The EU has a current target of cutting carbon emissions by 40% on the 1990 level by 2030. But with the European Green Deal, it has been proposed that target should be increased to 55%. Some European countries do not want this – while climate experts say even greater carbon cuts are needed. The European 55% target would include use of “carbon sinks” in the figures, so there is an assumed amount of carbon being absorbed by forests etc, meaning net carbon emissions would appear to be lower than they really are. This might be a difference of 2% or else perhaps 5%. Some environmental campaign groups said this use of carbon sinks was “an accounting trick” and “Relying on forests to reach climate targets sends the wrong signal that it’s OK to keep polluting because the land will absorb it.” In Europe, forests are currently a net carbon sink because they take in more carbon dioxide than they emit. But their capacity to absorb CO2 “has been shrinking” over the years, and if left unchecked, could further decline – due to cutting down trees and forest, and damage to them from fires, pests, more demand for biomass, and impacts of climate change. Mature forests have to be kept healthy, and just planting new saplings is not enough. . Tweet
Commission under fire for including ‘carbon sinks’ into EU climate goals
By Frédéric Simon | EURACTIV.com
18 Sep 2020
“The target is what counts, we use every method to get there,” said Frans Timmermans, EU Commission vice-president in charge of the Green Deal.
The European Commission on Thursday (17 September) defended its plan to bring carbon removals from agriculture, land use and forestry into the EU’s updated climate target for 2030, saying this was in line with UNFCCC standards. [The proposal to increase the climate ambition from 40% to 55% by 2030 ]
“If you look at the logic and the methods applied by UNFCCC, they all include carbon sinks,” said Frans Timmermans, the Commission vice-president in charge of climate policy.
“This is exactly what we have done at the European Commission,” he told journalists at a press briefing. “So I think we’re on solid ground here”.
The updated 2030 target, announced the day before by Commission President Ursula von der Leyen, aims to put the EU in line with its commitments under the Paris Agreement and the bloc’s broader objective of becoming the first “climate neutral” continent in the world by 2050.
‘We can do it!’: EU chief announces 55% emissions reduction target for 2030
European Commission President Ursula von der Leyen announced plans on Wednesday (16 September) to target a 55% cut in greenhouse gas emissions by 2030 as part of a broader European Green Deal programme aimed at reaching “climate neutrality” by mid-century.
‘Accounting trick’
But environmental campaign groups denounced the Commission’s plan to include carbon sinks in the target, saying this was “an accounting trick” to meet the 2030 goals.
“Relying on forests to reach climate targets sends the wrong signal that it’s OK to keep polluting because the land will absorb it,” said Sam van den Plas, policy director at Carbon Market Watch, an environmental NGO.
“The Commission is greenwashing its own climate target: including carbon dioxide removals in the calculations means emissions will actually go down by a lot less. We’re facing a climate emergency, and there isn’t time for games,” said Alex Mason from the WWF.
In Europe, forests are currently a net carbon sink because they take in more carbon dioxide than they emit. On a global level, oceans and forests are the two biggest carbon sinks.
But the capacity of European forests to absorb CO2 “has been shrinking” over the years, Timmermans warned, saying “the sink has to go back to its previous levels” if Europe wants to reach climate neutrality and preserve biodiversity at the same time.
If left unchecked, forest sinks could further decline to 225 million tons of CO2 equivalent by 2030, down from 300 million tons CO2 in 2010, the Commission says. According to the EU executive, the forests’ declining capacity to absorb carbon dioxide is driven by “further increases in harvesting” and negative impacts from natural hazards such as fires and pests caused by a changing climate and growing demand for biomass.
“We really have to take care of our forests. It’s not enough to say we’ll plant 3 billion trees, we need to make sure our forests stay healthy and this is going to be a momentous task,” Timmermans said.
Environmental groups applauded the Commission’s intention to restore healthy forests and ecosystems. But they pointed to inconsistencies with the EU’s existing climate goal for 2030, which according to them, does not take carbon removals into account.
“The current EU target of ‘at least 40%’ agreed in 2014 does not include sinks,” affirms Bert Metz, a climate scientist who co-chaired the mitigation working group of the UN Intergovernmental Panel on Climate Change from 1997 to 2008.
“Including sinks means that the new 55% target would effectively be less than 50% in the current target’s terms,” he wrote in an opinion piece for EURACTIV.
“We need to restore Europe’s forests and protect and restore our precious ecosystems, but that must be on top of greenhouse gas reductions, not instead,” he insisted, saying the 55% target “must be a real, absolute reduction,” not a net target that takes carbon removals into account.
How the EU could snatch defeat from the jaws of victory on climate
The European Commission’s commendable move to aim for emission reductions of “at least 55%” by 2030 risks being completely undermined if the target also takes into account “reductions and removals” from forest growth and tree planting schemes, warns Bert Metz.
53% without carbon removals
Timmermans strongly rejected the NGO’s accusation that the net target is an accounting trick.
“I really dispute the idea that this would in fact mean only 50% reduction,” he said. “I don’t understand the logic, carbon sinks play a role, it takes CO2 out of the atmosphere – isn’t that what we want to achieve?”
“I honestly believe there is no problem with that,” Timmermans added, saying all that matters is that the EU achieves its 2030 climate goal.
Officials who briefed the press afterwards told a different story however, and did recognise that the 55% target would be lower by 2% without carbon removals. This would translate into an emissions reduction target of 53%, not 55.
“The 53% is calculated without taking into account the removals, and the 55% is calculated with removals,” the official said. And using the EU’s current method to calculate carbon sinks “would shave away probably about half of those 2 percentage points,” he explained, suggesting the target would effectively be around 54% using today’s carbon accounting rules.
Green campaigners who analysed the Commission’s impact assessment on the 2030 target came to different conclusions, however. Depending on the scenarios, the effect of including carbon sinks “varies from just over 2% to nearly 5%, depending on whether you think the sink will be at the low end (225 million tonnes) or the high end (340 million tonnes),” said Alex Mason from the WWF.
“This makes clear that including sinks in the 2030 target makes a significant difference – it means other sectors such as buildings, transport and agriculture won’t have to cut emissions by as much.”
Mason also insisted that the EU’s current 2030 climate target does not take carbon removals into account, and accused the Commission of trying to cover up the change in carbon accounting rules.
“The Commission is trying to downplay the significance of this change – and appears even to have altered text on its website in order to imply that the 40% target has always been a net target,” Mason told EURACTIV.
“But it’s clear that the 55% target Ursula von der Leyen and Frans Timmermans have been trumpeting is not what it seems, and is even further from the 65% cut in emissions that science demands.”
Timmermans himself seemed to admit that carbon sinks were a new element in the EU’s climate target calculation, saying the Commission drew its figures on carbon removals from the most recent findings of the UNFCCC.
“You could wonder why we didn’t include it in the -40% target at the time, because carbon sink is an important element in all of this,” Timmermans said.
“The target is what counts, we use every method to get there.”
Some trainee air-traffic controllers with only weeks before graduation have been told their training course is over and they will not get jobs. NATS, the UK air-traffic control provider, is the latest aviation employer to cut jobs. The trade union for controllers’, Prospect, said the move was “a disastrously short-sighted and cruel decision”. Now there is little air traffic due to the pandemic, with about 11-12% as many air passengers in July 2020 as there were in July 2019. NATS said the trainees would be able to re-start training when air traffic increases, to 2019 levels, though many in the sector say this may not be for perhaps 3 years. A spokesperson for NATS said: “We currently have 275 trainees who have passed through the college and are waiting to re-start their on-the-job training at units across the country once traffic increases. … we have [decided] to pause training at our college, which means the 122 trainees have until the end of September to decide if they prefer to leave or wait to see if any redeployment opportunities emerge over the course of October.” As air traffic control becomes more automated, there may be fewer controllers needed in future. . Tweet
AIR-TRAFFIC CONTROL TRAINEES TOLD: COURSE OVER, JOB ENDED
‘All that work, pain of being away for six months from family and it’s back to square one,’ wrote one student controller
By Simon Calder Travel Correspondent (The Independent)
@SimonCalder 15.9.2020
Trainee air-traffic controllers with only weeks before graduation have been told their training course is over and they have lost their jobs.
