CE Delft study shows alleged economic benefits of London City airport greatly exaggerated

In December 2020, London City Airport published its Master Plan, after various consultations. This claims: “Taking all benefits into consideration, the proposed growth could add £586 million [annual benefit in 2035]  to the UK economy. Adding this impact to the £1.5bn impact that LCY is currently expected to reach under CADP, the airport could reach a £2bn annual contribution to the UK economy by 2035.” This was based on figures produced by a report for the airport by Ove Arup in April 2019.  All that was in the heady days before the impact of Covid on air travel … A report by the consultancy, CE Delft, looked carefully at the figures of supposed future economic impact, and found name exaggerations and errors. CE Delft consider that the £586 million in economic impact in 2035 is an overestimate. Our study suggests the economic impact is likely to be smaller than £ 353 million + PM (plus or minus things that is impossible to calculate). This disparity in estimates is partly as local impacts are not additional at the national level, according to the UK’s transport analysis guidance WebTAG. Also that trade impacts should not be taken into account, according to WebTAG.
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The report by CE Delft in February 2020 is at

Review of the economic impact analysis of the expansion of London City Airport

https://hacan.org.uk/wp-content/uploads/2020/03/CE_Delft_190363_Review_of_the_economic_impact_analysis_of_the_expansion_of_London_City_Airport.pdf

 

Its conclusion states: 

This report has conducted a methodological review, a review of results and has attempted to recalculate the economic impact of the proposed Draft Master Plan for expanding capacity at London City Airport up to 11 million passengers by 2035. The socio-economic impacts of this proposed Draft Master Plan were presented in a Socio-Economic Assessment Report conducted by ARUP (ARUP, 2019). According to ARUP, the estimated economic impact of the Draft Master Plan on the UK economy would be £ 586 million in 2035.

In general, our study has concluded that the £ 586 million in economic impact in 2035 is an overestimate. Our study suggests the impact will be lower, the economic impact of the Draft Master Plan is likely to be smaller than £ 353 million + PM. This disparity in estimates can be explained.

Firstly, the local impacts are not additional at the national level, according to the UK’s transport analysis guidance WebTAG. This implies that £ 160 million in benefits reported by the Socio-Economic Assessment Report are significantly overestimated. In this study it is replaced by a (small) PM post.

Secondly, when following WebTAG guidelines, the trade impacts of the Draft Master Plan should not be taken into account. However, Arup, in their Socio-Economic Assessment Report reports £ 73 million in trade benefits. In this study, we follow WebTAG guidelines and replace the £ 73 million by 0.

Lastly, the causal effect of air pollution, noise and greenhouse gas emissions of the Draft Master Plan is not taken into account in the Socio-Economic Assessment Report. Although it is outside the scope of this project to identify the size of the causal effect, we can say with certainty that the effects will be negative, as more flights will lead to more air pollution, more noise and more greenhouse gases. The effect should therefore be monetised and incorporated as a negative economic impact into the total economic impact.

For a number of the impacts identified, the calculations and background data were not made publicly available with the publication of the Socio-Economic Assessment Report. Therefore, we were unable to verify whether or not the figures mentioned in the report are realistic. It is therefore possible that those impacts (e.g. surface access benefits, productivity and economic growth, move to more productive jobs) may change in magnitude. Overall, we can conclude that our estimate of the total economic impact of LCY’s Draft Master Plan on the UK economy is lower than presented by Arup in their Socio-Economic Assessment Report.

https://hacan.org.uk/wp-content/uploads/2020/03/CE_Delft_190363_Review_of_the_economic_impact_analysis_of_the_expansion_of_London_City_Airport.pdf


The Ove Arup report  (April 2019) is at 

https://assets.ctfassets.net/ggj4kbqgcch2/24gZnTO2MixelOtxLEyyfa/9c4ccc7d0b44d9bafe2262f8ec7482a0/LCY_Draft_Master_Plan_Socio-Economics_Report.pdf

The Arup report says:  “This socio-economic impact assessment is part of a package of works commissioned to Arup, to inform the draft master plan for consultation by London City Airport (LCY) to cater for 11 million passengers per annum in 2035, compared to 6.5 million passengers per annum currently being implemented under the City Airport Development Programme (CADP). This corresponds to a 69% increase in passenger growth, which would result in a range of positive local and wider economic impacts.”

and

“Taking all benefits into consideration, the proposed growth could add £586 million [annual benefit in 2035]  to the UK economy. Adding this impact to the £1.5bn impact that LCY is currently expected to reach under CADP, the airport could reach a £2bn annual contribution to the UK economy by 2035.”


London City Airport’s Master Plan was published in December 2020

https://www.londoncityairport.com/corporate/master-plan

This document

https://downloads.ctfassets.net/ggj4kbqgcch2/4auw6GSrzHWwMJkfIxRBF2/c1ac4a3870e9caf2b53a8c53f8052a58/p01-100_LCY_MP.pdf

says:

“Subject to meeting the forecast demand and adjusting how we operate, we estimate that with up to 11 million passengers the airport could support approximately 5,300 jobs locally – an increase of 2,7009 . When the wider economic benefit to tourism and trade is considered, our overall economic contribution is expected to increase to over £2 billion per year.”


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See earlier:

 

Master Plan

London City Airport shelves plans to extend operating hours – has to focus on post-Covid recovery

London City Airport has published its long-term vision for the future today, after a consultation with residents, passengers and stakeholders. Local community campaign group HACAN East had been concerned by suggestions the airport might seek to increase flights at the weekend, as well as earlier and later each day.  But due to a huge fall in passenger numbers, the airport’s CEO Robert Sinclair says the focus “has to be on recovering” for the foreseeable future.  But it still has the longer term ambition of 151,000 flights per year, up from around 82,000 before Covid, which campaigners fear will have a serious impact on residents and the environment – due to noise and air pollution (as well as carbon). Mr Sinclair said the airport will keep the expansion plans “under review” as the airport recovers from the impact the pandemic.  Changes in future would need to go through the necessary consultation and planning processes.  HACAN East chairman John Stewart said the news was a welcome development and the result of a “huge campaign” by both residents and local councils – and  “Our concern remains that they would like to lift the annual cap on the number of flights to 151,000.”

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