEO of Heathrow, said:
“Britain already has one of the world’s most successful international hub airports in Heathrow. Expanding Heathrow will put Britain ahead in the global race, connecting UK business to growth more quickly and at less cost to the taxpayer than any other option for new capacity. Heathrow is better located for passengers, business and jobs. Why build from scratch at a new hub when we can build on the strength that already exists around Heathrow today?”
Notes to editors:
The full report “Best placed for Britain” is available online at:http://mediacentre.heathrowairport.com/ImageLibrary/downloadmedia.ashx?MediaDetailsID=1507&SizeId=-1
The UK Government set up the Airports Commission in 2012 to examine the need for additional UK airport capacity. The Commission is responsible for submitting an interim report to the government by the end of 2013 identifying and recommending options for maintaining the UK’s status as an international hub for aviation. It will submit its final recommendations to government by summer 2015.
Capacity is constrained at the UK’s only global hub, Heathrow, which has been virtually full since 2003. Heathrow provides long haul services to direct and transferring passengers. Other UK airports such as Gatwick, Manchester and Birmingham operate a ‘point-to-point’ model, providing a wide range of direct short-haul flights but few long-haul services.
Heathrow and the Mayor of London both agree that the UK needs additional capacity at a single major hub airport with the size and scale to compete with other international hub airports such as Frankfurt, Paris and Amsterdam. We only disagree on the question of where this additional capacity should be added – at Heathrow or at a new hub airport to the east of London.
Today’s report does not cover the environmental and sustainability issues associated with building additional runway capacity. We recently published a separate document, ‘A Quieter Heathrow’, outlining Heathrow’s approach to noise mitigation which is available here:
In July, we will submit options to the Airports Commission for additional runway capacity at Heathrow and set out environmental impacts.
Gatwick has not been included in the report as a potential location for the UK’s hub because it is only proposing a two-runway solution and therefore could not be any larger than Heathrow is today.
The report is at:
Comments from AirportWatch members:
I never thought Heathrow Ltd would be coughing up for more roads,public transport to cope with the 20 million extra passengers a third runway would bring.
Same story, albeit on a smaller scale, at Luton where the operator’s half-baked analysis of the road traffic consequences of its proposed expansion says, in effect, “it’s all too terribly difficult for us to estimate what might be the increase in road traffic at any distance more than a mile or so from the airport, and what proportion of any growth would be caused by airport expansion – so we’ll leave any provision that turns out to be necessary to the public purse”.
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Over the weekend of 3rd and 4th August, at Nantes, there will be a weekend gathering of all those who have worked over the past years to oppose a new airport at Notre-Dame-des-Landes. This is part of a series of protests against Imposed Useless Major Projects (les Grands Projets Inutiles et Imposés) across and outside France. There will be music, forums and debates, on a range of subjects such as threats to agricultural land, environmental and energy transition, urbanization, spatial planning, transport, water and biodiversity. Thecampaigners say this will be ”The essential rally this summer to defend the land and agricultural jobs that are threatened, for better use of public money, and to stop projects as useless as destructive, here as elsewhere!” It will also be THE place to invent and create, in solidarity, essential alternatives on the fight against global warming and the return to solid citizen representation, which they feel has been removed from local people during the process of forcing through the new airport plans.confiscated. They say: “No giving up ! Neither here, nor anywhere else!”
Let’s bury Notre Dame des Landes airport project for good !
LE rassemblement incontournable de l’été pour la défense des terres et des emplois agricoles menacés, pour une meilleure utilisation de l’argent public et pour l’arrêt des projets aussi inutiles que destructeurs, ici comme ailleurs !
THE essential rally this summer to defend the land and agricultural jobs that are threatened, for better use of public money, and to stop projects as useless as destructive, here as elsewhere!
On ne lâche rien! Ni ici, ni ailleurs!
We’re not giving up anything! Neither here nor elsewhere!
We note that the real halt that occured in the AGO/ Vinci, and government progression has come true on site, and that has been the case for several weeks now.
Strenghtened by the improvement acquired in recent months (see below, the local citizen’s group ACIPA and the Coordination of opponents aim to increase pressure on decision makers by organizing a large summer gathering – which has now become traditional ; this year, it will have an unprecedented scale.
They are inviting all support committees across France to spread the information and organize widely to mobilize for the NDLL 2013 (NDDL is Notre Dame des Landes) gathering, just as they managed to do after the police invasion of 16th October on the ZAD. The great national transmission belt they represent will build the success with us.
However, the airport project is far from being completely stopped !
We must snatch victory now !
We can do it!
The project managers are obstinately misled into a major political impasse, both by their actions on the ZAD (evictions, house demolitions, police brutality …) and by their repeated lies and contempt of the conclusions of the three commissions, in particular those of the scientific committee.
The weekend of August 3 and 4 will be both festive and militant
Militant : in continuation of our previous summer gatherings, we will go on with discussions on issues that are dear to us as they relate to this airport project of Notre Dame des Landes. We’ll gather in many forums :
• about Imposed Useless Major Projects, across and outside France
• about lands that feed – agricultural land
• about environmental and energy transition,
• about urbanization, of spatial planning, and transport,
• about water and biodiversity ..
