Business leaders question 3rd runway plan for Heathrow Airport

26.5.2009   (Telegraph)

Ian Cheshire would like to get one thing straight.   “I am not anti-aviation,”
he says. “I run an international business that relies on aviation.   I travel a
lot – though I have been wondering lately if my BA Gold Card might mysteriously


By Alistair Osborne

The chief executive of B&Q-owner Kingfisher is more usually associated with
a different type of plane, not to mention all the other tools found in his DIY

In the last fortnight, however, he has found himself in the same camp as tree-huggers
and the Conservative Party as an opponent of the proposed third runway at Heathrow.  
Mr Cheshire is one of the 13 heavyweight signatories of an open letter urging
the Government to rethink its Heathrow expansion plans – debunking the myth that
business is squarely behind the third runway.

The others include Charles Dunstone, the chief executive of Carphone Warehouse;
Justin King, the J Sainsbury boss; James Murdoch, head of News Corporation in
Europe and Asia; and Jeremy Darroch, the BSkyB chief.

“There isn’t an automatic link between Runway 3 and it being good for business,”
says Mr Cheshire. “The feeling in the group was: can we at least have a proper
debate before we make a pretty irreversible decision to double the concrete at

Some of the signatories came together while sitting on environmental committees,
including the Corporate Leaders Group on Climate Change, but Mr Cheshire’s concerns
for the planet are only part of the story.

The group was put together by Russell Chambers, a senior adviser to Credit Suisse.
Mr Chambers, says Mr Cheshire, had “got increasingly annoyed that the whole runway
thing was going to be presented as a pro-business whitewash”.

Mr Cheshire says he felt compelled to speak out. “It was a sort of ‘not in my
name moment where you say if it went through and I hadn’t said anything I would
have felt I’d been irresponsible.”

The costs of the runway project span £7bn to £13bn, depending on whose estimates
you believe. But it would deliver, claim its champions, at least £5bn a year of
economic benefits.

The pro-lobby cite an increasingly dated Oxford Economic Forecasting (OEF) report
written in 2006.    Heathrow, which has not had a new runway since 1946, handles
68m passengers a year – or about 60,000 a day more than its theoretical design
capacity.     Adding another runway, OEF said, would provide an extra £7bn of economic
benefits a year by 2030, with annual air traffic movements rising from the current
cap of 480,000 to as much as 700,000.   They would be capped initially at 605,000
until the aviation industry proves it can comply with environmental standards.

Mr Cheshire has heard the arguments but has found “the sensitivity of some assumptions
much greater than I first thought.   So you can destroy the economic benefits they claim really quickly with just a couple
of small changes.”

He would also like to see a different perspective. “We are in danger of answering
the wrong question here,” he says.    “Instead of saying what are the economics of a third runway, we should be asking
what do we actually need to do in terms of transport solutions in the round

He’s also suspicious that the runway’s main champions are BAA, the owner of Heathrow,
and British Airways, the airport’s major customer, though other supporters do
span the CBI employers’ group, the British Chambers of Commerce and unions.

“If all the data and all the arguments are coming from someone who has a self-interest
in building it, that can’t really be a balanced debate,” he says.

Take one of the key issues: transfer passengers.   Both BA and BAA claim that
passengers simply switching planes – roughly a third of the traffic – bring economic
benefits to the UK.   The argument is that these passengers underpin otherwise
marginal routes, enabling airlines using Heathrow to offer direct flights to more

Mr Cheshire is far from convinced. “Someone flying in from the States and flying
on to Geneva goes straight through. They don’t touch the sides except for BAA
landing fees.   Does that really help UK plc?”, he asks.

“Part of the frustration is that if you look at how Heathrow has evolved, it
is serving fewer international destinations as the total traffic has gone up and
it’s also serving fewer UK destinations.   Airlines have been adding more frequency on existing routes and growing transfer
passengers quicker than UK passengers

Similar debates rage around the environmental issues; whether the runway could
be replaced – as the Tories suggest – by high-speed rail links; the cost of the
project; and the ability of Spain’s Ferrovial, BAA’s controlling shareholder,
to fund it.

But isn’t the real reason for the opposition from the 13-strong group that they
live on the flight path?   Cheshire laughs.  “It’s only after the letter was published
that someone mentioned where does everyone live,” he says.   “Actually, there’s
a fair spread.   Most of us are London-based in the sense of our work but we live
all over the place.

“I suppose I could be accused of being a Nimby [not in my back yard] in that
I’m in Wandsworth but I don’t feel I’m under the flight path.   Then look at someone
like Jon Moulton [the head of Alchemy Partners and another signatory].   He lives
in Sevenoaks.”

The group reconvenes this week, partly to consider whether they should commission
their own research, coming at the issue from a different perspective – such as
examining capacity at all five London airports and whether Heathrow could be more
efficient if the physical layout was changed.

“It must be very difficult for BAA because there probably isn’t a very good economic
case for putting money into resolving that layout,” says Mr Cheshire, noting that
“with extra capacity you can see how you can get money out”.

“Is it maybe a problem that because of BAA’s structure and financing requirement
there are some options that don’t work for it but could work from a public good
type of argument?”

Mr Cheshire pauses. “Basically, all we’re saying is can we look at the options
guys rather than default to the idea that we have to build the runway.”

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