Nats, the UK air-traffic control provider, is the latest aviation employer to cut jobs.
More than 120 trainees who have yet gained to gain their student licence and be posted to an operational unit have been offered redeployment or a voluntary exit package.
One of them, Trevor Hannant, tweeted: “Gutted at today’s news, finally get my dream job in my late 40s then boom, it’s gone…
“All that work, pain of being away for six months from family and it’s back to square one.”
Mr Hannant has changed his description on Twitter to: “Soon to be ex-Trainee ATCO.”
The controllers’ union, Prospect, has described the move as “a disastrously short-sighted and cruel decision”.
Until the coronavirus crisis, the skies in southeast England were the busiest in the world, with six airports serving London – formerly the world hub of aviation – and a prodigious amount of overflying traffic.
But the UK is now ranked as 27th out of 31 nations in Europe in terms of passengers flying as a proportion of last year’s levels.
In July, only 11.6 per cent of 2019 passengers flew to or from the UK.
A spokesperson for Nats said: “We currently have 275 trainees who have passed through the college and are waiting to re-start their on-the-job training at units across the country once traffic increases.
“They will provide sufficient controller resource for the next two years and there is no capacity to take more trainees from our college.
“With this in mind, we have taken the very difficult decision to pause training at our college, which means the 122 trainees have until the end of September to decide if they prefer to leave or wait to see if any redeployment opportunities emerge over the course of October.”
Since lockdown, the trainees have been furloughed to take advantage of the government’s job retention scheme. The most recent starters are on apprentice contracts.
Steve Jary, national secretary for Prospect, said: “This is a disastrously short-sighted and cruel decision by Nats to dismiss these trainees, some of whom have just a fortnight left of their course to run.
“The aviation industry is facing unprecedented challenges but simply dismissing these people is not the answer.
.“They are being thrown to the wolves. We have received countless messages from trainee air-traffic controllers in despair: having got through a highly competitive selection process, their dream career is being ripped away from them.
“We have seen in previous downturns that cutting training undermines Nats’ ability to provide a reliable service. It is dangerous to repeat the mistakes of the past by slashing potential air-traffic controller numbers to the point where the industry will be unable to recover after the pandemic.”
The Nats spokesperson said: “We will stay in regular contact with those who want us to and hope we will be able to re-employ them when traffic recovers.”
They will have a guaranteed right to return to NATS when college training restarts.
“Our training college will remain active, supporting the trainees awaiting re-start and providing refresher training for our existing qualified controllers as traffic levels increase.”
The union estimates that Nats spends an average of £150,000 on each trainee.
On 7th and 8th October, there will be a Supreme Court hearing of the appeal, by Heathrowairport, against the ruling by the Appeal Court in February 2020 that the Government’s Airports National Policy Statement (ANPS) was illegal. Heathrow cannot proceed with plans for a 3rd runway, without a legal ANPS. The government itself decided not to challenge the Appeal Court decision – it is only Heathrow. Friends of the Earth and Plan B Earth are defending the case. The decision of the Appeal Court was due to the failure of the ANPS to properly take into account the UK’s commitment to the Paris Agreement (aiming to keep global climate warming to 1.5C) and thus its duty to keep carbon emissions from rising. Plan B Earth has published its response, challenging the Heathrow claim that the Paris Agreement is “not” government policy. It is a 29 page document, but the conclusion is copied here. It states that: “At the time of the designation of the ANPS in June 2018, the Secretary of State (SST) [Chris Grayling] knew, or ought to have known, that the Government had: a) rejected the 2˚C temperature limit as creating intolerable risks, in the UK and beyond b) committed instead to the Paris Agreement and the Paris Temperature Limit, and that it had c) committed to introducing a new net zero target in accordance with the Paris Agreement. These matters were fundamental to Government policy relating to climate change and it was irrational for the SST to treat them as irrelevant. . Tweet
IN THE SUPREME COURT
ON APPEAL FROM THE COURT OF APPEAL [2020] EWCA Civ 214
UKSC 2020/0042
B E T W E E N:
. (1) HEATHROW AIRPORT LIMITED Appellant
[Arora is no longer pursuing the appeal]
-and-
(1) FRIENDS OF THE EARTH LIMITED (2) PLAN B. EARTH Respondents
106. At the time of the designation of the ANPS in June 2018, the SST knew, or ought to have known, that the Government had:
a) rejected the 2˚C temperature limit as creating intolerable risks, in the UK and beyond
b) committed instead to the Paris Agreement and the Paris Temperature Limit, and that it had
c) committed to introducing a new net zero target in accordance with the Paris Agreement.
107. In reality these matters were fundamental to Government policy relating to climate change and it was irrational for the SST to treat them as irrelevant.
108. While PA 2008 s.5(8) does not require the SST to follow Government policy relating to climate change it does require that the SST communicate transparently the relationship between the ANPS and that policy, so that any tension arising can be debated openly and democratically. The SST’s failure in this regard was a fundamental flaw in the process.
109. This Appeal is misconceived and should be dismissed.
Supreme Court to hear Heathrow appeal, against judgement on the Airports NPS by the Appeal Court, on 7th and 8th October
May 15, 2020
The Supreme Court has announced that it will hear an appeal from Heathrow Airport and Arora Group [it appears Arora has now dropped out – Sept 2020 – update ] on Wednesday 7th and Thursday 8th October 2020 on the plans to expand Heathrow Airport by adding a third runway. The appeal was granted by the Supreme Court on 7th May, but the dates of the appeal were announced today. Granting of the appeal by the Supreme Court followed an earlier landmark ruling by the Court of Appeal at the end of February which stated that the government has not taken into account the Paris climate change agreement when drawing up its plans to expand Heathrow. Reacting to the news of the hearing dates, Paul McGuinness, Chair of the No 3rd Runway Coalition, said: “These dates are sooner than some expected. Perhaps because the Supreme Court is as keen to clarify this important area of developing law, as our communities are anxious to see Heathrow expansion shelved, once and for all. “The sooner this misguided project is put of its misery, the better. So we welcome these dates.”
