Birmingham Airport runway extension scheme may get the funding it needs

Date added: 19 September, 2010

17.9.2010   (Birmingham Mail)

But now they have cut costs by agreeing a slightly shorter extension and hatching
a deal over diverting the A45 Coventry Road.

The extension is now thought likely to cost about £65 million instead of £120
million and will allow Birmingham to compete with Manchester, Heathrow and Gatwick
by offering non-stop flights to cities in China and India and to the west coast
of America for the first time.

At 350 metres, the extension is about 60 metres shorter than originally planned.

Birmingham and Solihull councils will share the £32 million cost of moving the
A45, rather than tunnelling the road under the runway.

Officially, the airport remains optimistically cautious that approval will be
given at its October 28 board meeting.

A spokesman said: "We are very close but it would be premature to comment."

The development follows months of discreet negotiations between the seven West
Midlands councils, which own just under half of BIA shares, the airport’s management
company and private sector shareholders the Ontario Teachers’ Pension Fund and
Victoria Funds Management.

The completed runway is likely to be operational by 2014.

Birmingham Council leader Coun Mike Whitby, a member of the airport board, said:
"The runway will get Birmingham to the economic hot spots of the world. And I
envisage the extension being built very shortly. Approval is imminent."

He said talks between the councils and the airport had been tough, but ultimately
fruitful.

Last November, airport chief executive Paul Kehoe said he couldn’t see how the
extension could be funded. A promised £25 million grant from development agency
Advantage West Midlands failed to materialise and Mr Kehoe conceded there was
no clear business advantage to the airport in pushing ahead with the runway.

Birmingham International Airport’s long-awaited runway extension looks certain
to get the final go-ahead within weeks.

BIA board members are set to approve a funding package for the ambitious scheme
which will allow Birmingham to compete with Manchester, Heathrow and Gatwick by
offering non-stop flights to cities in China and India and to the west coast of
America for the first time.

The extension, a slightly scaled down version of an original proposal, is likely
to cost about £65 million instead of £120 million.

At 350 metres the extension is about 60 metres shorter than originally planned.

But BIA believes the alternative proposal will still deliver 95% of the original
capacity, triggering millions of pounds in economic benefit for the West Midlands
from faster flights to the rest of the world. The final part of the new runway
will be added at a later stage when funding allows.

The decision follows months of discreet negotiations between the seven West Midlands
councils, which own just under half of BIA shares, the airport’s management company
and private sector shareholders the Ontario Teachers’Pension Fund and Victoria
Funds Management.

Part of the strategy to close the funding gap involves the seven councils accepting
lower annual dividend payments from the airport in future. Officially, BIA remains
optimistically cautious that approval will be given at the October 28 board meeting.

A spokesman said: "We are very close, but it would be premature to comment."

However, sources close to negotiations said they expected the tendering process
for the extension to begin in November – an outcome which in itself will give
a welcome boost to the Midland construction industry. The completed runway is
likely to be operational by 2014.

The airport spokesman paid tribute to Birmingham Council leader Mike Whitby,
a key figure in the talks who knocked heads together behind the scenes.

"He has certainly played a major role, inspiring everyone and keeping them going.
His passion has been unabated.

"From the point of view of the West Midlands operating on the world stage it
is essential that we get the runway extension in place."

Coun Whitby (Con Harborne), a member of the BIA board, described the extension
as "a splendid piece of good news amid the present gloomy economic situation".

He added: "The runway will get Birmingham to the economic hot spots of the world.
And I envisage the extension being built very shortly. Approval is imminent."

He said talks between the councils and BIA had been tough, but ultimately fruitful.

Coun Whitby said: "I think we have done enough work together to ensure the runway
goes ahead.

‘‘We have reassured everyone involved that there is a way forward. Adequate funding
is there."

The council leader said his ambition was to see the giant A380 Airbus fly from
Birmingham regularly. The new plane, capable of carrying between 550 and 850 passengers,
would revolutionise Birmingham as a destination airport, he added.

BIA and council leaders are also gambling on BIA picking up business following
the cancellation of Heathrow’s third runway.

The likelihood of a high speed rail link between Birmingham and London will enable
BIA, which is only operating at less than half of its capacity, to drum up new
business by luring passengers from overcrowded Heathrow, according to Mr Kehoe.

The airport already has planning permission for the runway extension which lasts
until 2016, although an application to move the A45 still has to be made and approved.

The proposal has come up against strong opposition from Friends of the Earth,
which described the longer runway as a waste of money.

In November last year, BIA chief executive Paul Kehoe said he couldn’t see how
the extension could be funded.

A promised £25 million grant from Advantage West Midlands failed to materialise
and Mr Kehoe conceded there was no clear business advantage to the airport in
pushing ahead with the runway.

* A £12.8 million hotel is to be built at Birmingham Airport after plans were
given the green light.

The 200-bedroom Travelodge will be the second largest hotel within the perimeter
of the airport and is due for completion in summer 2011.

The deal was brokered by design and construction specialist Anglo Holt and the
this latest development brings the total number of Travelodges completed or under
construction by the West Bromwich-based firm to 49.

Sep 17 2010

Good news is at a premium as the West Midlands faces fallout from the gravest
economic crisis in recent times, but confirmation that Birmingham International
Airport’s runway extension will finally go ahead is certainly reason to celebrate.

A year ago it seemed doubtful that this highly desirable project would get off
the ground in the foreseeable future. The problem facing the airport company was
simple enough: while a longer runway makes perfect sense for the regional economy,
the finances for the airport’s private shareholders never really stacked up.

The business case for the £120 million runway extension was only ever marginal
and collapsed entirely when the extent of the recession, the credit crunch and
the unwillingness of banks to lend money at reasonable rates of interest became clear.

The airport company has also shifted its position, first by agreeing a slightly shorter extension at a cost of £65 million for the first phase and secondly by convincing major private shareholders that such large investment
at this difficult time is a good idea that will reap rewards in the future.

Taken together, the positive discussions are a fine example of what can be achieved
at a city region level and only go to rub salt into the wounds arising from parochial
differences that put paid to a Greater Birmingham and Black Country Local Enterprise
Partnership.

Based purely on terms of economic regeneration, a £65 million runway extension
has to represent exceptional value for money. It means that from 2014 Birmingham
will be able to offer non-stop flights to cities in fast-growing India and China
as well as the west coast of America. This should place BIA, which operates at
less than half capacity at the moment, into a new league while promoting Birmingham
as a world destination.

The extension is of even greater significance given the abandonment of Heathrow’s
third runway and the possibility of a high speed rail link between Birmingham
and London.

This means that BIA can become a highly plausible gateway into the UK, with the
capital less than 50 minutes away by train.

A word of caution lingers, however. Airlines will not automatically come to Birmingham
simply to take advantage of a longer runway – the new facility must be marketed
like never before.

Having said that, now is the time for celebration.

To quote Birmingham City Council leader Mike Whitby, a rare piece of good news amid all the gloom.

Read More http://www.birminghampost.net/comment/post-comment/2010/09/17/post-comment-runway-plan-reaches-for-the-sky-65233-27282093/#ixzz10AqwqSgI

Posted: Sunday, September 19th, 2010. Filed in News about Airports.