No 3rd Runway Coalition blog: Still no clarity on Heathrow finances for its expansion
Still no clarity on Heathrow finances
16th November 2018
Blog by Paul McGuinness, Chair, No Third Runway Coalition
Last week the CAA took the exceptional step of publicising a letter it had sent to the DfT regarding their concerns about Heathrow’s plans for financing the third runway. Essentially, the CCA is complaining that Heathrow has still not provided adequate or detailed information.
As Nils Pratley highlighted in the Guardian “in most industries, a rebuke from the regulator would be met with an immediate promise to do better. Heathrow’s response, however, amounted to a shrug of the shoulders. (They) didn’t even attempt to explain why it has not satisfied the CAA’s long-standing and reasonable requests.”
For those communities impacted by operations at Heathrow, such a complaint and lack of response is not a revelation: it simply confirms the ongoing, arduous reality of seeking to engage with this arrogant corporate behemoth. Indeed, Heathrow’s response has entirely ignored the issues raised – and merely offered their generic holding statement that they are proceeding with the planning process.
In May, Heathrow submitted their initial Scoping Report for expansion to the Planning Inspectorate. This sets out their initial thinking on the multitude of issues associated with their aspirations; yet it does not go into specific detail.
Buried deep within the highly technical documents is a line that seeks ‘early release of capacity’ that would be created by a third runway. In short, Heathrow are trying to secure an additional 25,000 flights each year before the third runway opens.
This means that they are effectively trying to force the lifting of the 480,000 Air Traffic Movement (ATM) and thus break a key condition of the T5 planning permission. Essentially, Heathrow is seeking these extra 25,000 flights a year in order to raise the money to pay for the third runway.
There has been no assessment undertaken on the impact on local communities of an additional 25,000 flights – 68 every day – in terms of noise, air pollution or congestion on public transport and local road networks. None whatsoever.
Was this always a part of their strategy – despite it was never being discussed in the run up to the Parliamentary vote on the Airports National Policy Statement?
Or is it a tactic to seek to deliver on the condition that a third runway does not result in significant increases in landing charges?
After all, steep rises in landing charges over the past decade has been a Heathow financing technique – deployed by Heathrow to pay for the T2 refurbishment without having to put its hand into its shareholders pockets.
But whichever game they are playing, the inescapable fact is that Heathrow’s ability to finance the 3rd Runway is yet again being called into question. And its inability to produce a transparent set of answers on the issue – even when implored repeatedly to do so, by the CAA – may speak to the truth, more than any of the platitudinous assurances that Heathrow has uttered in the public domain.
The communities that we represent are already sceptical and concerned. Sceptical about the favourable, special protections that have long been offered to Heathrow. And concerned about the manner in which taxpayers are being asked to underwrite the construction risks of Heathrow’s expansion plans.
Might Heathrow only be able to afford its 3rd runway scheme, by being allowed another 25,000 annual flights well before runway was ready?
The Times’ Chief Business Commentator, Alistair Osborne, has written on the deeply unclear finances of a possible Heathrow 3rd runway. Alistair suggests, one way the airport could try and get in some extra cash, early in the building programme (when no airlines can use the new runway yet) is increasing the current numbers of flights and passengers. Heathrow loves to say it is full, but it is not. Each year the number of passengers creeps up – there is spare terminal capacity. But if instead of the current cap of 480,000 annual flights, Heathrow could get consent for an extra 25,000 (ie. to 505,000), it could add perhaps 6-7 million more passengers, up from the current 78 million or so. That could bring in much needed income, to help fund the vast project – including what to do with the M25. But adding 25 million more annual flights means about 65 more per day. Heathrow hopes to appease the ire of badly impacted local residents, by saying they would start flying at 5.30am rather than the 4.30am start now. But there would then be plane after plane after plane then, when people are still trying to sleep. And the airlines don’t like the idea, as it upsets their lucrative long haul schedules, and causes less resilience if there are delays, at the peak periods.
Heathrow regulator, the CAA, demands answers urgently on airport’s 3rd runway plan
The CEO, Richard Moriarty, of aviation watchdog body, the CAA, have written to the Department for Transport (DfT) asking that they should “decisively and urgently” address major concerns about the funding for the 3rd runway scheme – at least £14 billion, and doubtless more with cost over-runs and things not going to plan. They say Heathrow must “provide assurance that its revised timetable is realistic” and would “ensure timely delivery” of the expansion. The CAA threatens enforcement action against Heathrow to force it to provide clear evidence about how it would finance the scheme, while avoiding pushing up costs for airlines and passengers. The CAA says the project had been hit by a further delay, with a public consultation on detailed plans for the new runway now scheduled for June rather than in the first three months of next year. Heathrow is already the most expensive airport in the world, with landing charges of over £20 per ticket, and that is likely to rise – regardless of flimsy Heathrow assurances. Mr Moriarty said there is a “lack of high quality and comprehensive information” about how Heathrow would keep costs down, while being commercially viable, and these concerns had “not been adequately addressed, despite repeated requests”.