Supreme Court grants Heathrow and Arora permission to appeal against the Appeal Court ruling on the ANPS
May 7, 2020
In February, the Appeal Court ruled that the government’s Airports National Policy Statement (ANPS) was illegal, because it had not taken properly into account the UK’s responsibilities on carbon emissions, or commitments under the Paris Agreement. For a Heathrow 3rd runway to go ahead, it has to be in line with the necessary policy document, the ANPS. That document is now invalid in law, and will remain so until it is amended to rectify its deficiencies. It is for the Secretary of State for Transport to do that, but the government declined to challenge the Appeal Court judgement. So Heathrow, and Arora Holdings (the two organisations hoping to get a 3rd runway built) asked the Supreme Court for permission to appeal the Appeal Court decision. That has now been granted, by the Supreme Court. The legal process is slow, and could take as much as a year. It will probably cost a lot of money, at a time when Heathrow is haemorrhaging money, with minimal income, due to Covid. Only a day earlier, CEO of Heathrow, John Holland-Kaye admitted there would not be a need for a 3rd runway for 10-15 years. Heathrow wants this drag on and on and on …
In a new paper, published in Science Direct, Professor Stefan Gossling looks at the future of the airline industry, especially after the set-back it has had from Covid. He says it is important to “think the unthinkable”, and not only what is possible for aviation, but what is desirable for society … most stakeholders in industry and policymakers would agree that it is desirable for aviation to become more resilient financially and more sustainable climatically … COVID-19 has forced many airlines to reduce their fleets, retire old aircraft, or stop serving long-haul destinations … As a result, air transport capacity is diminished. Further reductions in capacity may be achieved by reducing subsidies … A scenario for a resilient aviation system should have a starting point in the question of how much air transport is needed …where risks are accounted for, and where their cost is part of the price paid for air travel. In a situation of reduced supply, there should be an opportunity for airlines to increase profitability … Many questions need to be asked, such as those addressing volume growth, the sector’s reliance on State aid, its unresolved environmental impacts, and hence the basic assumptions on which aviation operates. . Tweet
Scientific paper:
Risks, resilience, and pathways to sustainable aviation: A COVID-19 perspective
From a long an interesting paper, with a lot of facts and arguments, the conclusion is copied below:
5. Thinking the unthinkable
As proposed by Banister and Hickman (2013), it is important to “think the unthinkable”, i.e. to consider longer-term transportation scenarios that embrace possibility, plausibility and desirability. It may be argued that air transport futures have been discussed mostly in terms of “possibility”, and less in terms of plausibility or desirability. “Possibilities” are framed economically, and by a limited number of actors, the proponents of volume growth. There is a notable absence of any discussion of alternative pathways. Yet, most stakeholders in industry and policymakers would agree that it is desirable for aviation to become more resilient financially and more sustainable climatically. It would seem that for this to happen, very radical changes are necessary in terms of measuring economic performance, the progress and potential of technology change, and the limits to sustainable transitions implied by a rapidly growing transport system (Gössling and Higham, 2020).
In conclusion, this discussion has revealed unsurmountable conflicts inherent in the proposition of continued volume growth and a reduction in risks and vulnerabilities. Hence, a reorientation is necessary that includes the possibility of a shrinking of the global air transport system to increase its desirability for society. It is also plausible. COVID-19 has forced many airlines to reduce their fleets, retire old aircraft, or stop serving long-haul destinations. Airlines have gone bankrupt (Flybee, South African Airways, Eurowings), or entered Voluntary Administration (Air Mauritius, Virgin Australia) (TTRWeekly, 2020). As a result, air transport capacity is diminished. Further reductions in capacity may be achieved by reducing subsidies. This should affect low-cost carriers such as Ryanair, an airline sometimes offering transport at a price below the cost of fuel, while counting among the European Union’s top 10 greenhouse gas emitters (The Guardian, 2019).
A scenario for a resilient aviation system should have a starting point in the question of how much air transport is needed; here, the COVID-19 pandemic leaves much room for critical reflection. A desirable aviation system is also one where risks are accounted for, and where their cost is part of the price paid for air travel. In a situation of reduced supply, there should be an opportunity for airlines to increase profitability. COVID-19 thus offers an opportunity to rethink global air transport. Many questions, such as those addressing volume growth, the sector’s reliance on State aid, its unresolved environmental impacts, and hence the basic assumptions on which aviation operates, will be difficult to ask. However, risks and vulnerabilities have to be weighed against short-term benefits, if the sector’s future resilience is to improve. If there is one lesson to be learned from the COVID-19 crisis, it is the demonstration that nation states can take radical structural actions to deal with emergencies.
Author statement The idea for this opinion piece was developed by the author, who also wrote the entire text.
Councils have called on Heathrow to abandon once and for all its bid for a third runway and concentrate instead on working with the aviation industry to achieve zero carbon emissions and reduce noise impacts for overflown communities. Heathrow is due to challenge February’s Court of Appeal ruling against the expansion plan in October (7th and 8th) at the Supreme Court. The 5 councils, (Hillingdon, Wandsworth, Richmond upon Thames, Hammersmith and Fulham, and Windsor and Maidenhead) say there is no logic in the airport persisting with its runway fantasy. Cllr Gareth Roberts, Leader of Richmond Council, said: “COVID-19 has changed everything. This is a unique period when we are all rethinking traditional assumptions about how we work, travel and grow our economies. As local councils we want the industry to get back on its feet. But this won’t work without a fundamental rethink about the place of aviation in our society – and indeed where future capacity is most needed. Even Heathrow’s chief executive has admitted that a new runway would not be needed for years due to the pandemic. Yet still the airport and its shareholders press on with the process and the prize of a planning permission for a runway that will never be built.” . Tweet
Heathrow urged to end third runway ‘fantasy’
15 September 2020 (Richmond Council)
Councils have called on Heathrow to abandon once and for all its bid for a third runway and concentrate instead on working with the aviation industry to achieve zero carbon emissions and reduce noise impacts for overflown communities.
The airport is due to challenge February’s Court of Appeal ruling against the expansion plan in October at the Supreme Court.
The councils said today (Tuesday 15 September 2020) that there was no logic in the airport persisting with its runway fantasy.
Cllr Gareth Roberts, Leader of Richmond Council, said:
“COVID-19 has changed everything. This is a unique period when we are all rethinking traditional assumptions about how we work, travel and grow our economies. As local councils we want the industry to get back on its feet. But this won’t work without a fundamental rethink about the place of aviation in our society – and indeed where future capacity is most needed.
Even Heathrow’s chief executive has admitted that a new runway would not be needed for years due to the pandemic. Yet still the airport and its shareholders press on with the process and the prize of a planning permission for a runway that will never be built.
The kind of growth that the third runway plan was predicated on was never sustainable. It is an insult to the people who have for years had their lives blighted by the threat of expansion to persist in keeping the threat alive.”
Cllr Ravi Govindia, Leader of Wandsworth Council, added:
“Give the challenges that the aviation industry faces today it beggars belief that one airport should think its own demand for extra capacity should still be on the table.
“At a time when the sector is benefiting from tax-payer funded support – and indeed seeking further help through cuts in airport passenger duty – the priority should be to rebuild the entire aviation economy and set it on a more sustainable footing.
“This should start with a legally binding commitment to achieving zero emissions. It should also mean a permanent end to night flights and the adoption of tougher measures to limit noise impacts. This should include rejecting the practice of ‘route concentration’ as a means of squeezing in more flights over densely populated areas. All this does is both increase noise and emissions.”
The Court of Appeal ruled in February 2020 that the Government had not taken into account the requirements of the Paris Agreement on Climate Change when drawing up its national policy statement (ANPS) giving support to Heathrow expansion. The Court said that the ANPS is legally ineffective unless and until it is reviewed by the Government. Ministers have said they will not be appealing the ruling.
A group of local councils – Hillingdon, Wandsworth, Richmond upon Thames, Hammersmith and Fulham, and Windsor and Maidenhead together with the Mayor of London and Greenpeace – had challenged the ANPS alongside environmental groups Plan B and Friends of the Earth.
Richmond Council urges Heathrow to end third runway ‘Fantasy’
15.09.20 (Teddington Nub News)
Richmond Council has called on Heathrow to abandon its bid for a third runway.
The council said Heathrow should instead be focused on working with the aviation industry to reduce pollution and noise for local communities.
The airport is due to challenge February’s Court of Appeal ruling against the expansion plan in October at the Supreme Court.
The council said today that there was no logic in the airport persisting with its runway ‘fantasy’.
Councillor Gareth Roberts, Leader of Richmond Council, said: “Covid has changed everything. This is a unique period when we are all rethinking traditional assumptions about how we work,travel and grow our economies.