Active thinking to invent and build alternatives …
Festive: Along with the support of many collectives (elected officials, pilots, geographers, lawyers, naturalists), musician artists want to play their part in the struggle of Notre Dame des Landes. About 30 groups of all kinds will participate to the event of summer 2013. Children are not forgotten : places to have fun and relax will be built for them and performances will also be offered.
One week after the third European Forum against Imposed Useless Major Projects in Stuttgart,
The Gathering 2013 in Notre Dame des Landes will beTHE place to be this summerto defend land and agricultural jobs threatenedfor a better use of public moneyand to stop projects as useless as destructive, here as elsewhere !
It will also be THE place to invent and create, in solidarity, essential alternatives :
About energy Transition, about the fight against global warming and the return to solid citizen representation, confiscated by the ruling political class. The hour of victory may ring soon ! No giving up ! Neither here, nor anywhere else!
What’s new about NDLL project ?
On October 16, 2012, the government tried to clear up the zone dedicated to the airport project and its so-called “illegal” but quite legitimate residents !
The “Caesar maneuver”, planned to last 36 hours, was never able to overcome immediate resistance, which has only gained momentum as in the big event of reoccupation which gathered 40,000 people on November 17, 2012 , after that:
• all over France, many committees were created to support the fight
• many new people came to settle in the area at the height of winter
• Mid-January 2013, Bellevue farm was saved from destruction by the Collective of Professional Agricultural Organisations Outraged by the airport project (COPAIN) and is now back to agriculture.
• Mid-April perennial plants – mainly vegetables – were planted during the operation “Sow your ZAD”
• On May 11, again nearly 40,000 people came and gathered in a large human chain circling the area so as to protect it by burying the project .
Opponents also progressed in legal and administrative proceedings that are still on :
• End of January 2013 : The French Supreme Court rejected the request of AGO / Vinci to accelerate a judgment “breaking” against the order of expropriation, therefore delaying the eviction of the residents and farmers of the area.
• March 17, 2013 : the European Petitions Committee took the NDL file in hand and kept open the two petitions of the opponents ACIPA / CEDPA and FNE / Bretagne Vivante. A commission of inquiry may move on to Nantes Atlantique and Notre Dame des Landes to investigate…
• End of March 2013 : rendering of the three commissions :
- The so-called “dialogue committee” which validates the correctness of our arguments and alternative proposals advanced in the public debate of 2003 : study of a new noise exposure perimeter, economic study on the optimization of Nantes Atlantique…
- The agricultural committee confirms our figures on the waste of agricultural land and reassures expropriated farmers : they can carry on exploiting their land and live decently again this year!
- The scientific committee of expertise does not validate Vinci/AGO and governmental proposals made in the public inquiries, considering the “Water Act”, meaning that the whole content of environmental compensations has to be reviewed!
This has the immediate effect of stopping preventive archaeological excavations, stopping evictions, stopping housing demolitions and withdrawal of the police forces from the area. Additional environmental investigations will be carried out.
Strong because of all our support, we follow the progression of the project with calm and determination, especially in the European institutions that can put pressure on the French government.
The success of our summer gathering will increase this pressure.
HOPE IS NOW IN OUR CAMP!
Web site : http://www.notredamedeslandes2013.org
Contact : firstname.lastname@example.org
Nous constatons qu’un coup d’arrêt à l’avancée d’AGO/Vinci et de l’Etat est bien réel sur le terrain depuis quelques semaines déjà.
Fortes des avancées acquises ces derniers mois (voir au dos), l’ACIPA et la Coordination des opposants entendent augmenter la pression sur les décideurs en organisant le grand rassemblement estival devenu traditionnel mais qui, cette année, va prendre une ampleur inégalée. Elles invitent l’ensemble des comités de soutien à organiser largement l’information et la mobilisation pour le rassemblement NDL 2013 comme ils ont su le faire au lendemain de l’invasion policière du 16 octobre sur la ZAD. La formidable et inventive force collective qu’ils représentent construira avec nous la réussite.
Une semaine après le 3ème Forum européen contre les Grands Projets Inutiles et Imposés qui se tiendra à Stuttgart,
Le Rassemblement 2013 de Notre Dame des Landes sera
LE rassemblement incontournable de l’été
pour la défense des terres et des emplois agricoles menacés,
pour une meilleure utilisation de l’argent public
et pour l’arrêt des projets aussi inutiles que destructeurs, ici comme ailleurs !
Mais incontournable aussi pour inventer et mettre en œuvre de manière solidaire
les alternatives indispensables :
Pour la transition énergétique, la lutte contre le réchauffement climatique
et le retour à une solide représentation citoyenne, confisquée par les classes politiques dirigeantes.
L’heure de la victoire peut sonner bientôt ! On ne lâche rien ! Ni ici ni ailleurs !
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