“As local councils we want the industry to get back on its feet. But this won’t work without a fundamental rethink about the place of aviation in our society – and indeed where future capacity is most needed.
“Even Heathrow’s chief executive has admitted that a new runway would not be needed for years due to the pandemic.
“Yet still the airport and its shareholders press on with the process and the prize of a planning permission for a runway that will never be built.
“The kind of growth that the third runway plan was predicated on was never sustainable. It is an insult to the people who have for years had their lives blighted by the threat of expansion to persist in keeping the threat alive.”
The Court of Appeal ruled in February that the Government had not taken into account the requirements of the Paris Agreement on Climate Change when giving support to Heathrow expansion.
A group of local councils – Hillingdon, Wandsworth, Richmond upon Thames, Hammersmith and Fulham and Windsor and Maidenhead together with the Mayor of London and Greenpeace– had challenged the plans alongside environmental groups Plan B and Friends of the Earth.
The UK government is set to end tax-free sales at airports, ports and Eurostar stations from 1 January 2021. As the Brexit transition period comes to an end, the UK government cited “concerns over how the benefit is passed on to passengers and in some instances, the relief is not consistent with international tax principles.” The VAT retail export scheme, which currently enables EU visitors to claim refunds on goods purchased in the UK, will also be withdrawn from the same date. The airports are unhappy about this, as it will cut their income, and some jobs would be lost. The Treasury said: “Overseas visitors – including in the EU – will still be able to buy items VAT-free in store and have them sent direct to their overseas addresses, while the costly system of claiming VAT refunds on items they take home in their luggage will be ended.” It described the scheme as “a costly relief, which does not benefit the whole of Britain equally”, adding that the current use is mostly centred in London. Visitors arriving from EU and non-EU countries will be allowed 42 litres of beer, 18 litres of still wine and 9 litres of sparkling wine duty free from 1.1.2021 (much lower than currently). . Tweet
TAX-FREE AIRPORT SALES TO END IN JANUARY 2021
The Airport Operators Association said the move ‘needlessly harms an industry in peril’
By Joanna Whitehead @MsWhitehead100 The Independent
14.9.2020
The UK government is set to end tax-free sales at airports, ports and Eurostar stations from 1 January 2021, in what has been described as a fresh “hammer blow” to the ailing aviation industry.
From next year, overseas visitors will no longer be able to benefit from tax-free sales and VAT relief on goods purchased in the UK.
As the Brexit transition period comes to an end, the government justified the decision by citing “concerns over how the benefit is passed on to passengers and in some instances, the relief is not consistent with international tax principles.”
In addition, the VAT retail export scheme, which currently enables EU visitors to claim refunds on goods purchased in the UK, will also be withdrawn from the same date.
The Airport Operators Association (AOA) criticised the move, saying it “needlessly harms an industry in peril”.
AOA chief executive Karen Dee condemned the government for “a complete lack of awareness for the jobs and businesses on the line in the aviation sector”.
The Treasury announced: “As part of these changes, VAT refunds for overseas visitors in British shops will be removed. Overseas visitors will still be able to buy items VAT-free in store and have them sent direct to their overseas addresses, while the costly system of claiming VAT refunds on items they take home in their luggage will be ended.”
It described the scheme as “a costly relief, which does not benefit the whole of Britain equally”, adding that the current use is mostly centred in London.
Retailers will still be able to offer VAT-free shopping to overseas customers who purchase items and have them delivered overseas, including EU visitors.
Duty-free sales will also be extended to travellers to and from the EU, while personal duty-free allowances will “significantly increase”.
Visitors arriving from EU and non-EU countries will be allowed 42 litres of beer, 18 litres of still wine and 9 litres of sparkling wine duty free from next year. Allowances for tobacco and other goods will remain the same.
Travellers arriving in the UK from the EU will no longer be able to bring back unlimited amounts of alcohol, tobacco and other goods without declaring them and paying tax, however.
Ms Dee condemned the move. “Our industry can scarcely afford another hammer blow like this,” she said.
“By removing the airside concession, the government is needlessly harming the revenue of retailers and airports. Passengers will be dis-incentivised from making purchases as they travel.”
She warned: “Many foreign visitors will now choose to go elsewhere, attracted by the tax and excise regimes of our European competitors. This will harm not only UK airports, but the high street stores that hugely benefit from tourists.
“I strongly urge the government to reconsider.”
The UK government said the rules were part of a harmonisation process concerning EU and non-EU travellers and that the rules had “to be aligned following the transition period so EU and non-EU passengers are treated equally”.
Until the Irish border and customs dispute between the EU and the UK continues, Northern Ireland will continue with the existing tax and duty regime.
Perhaps even more than other airports like Gatwick and Luton, a large part of the economy around Heathrow has become over-dependent on the airport. Now the CEO of Heathrow, John Holland-Kaye has said boroughs like Hounslow risk becoming like “a mining town in the 1980s” with the collapse in air traffic putting tens of thousands of jobs at risk. Many more people work in businesses associated with Heathrow, than directly for the airport itself. In August, Heathrow had around 1.4 million passengers, which is less than 20% of its “normal” amount. People are not flying for leisure, due to the risk of Covid itself, or the need to quarantine. There are few business trips, as they are being replaced by Zoom etc. Many in the aviation sector do not think levels of flying will return to their 2019 levels for 2-3 years, or more – if ever. Heathrow had losses of £1.1bn in the first half of 2020. Recently Heathrow issued formal section 188 notices, allowing it to potentially fire and rehire some 4,700 employees, after months of negotiations with unions representing its directly employed ground staff failed to produce an agreement. Section 188 means the airport can bypass negotiations after a 45-day period has elapsed. There might overall be 25,000 Heathrow-related job losses. . Tweet
Heathrow area risks fate of 1980s mining towns, says airport boss
CEO condemns UK government’s Covid response, saying lack of airport testing risks tens of thousands of jobs
The boss of Heathrow airport has warned that its west London home of Hounslow risks becoming like “a mining town in the 1980s” with the collapse in air traffic putting tens of thousands of jobs at risk.
Heathrow’s chief executive, John Holland-Kaye, urged the government to approve its Covid-19 testing regime to enable more travel, as the airport reported 1.4 million passengers in August, less than one-fifth of its normal traffic for the peak summer month.
“It has really been killed by the quarantine … What we have seen is that when people can fly, they will,” he said. “Other countries – even Jersey – have introduced testing, very successfully. We don’t understand why the government doesn’t do similar things, not just to support aviation but all the businesses that depend on it.”
“Given the lack of passengers, we have to do something and that is the least worst option… We are such as big part of the local economy, if we have large-scale redundancies that would have a similar impact to what we saw with mining towns back in the 1980s, and we want to do everything we can to avoid that,” Holland-Kaye said.
An independent report by Oxford Economics for Hounslow council found the decrease in Heathrow traffic threatened up to 43,000 jobs in the borough, and warned of a £200m hit to the economy causing “extreme hardship for local families and communities”.
Holland-Kaye suggested British Airways could fail and that “no one was immune”, warning: “Alitalia went bust, and now if you want to get to Italy on a long-haul route you mainly have to fly via Germany. That could happen in the UK, and would destroy any hope of a global Britain you may have.”
He added: “We don’t need bailouts, we just need a sensible testing regime. If we don’t take steps to open with testing we will see UK airports and airlines going bust – and once we’ve lost that capacity we will never get it back.”
Heathrow has established a facility with Swissport in Terminal 2 that can test up to 15,000 passengers a day with standard Covid PCR tests, and it has also trialled three rapid tests. One based on microscopic computer analysis of saliva took less than 20 seconds to give a result and cost less than £10 per test, Holland-Kaye said.
“Only the government can decide that a test is good enough to allow people into the country, but this is a British company with potentially world-leading technology … if it could work we should be fast-tracking this,” he added.
Coronavirus pandemic has cost airport £1bn as passenger numbers fall over 80%
Heathrow has told long-serving frontline staff they must take a pay cut of 15-20% or face job losses, with the aviation sector’s hopes of a quick summer recovery from the pandemic dashed.
On Wednesday the airport issued formal section 188 notices, allowing it to potentially fire and rehire some 4,700 employees, after months of negotiations with unions representing its directly employed ground staff failed to produce an agreement.
Although Heathrow insisted it was not looking to cut jobs, the chief executive, John Holland-Kaye, had previously suggested that up to one in four of its jobs could go, and up to 25,000 across the airport, including those employed by other companies – not least British Airways.
Heathrow has already laid off one in three managers and imposed 20% pay cuts on office staff.
The section 188 notices allow Heathrow to bypass negotiations after a 45-day period has elapsed, and then offer employees new contracts. All will be told they are to be employed at a market rate – meaning the higher paid staff could face pay cuts of up to £10,000 if they choose to stay on.
Heathrow said it would soften the blow by offering lump sums to cover the initial losses, as well as enhanced voluntary redundancy to those who preferred to leave.
A Heathrow spokeswoman said: “Covid-19 has decimated the aviation industry, which has led to an unprecedented drop in passenger numbers at Heathrow, costing the airport over £1bn since the start of March. Provisional traffic figures for August show passenger numbers remain 82% down on last year and we must urgently adapt to this new reality.”
She said the offer still guaranteed a job at the airport for anyone who wished to stay.
The Unite union said it was “deeply concerned” and urged the airport to continue talks, adding that Heathrow was “an incredibly wealthy company … at the start of the pandemic it boasted of a £3.2bn war chest. These attacks on pay are not about survival but introducing measures to boost future profits.”
Heathrow “to slash staff pay by up to a third” becoming a “low cost employer”after collapse in air travel
August 16, 2020
Heathrow staff are being asked to accept pay cuts of up to 37% and will lose their final salary pension scheme. It will also end paid breaks and allowances, worsen redundancy terms, and refuse to honour a pay rise. The airport wants to slash pay and conditions for its 7,000 workers in a bid to become a low-cost employer, according to union chiefs – an allegation denied by management. Air travel demand is currently low, (88% lower in July 2020 than in July 2019) and not expected to rise much in the short term. The aviation sector cannot afford to pay so many staff, when it has little income. Heathrow said it has been forced to take action now to protect jobs. But the union Unite (which has always been an enthusiastic backer of Heathrow and its expansion plans) has told its members that the airport is acting out of “greed, not need” and said it was using the pandemic as a smokescreen to cut pay and conditions. It added that Heathrow paid £100m in dividends in April. Unite says John Holland-Kaye told unions that he wanted to make the business a “low-cost employer” during a meeting on July 30th. Many staff working around Heathrow are not directly employed by the airport, but associated businesses. There could be over 20,000 job losses in these companies.
The Climate Assembly was set up by the UK government in 2019. It consisted of 108 citizens, selected to be representative of the population and its views. They met over 6 weekends, with expert guidance and information, to discuss how the UK could get to net zero carbon by 2050. One of the many issues discussed was air travel. Overall there was wide support among the Assembly for limiting the growth of the sector, to some extent. The anticipated growth of about 65% (from 2018 to 2050) was seen as too much. Many believed there would be advances in technology that would allow for increased numbers of passengers, but keeping to 30 MtCO2 aviation emissions by 2050 (the CCC’s scenario). There was support for increasing the price of flying for frequent fliers, and those who flew long distances. Assembly members wanted to see the airline industryinvest in greenhouse gas removals, and in lower carbon technologies (which would make flying more expensive). Members wanted more engagement with the UK population, to understand the necessary changes. They wanted more parity between the cost of rail and flying, where flying is now often hugely cheaper. The committees behind the report have asked Prime Minister Boris Johnson to respond before the end of the year. . Tweet
Climate change: Tax frequent fliers, get rid of SUVs, government told
By Roger Harrabin (BBC environment analyst)
10th September 2020
A frequent flyer tax, phasing out polluting SUVs and restricting cars in city centres are among climate change solutions suggested by members of the public.
A citizens’ assembly of 108 people from all walks of life published its report after weeks of debate.
They proposed curbing road building and using the pandemic to cut emissions.
MPs said the report offered a “unique insight”, but activists Extinction Rebellion said it didn’t go far enough.
The report says the government must show leadership on climate change and insists climate policies must be fair to all – especially the poorest in society.
Its radical conclusions may offer political cover to ministers who’re typically nervous of a public backlash against policies that affect lifestyles.
What is the citizens’ assembly?
The group, or citizens’ assembly, was set up by six government select committees – groups of MPs who look at what the government is doing and scrutinise policy.
Members of the assembly were chosen to represent a spectrum of views from all over the UK and committed 60 hours of their time to studying and debating climate change.
They met over six weekends and were asked how to come up with ideas to help the UK achieve net zero emissions by 2050. Their conclusions have been published in a report that is more than 550 pages.
The members said it was “imperative that there is strong and clear leadership from government” to tackle climate change.
One member, Sue, from Bath, said: “Even with the country still reeling from coronavirus, it’s clear the majority of us feel prioritising net zero policy is not only important, but achievable.”
Hamish, a software engineer from rural Aberdeenshire, told BBC News the government needed “to develop a long-term strategy to help us”.
A key theme of the report is education. Ibrahim, a GP from Surrey, said: “The media has to take a role – schools as well. We perhaps need to look at the curriculum.
“You can’t go to someone and say ‘you need to switch to the hydrogen boiler because it’s low CO2’ but they have no idea [about it]. You’re more likely to get a buy-in from people when they know about the issues.”
Members said the government should start phasing out the sale of polluting new vehicles such as SUVs, and clamp down on adverts for highly-polluting goods.
Another central message is the need for policies to be fair. Amanda, from Kent, said: “Electric cars have to be more affordable to everybody – not just people who earn enough money.”
They also supported higher taxes on frequent fliers, and investment in clean aviation technology.
Tracey, a mother from Northern Ireland, said: “I would be a frequent flier myself – so I would say there needs to be something there to stop us from taking so many flights – to reduce our emissions.”
On the subject of what we eat and how we use the land, the assembly urged a voluntary cut of 20-40% in eating red meat.
“The government can’t legislate against eating red meat,” Amanda told us, “but with education, advertising and labelling I think we can change their attitudes towards eating red meat – as we did with smoking.”
They also said:
Businesses should make products using less energy and materials
People should repair goods and share more, instead of owning all their appliances
The UK should get more power from offshore and onshore wind, and solar power
New housing developments must have good access to facilities through walking and cycling
Most members were not very keen on nuclear – or on burning wood in power stations – and most weren’t confident in carbon capture and storage.
They think the government should be harnessing the Covid crisis to limit support for high-carbon industries.
What’s the reaction been?
The MPs behind the assembly said the report “provides a unique insight into the thinking of an informed public to the trade-offs and changes required to help deliver on the objective that parliament has agreed”. They said: “Their work merits action.”
Crispin Truman, from the countryside charity CPRE, said it shows “public appetite to end the UK’s contribution to the climate emergency has far outstripped government action.”
And Tom Burke, from the climate change think tank, e3g, added: “This is a striking tribute to the common sense of the British public. There is a clear lesson for politicians and editors across the political spectrum about the role our citizens are capable of playing in shaping public policy.”
However, radical green group Extinction Rebellion (XR) condemned the proposals as too timid to meet internationally-agreed proposals limiting the global temperature rise to 1.5C. They warned that the report could get buried in government bureaucracy.
What happens now?
The committees behind the report have asked Prime Minister Boris Johnson to respond before the end of the year.
This may be challenging as, according to a recent report by the Institute for Government, Covid and Brexit have forced climate change down the government’s priority list – a claim the government denies.
A government spokesperson said it would study the report.
The organisers of the assembly have requested that only first names of members are used in the media.
Air travel accounts for 22% of the UK’s total greenhouse gas emissions from transport, and 7% of the UK’s total greenhouse gas emissions overall. Emissions from flying have grown significantly in the last 30 years.10
Key recommendations
Assembly members identified 14 considerations that they would like government and Parliament to bear in mind when looking air travel and the path to net zero. A full list can be found in Chapter 4. Assembly members’ ten highest priority considerations were:
Speed up technological progress;
Influence the rest of the world;
Even out the costs of air travel compared to alternatives;
Frequent fliers and those that fly further should pay more;
Stay competitive and protect the economy;
Engage the population in making the necessary changes;
Take account of different travel needs (e.g. people with family far away);
Promote and incentivise UK holidays;
Scrap incentives to make people fly more (e.g. air miles, first class);
Ban polluting private jets and helicopters, moving to electric when possible.
What the future should look like
Assembly members would like to see a solution to air travel emissions that allows people to continue to fly. Assembly members felt that this would protect people’s freedom and happiness, as well as having benefits for business and the economy. Assembly members’ support for continued flying did, however, have limits. Assembly members resoundingly rejected a future in which air passenger numbers would rise by as much as 65% between 2018 and 2050, labelling it “counterproductive”. Instead, assembly members sought to find an acceptable balance between achieving the net zero target, impacts on lifestyles, reliance on new technologies, and investment in alternatives. Assembly members recommended a future in which:
Growth in air passenger numbers is limited to 25–50% between 2018 and 2050, depending on how quickly technology progresses. This is a lower rate of growth per year than was seen in recent times prior to Covid-19;
30m tonnes of CO2 is still emitted by the aviation sector in 2050 and requires removing from the atmosphere;
There is investment in alternatives to air travel.
How change should happen
80% of assembly members ‘strongly agreed’ or ‘agreed’ that taxes that increase as people fly more often and as they fly further should be part of how the UK gets to get zero (see Figure 1). Assembly members saw these taxes as fairer than alternative policy options. They also suggested a number of points around their implementation for policy-makers to bear in mind. Assembly members would like to see the airline industry invest in greenhouse gas removals. 75% of assembly members ‘strongly agreed’ or ‘agreed’ that this should be part of how the UK gets to net zero. There was also significant support for financial incentives from government to encourage a wide range of organisations to invest. Assembly members tended to feel that ‘the polluter should pay’, although some suggested a need to monitor, scrutinise and perhaps enforce airline industry investment to ensure it actually takes place. Assembly members strongly supported the need to invest in the development and use of new technologies for air travel. 87% of assembly members ‘strongly agreed’ or ‘agreed’ that this should be part of how the UK gets to net zero. These technologies could include electric aircraft and synthetic fuels.
Assembly members identified 14 considerations that they would like government and Parliament to bear in mind when looking at air travel and the path to net zero. These included speeding up progress on technology, influencing the rest of the world, and evening out the cost of air travel versus alternative forms of transport by making the latter cheaper and better.
Assembly members would like to see a solution to air travel emissions that allows people to continue to fly. Assembly members felt that this would protect people’s freedom and happiness, as well as having benefits for business and the economy. However their support for continued flying had limits. Assembly members resoundingly rejected a future in which air passenger numbers would rise by as much as 65% between 2018 and 2050, labelling it “counterproductive”. Instead, assembly members sought to find an acceptable balance between achieving the net zero target, impacts on lifestyles, reliance on new technologies, and investment in alternatives. Their preferences point to a future in which:
Air passenger numbers increase by25–50%between 2018 and 2050, depending on how quickly technology progresses. This is a lower rate of growth per year than was seen in recent times1 prior to Covid-19;
30m tonnes of CO2is still emitted by the aviation sector in 2050 and requires removing from the atmosphere;
There is investment in alternatives to air travel.
80% of assembly members ‘strongly agreed’ or ‘agreed’ that taxes that increase as people fly more often and as they fly further should be part of how the UK gets to net zero. Assembly members saw these taxes as fairer than alternative policy options.
Assembly members would like to see the airline industryinvest in greenhouse gas removals. 75% of assembly members ‘strongly agreed’ or ‘agreed’ that this should be part of how the UK gets to net zero. There was also significant support for financial incentives from government to encourage a wide range of organisations to invest. Assembly members’ tended to feel that ‘the polluter should pay’, although some suggested a need to monitor, scrutinise and perhaps enforce airline industry investment to ensure it actually takes place.
87% of assembly members strongly agreed that we need to invest in the development and use of new technologies for air travel. These technologies could include electric aircraft and synthetic fuels.
How we travel by air
Air travel accounts for 22% of the UK’s total greenhouse gas emissions from transport, and 7% of the UK’s total greenhouse gas emissions overall.2 Emissions from flying have grown significantly in the last 30 years.3
Air travel’s contribution to UK emissions comes from both:
Domestic travel – travel within the borders of the UK; and
International travel – travel that starts in the UK but ends in another country. 96% of the UK’s air travel emissions are from international flights.4
Excluded from these figures are flights from other countries to the UK (for example, return flights from holidays), or travel that UK residents take within other countries or from one foreign country to another. Climate Assembly UK followed the same criteria when deciding what was, and was not, in scope for its discussions.
Air travel also includes both passenger or ‘personal’ transport, and freight. Personal transport is what people use to travel for pleasure, like going on holiday or visiting family and friends. It also covers travel for work. Freight is transport used to move goods. Climate Assembly UK considered personal transport only. It did not look at freight.5 This followed guidance from Parliament that, if there was not time to consider both, its committees most wanted to hear assembly members’ views on personal transport.
……
and there are many pages about what the Assembly considered and elements of what it decided.
Heathrow has been left with a £500M bill from its thwarted 3rd runway expansion. The airport chose to spend a lot up-front, in its plans to get a new runway, even before waiting for the legal challenges and approval of its DCO (Development Consent Order). Heathrow hoped it could charge airlines using the airport for these costs. It was always a risk that the runway would not happen, and the money spent in promoting it and planning for it would be sunk. The Court of Appeal ruled against the Airports NPS in February, on grounds of the carbon emissions the 3rd runway would generate. The appeal by Heathrow will be heard on 7th and 8th October. Meanwhile the CAA has restricted the amount Heathrow can charge airlines – and now there has been a massive reduction in Heathrow air traffic, and income, due to Covid. The New Civil Engineer gives a breakdown of what Heathrow (unwisely) spent, in the expectation the runway would definitely go ahead. According to the CAA’s Economic regulation of Heathrow: policy update and consultation, the costs are broken down into £394M of planning (category B) and £110M of early construction (category C) costs. These include ground investigations, all sorts of advisors, and designers. . Tweet
Heathrow saddled with £500M bill from thwarted expansion
8 SEP, 2020 BY CATHERINE KENNEDY (New Civil Engineer)
Heathrow Airport Limited (HAL) has been left with a £500M bill from its thwarted third runway expansion.
The Court of Appeal blocked the £14bn expansion in February due to climate change concerns, while in May the Civil Aviation Authority (CAA) said the plans were “unlikely” to re-start in the “short term”.
However, it has now emerged that HAL had already spent £504M on planning and early construction works at the time the project was paused.
According to the CAA’s Economic regulation of Heathrow: policy update and consultation, the costs are broken down into £394M of planning (category B) and £110M of early construction (category C) costs.
While the costs cover the expansion programme up until February this year, the CAA’s latest report only provides a detailed cost breakdown for 2018.
The CAA document reveals that £52.6M was paid to the integrated design team – consisting of Amec Foster Wheeler, Arup, Atkins, Grimshaw, Mott MacDonald, Jacobs and Quod – in 2018 alone.
A further £10.7M was spent in 2018 on ground investigations, and £11.4M went towards securing planning consents.
Category B costs during 2018
Work and Cost £M
Integrated Design Team 52.6
Colleague costs 18.9
Consents 11.4
Ground investigation 10.7
Programme leadership 7.6
Future Heathrow 5.8
Regulation and strategy 2.9
IT 2.8
Property 2.3
Community and stakeholder 1
.
Category B capital expenditure 116
Category B operating expenditure 2.2
Total Category B costs 118.2
A CAA-commissioned assessment of HAL’s planning costs during 2018 (£118.2M) found that opportunities to manage the programme in a more efficient way – identified in the previous reviews of 2016 and 2017 – “had not been fully dealt with by HAL”.
Issues highlighted in the assessment – which was undertaken by PwC – include the lack of a “clear and single integrated baseline plan through to obtaining planning consent that aligned requirements and scope with the associated time, cost and risk”.
The CAA update explains: “HAL had provided evidence of some examples of integrating scope, schedule and/or cost, but nothing that provided a single baseline plan through to obtaining planning consent that aligned all components of the plan.
“While HAL did have multiple documents that relate to scope, time, cost and risk, the alignment between these documents remained unclear and discrepancies were identified. The documents did not establish a robust baseline position from which to measure and manage performance and control delivery.”
The PwC assessment also identified that several core control processes were not in place. These include the lack of change control – a change process to manage the baseline scope, cost, schedule and risk – and a similar lack of timesheet systems to indicate efficiency of activity delivery.
The CAA conceded that “it is challenging to assess the efficiency of costs associated with planning activity, which by their nature, are difficult to benchmark” and noted that despite the “remaining weaknesses”, HAL has “improved on the processes it has in place since the start of the capacity expansion programme in late 2016”. HAL advised that a timesheet system was being considered for expansion during 2019.
Work on assessing the efficiency of costs incurred during 2019 and up to the end of February 2020 is due to begin. To offset the £500M bill, HAL plans to charge airlines for the charges, in line with recommendations in a regulatory consultation.
Meanwhile, the CAA understands from HAL that ‘wind down’ costs – incurred after the Court of Appeal judgement – are likely to continue until Q3 2020 and are forecast to be in the region of £46M.
This spending includes residual staff costs, costs associated with fulfilling supplier contractual commitments, and HAL’s preexisting agreements relating to property acquisition.
The CAA says it will finalise the approach to the recovery of these costs “once the full nature and extent of spending has been confirmed by HAL”.
BA hits out over £500m bill for Heathrow failed 3rd runway plans that it wants to pass on to airlines
September 7, 2020
A row has erupted between Heathrow and British Airways, its largest airline, over the plans to get airlines to pay the £500m bill relating to the airport’s third runway expenses so far. A regulatory consultation by the CAA recommends allowing Heathrow to charge carriers for expansion costs incurred until February this year. These are called “Category B” (£500m) and early “Category C” costs, associated with getting planning consent. CAA regulations allow Heathrow to increase charges in line with costs incurred. Willie Walsh, the outgoing boss of IAG, that owns BA, has repeatedly clashed with Heathrow over the framework, which he has said encourages the airport to “spend recklessly.” IAG has never wanted to pay for Heathrow’s costs in developing the runway (partly as the extra capacity at Heathrow would increase competition with BA by other airlines). CAA director Richard Stephenson said it was reviewing responses to the consultation (held in summer 2019) and had yet to make a decision. Heathrow has pressed ahead, spending a great deal on its runway plans, even before legal obstacles had been cleared. The restriction of early spending by the CAA meant a delay in the runway timetable of 2-3 years.
A row has erupted between Heathrow and British Airways, its largest airline, over the plans to get airlines to pay the £500m bill relating to the airport’s third runway expenses so far. A regulatory consultation by the CAA recommends allowing Heathrow to charge carriers for expansion costs incurred until February this year. These are called “Category B” (£500m) and early “Category C” costs, associated with getting planning consent. CAA regulations allow Heathrow to increase charges in line with costs incurred. Willie Walsh, the outgoing boss of IAG, that owns BA, has repeatedly clashed with Heathrow over the framework, which he has said encourages the airport to “spend recklessly.” IAG has never wanted to pay for Heathrow’s costs in developing the runway (partly as the extra capacity at Heathrow would increase competition with BA by other airlines). CAA director Richard Stephenson said it was reviewing responses to the consultation (held in summer 2019) and had yet to make a decision. Heathrow has pressed ahead, spending a great deal on its runway plans, even before legal obstacles had been cleared. The restriction of early spending by the CAA meant a delay in the runway timetable of 2-3 years.
A row has erupted between Heathrow airport and British Airways over the plans to hand airlines a £500m bill relating to the airport’s controversial third runway.
A regulatory consultation recommends allowing Heathrow to charge carriers for expansion costs incurred until February this year.
Regulations allow Heathrow, which is owned by a consortium led by Spain’s Ferrovial and the Qatar state, to increase charges in line with costs incurred.
Willie Walsh, the outgoing boss of IAG, the FTSE 100 group that owns BA, has repeatedly clashed with Heathrow over the framework, which he has said encourages the airport to “spend recklessly”.
A spokesman for IAG said: “In any other business, a wealthy, privately owned company like Heathrow Ltd would have to meet its own sunk costs.
“But Heathrow is a monopoly that will simply pass the bill to the airlines, further damaging UK aviation as it struggles to survive the Covid crisis. The regulator must step in.”
A spokesman for Heathrow said: “The CAA established an approach to expansion-related costs some time ago – with that approach approved and agreed by airlines, including IAG. We believe this approach should remain.”
CAA director Richard Stephenson said it was reviewing responses to the consultation and had yet to make a decision.
The row came as ministers faced questions over claims that taxpayers would not pay for Heathrow’s expansion. Analysis by The Sunday Telegraph of Department for Transport filings reveals £2.4m has been spent on investment bankers, lawyers and consultants over the last year in relation to Heathrow’s third runway.
A spokesman for the DfT said “The Government has always been clear that any expansion at Heathrow must be privately funded. However we regularly draw on expertise from inside and outside Government, to ensure ministers can benefit from comprehensive advice on high-profile schemes. Any outside advice is procured subject to a rigorous business case to ensure value for money for the taxpayer.”
The costs to February 2020 are £394M of planning (category B) and £110M of early construction (category C).
See earlier:
Heathrow application to Planning Inspectorate for DCO now delayed from summer 2020 to “towards the end of the year”
January 9, 2020
Heathrow had originally intended to start its DCO (Development Consent Order) application by the middle of 2020. Now that the CAA has restricted the amount Heathrow can spend on early development costs, the timetable has slipped. Instead of hoping a 3rd runway might be read for use by 2026, that date is now more like 2029. Heathrow says it plans to hold another consultation from April to June, and then feed responses from that into its DCO, which might be submitted to the Planning Inspectorate towards the end of 2020. That is perhaps a 6 month delay. Some time after the middle of January, the Appeal Court ruling on the legal challenges, against the government’s approval of the Airports NPS, are expected. The DfT was intending to publish its Aviation Strategy in the first half of 2019. This is now delayed due to changes on carbon emissions, with the UK changing from an 80% cut on 1990 levels by 2050, to a 100% cut (ie. “net zero”) and advice on aviation carbon from the Committee on Climate Change.
Aviation regulator, the CAA, losing patience with Heathrow expansion – approve only £1.6bn before DCO granted
December 20, 2019
The CAA has rejected Heathrow’s desire to spend nearly £3bn on its new runway despite the plans not having received final approval, in a sign that it is losing confidence in Heathrow’s ability to fund the project on budget. The CAA has a new consultation on this. The CAA approved just under half Heathrow’s request; £1.6bn (at 2018 prices) before the DCO is granted, saying that “passengers cannot be expected to bear the risk” of Heathrow “spending too much in the early phase of development, should planning permission not be granted”. This is yet another hurdle for Heathrow. Heathrow now says that instead of opening its new runway in 2026, that has now been put back to 2028/ 2029. That delay makes a large difference to the supposed economic benefit to the UK, which was at best marginal even with a 2026 opening date. Both Heathrow and the Government claim that the project will be privately financed yet there are concerns about Heathrow’s ability to afford expansion as costs continue to rise and the markets begin to question the viability of the investment. Standard and Poor said there is significant concern about the design, funding and construction costs of a 3rd runway which would make it unviable.
Heathrow ordered by CAA to rein in 3rd runway costs – to ensure it is built economically and efficiently
December 1, 2019
The CAA has inserted a significant new clause into Heathrow’s licence, starting in January 2020, amid concerns that costs on the vast 3rd runway project will spiral out of control. Heathrow will be penalised if it fails to build its £14bn expansion scheme efficiently — the first time such a condition has been imposed on the airport. Airlines, especially British Airways, are nervous that Heathrow will try to get them to pay up-front for construction costs, which would put up the price of air tickets, deterring passengers. The CAA polices the fees the airport charges passengers. It said the new licence clause was needed to “set clear expectations for Heathrow to conduct its business economically and efficiently”. Heathrow says this is disproportionate and could put off investors. IAG boss Willie Walsh has repeatedly complained that Heathrow’s runway scheme is a “gold-plated”, and that there is little incentive for Heathrow to keep costs down. Under a complex incentive system, the more Heathrow spends, the more its owners can earn. Heathrow has already spent £3.3 billion on its plans, which have not even yet passed through legal challenges, let alone the DCO process.
How Heathrow is happy to pay way over the odds, to increase its RAB, allowing more revenue
March 28, 2018
The City Editor of the Financial Times, Jonathan Ford, has written about how the reasons for Heathrow’s anticipated costs for its possible 3rd runway. The cost of £17 billion, or now £15 billion are exceptional. But Jonathan explains how Heathrow’s investors seem happy to spend so much. It is because of the curious incentives that operate in the topsy-turvy world of utility financing. As with most ventures that have monopolistic aspects, Heathrow is not subject to ordinary restraints on capital expenditure. The principal check is the willingness of the airport’s regulator, the Civil Aviation Authority, to sign off on the mechanism by which these costs can be recovered from captive airline customers through passenger charges. Heathrow often pays far above the going rate for building, new technology etc, because this adds to the airport’s regulated asset base (RAB) on which it gets an allowed return, and thus permits it predictably to expand its own revenues. Since taking over BAA in 2006, Ferrovial has been extremely active, tripling Heathrow’s RAB to £15bn. It is a system that has allowed the airport’s owners to finance these expansions with vanishingly little equity capital. Heathrow is encouraged to fund everything with debt by a regulatory system that allows it to keep the gains from financial engineering. Heathrow’s owners hope to shrug off the risks of completion, but transfer them on to customers.
Costs which are incurred by HAL during the Airports Commission process, or before Heathrow was named as the preferred location for new runway capacity on 25 October 2016. [CAP 1513, paragraph 3.20] On an exceptional basis, some Category A costs may be recategorised as Category B costs if HAL can provide a strong and clear case that the information submitted as part of the DCO planning process is not materially different from the information submitted to the Airports Commission or the Government prior to 25 October 2016. [CAP 1513, paragraph 3.21]
Category B costs (the only ones the CAA says Heathrow should be able to recover) are:
Costs which are: • in general1 , incurred by HAL after the Government policy announcement on its preferred location for new capacity (25 October 2016); and • associated solely with seeking planning permission for the delivery of new runway capacity at Heathrow. [CAP 1513, paragraph 3.10]
Category C costs are:
Costs incurred by HAL in connection with implementation and construction of new capacity, up to entry-intooperation. The majority of these costs will typically be incurred after planning permission is granted. [CAP 1651, appendix A]
Early Category C costs are:
Those costs that HAL will incur prior to the grant of a DCO permitting capacity expansion. These costs will be incurred in addition to the Category B planning costs. They include the costs of relocating certain large commercial and other facilities, community costs (compensation costs for other commercial activities, agricultural activities and residential property) and other enabling costs for construction. [Chapter 2, paragraph 2.1]].
An important requirement for costs to be considered as early Category C expenditure is that the purpose of this expenditure must be to promote the efficient and timely delivery of the overall programme for capacity expansion at Heathrow airport.
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Heathrow plans to increase 3rd runway costs – to £2.9 bn – before approval, hoping it will be too costly to scrap its plans
July 28, 2019
Heathrow plans to triple the amount it spends on its third runway proposal, to £2.9bn – well before getting final approval. This either means air passengers using Heathrow would be charged more (something the industry and the government do not want), or else the taxpayer will be charged. Even if the runway never goes ahead. The CAA has a consultation about the costs and how Heathrow has been speeding up the process, spending ever more money. (The legal challenges are now going to appeal in October, but Heathrow is pressing ahead with its DCO consultations). Especially on carbon emissions, air pollution and noise grounds, it is entirely possible the runway will be blocked and the DCO will not be granted. The CAA says it has asked Heathrow “to consider different options for this spending and the implications of this spending for the overall programme timetable and the interests of consumers.” [Not to mention the taxpayer, who may end up paying …] Heathrow is increasing the amount of its “Category B” costs and “early Category C” costs. They want to increase the amount spent already to be so large, that it effectively cannot be cancelled. Detailed costs still have to be outlined, but Heathrow is expected to submit its initial business plan to the CAA for review towards the end of this year.
Willie Walsh reiterates that he will fight Heathrow runway, due to cost; content with 3 hub system for IAG instead
May 12, 2016
Willie Walsh has reiterated his determination not to pay the exorbitant costs of a new Heathrow runway (and that’s without the costs that the taxpayer would have to pick up for surface access improvements – which could be £20 billion). He said the current proposal to build a 3rd Heathrow runway is “indefensible” from a cost point of view and he will fight it. BA holds over 50% of Heathrow’s slots. Walsh said he was worried about the current Heathrow proposal because there was now “desperation by the airport to get a third runway and they are willing to do anything to get it.” He commented: “So the airport is incentivised to spend money while I am incentivised to save money.” Because the coalition government blocked a 3rd runway in 2010, in January 2011 BA and Iberia were merged to form IAG. Then IAG bought UK airline BMI, to get hold of its Heathrow slots, gaining an extra 42 pairs. That ensured IAG had enough Heathrow slots to secure its ability to compete from its hub base. Since then Walsh has made his plans to use a 3 hub strategy – with Madrid and Dublin as its two others, not depending so much on Heathrow. IAG also owns Iberia, Vueling and Aer Lingus. Dublin will be adding a new runway – probably by 2020.
