Reading to Heathrow train line delayed by two years – at least

The Great Western rail link between Reading to Heathrow will be delayed by up to two years. A DCO application to construct the new line was expected this year but has now been delayed until winter 2021/2022 – at the earliest.  A spokesman for Network Rail said the Reading to Heathrow line has been delayed due to the court of appeal’s ruling against plans to expand Heathrow and the impact of Covid-19 on the aviation industry. The Supreme Court will hear Heathrow’s appeal against the Appeal Court decision, on 7th and 8th October. If Heathrow was to win the case (a massive IF) then the rail link – to speed passengers getting to the airport – a new tunnel would be created connecting Reading to Heathrow in around 20-30 minutes, with passengers from Reading currently having to use the 50-minute Rail Air bus or go into London to get to the airport.  Reading Station and Heathrow Airport both already have terminus platforms built for the line in anticipation of the scheme. The Department for Transport (DfT) is looking to fund the project with help from Heathrow Airport on the basis of expansion, apparently. (Though Heathrow is struggling financially to survive now …)
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Reading to Heathrow train line delayed by up to two years

By Tevye Markson @TevyeMarksonLDR
Local Democracy Reporter (Reading Chronicle)

26.9.2020

A railway line linking Reading to Heathrow will be delayed by up to two years.

The Great Western rail link will hook up Reading to Heathrow via Langley Train Station for people to travel directly to the airport.

An application to construct the new line was expected to be made this year but has now been delayed until winter 2021/2022.

A spokesman for Network Rail said the Reading to Heathrow line has been delayed due to the court of appeal’s ruling against plans to expand Heathrow and the impact of Covid-19 on the aviation industry.

Councillor Tony Page, lead member for Strategic Environment, Planning and Transport at Reading Borough Council (RBC), said the project “should have been delivered years ago”.

While Reading East MP Matt Rodda said he is “concerned that the government seems to be watering down its commitment to the western rail link”.

READ MORE: MP Tan Dhesi ‘frustrated’ by constant Heathrow rail link delay

When the project is able to go ahead, a new tunnel will be created connecting Reading to Heathrow in around 20-30 minutes, with passengers from Reading currently having to use the 50-minute Rail Air bus or go into London to get to the airport.

Reading Station and Heathrow Airport both already have terminus platforms built for the line in anticipation of the scheme.

The Department for Transport (DfT) is looking to fund the project with help from Heathrow Airport on the basis of expansion, according to Cllr Page.

He said the case for the rail link was justified by the Davies Commission based on the existing airport and should not be part of the expansion debate but governments over the last ten years have “chosen to ignore that”.

Comparatively, he said the case for Heathrow expansion “is lifeless now” as “it will be years before we see air travel up to pre-pandemic levels”.

A spokesman for Network Rail said: “The Western Rail Link to Heathrow is a Nationally Significant Infrastructure Project and planning permission can only be granted through a Development Consent Order (DCO).

“The DfT has been clear that whilst it fully supports the development of a Western Rail Link to Heathrow, this is subject to a satisfactory business case and the agreement of acceptable terms with the Heathrow aviation industry.

“In light of this, the DCO submission for Western Rail Link to Heathrow is now no longer expected to be made in 2020 but is anticipated to be submitted during Winter 2021/2022.

“During this time, the scheme’s environmental analysis will be updated to ensure it complies with new environmental regulations.”

Cllr Page said the delay is “probably the treasury putting on pressure to delay as many schemes as possible”.

He added: “Given the fact the rail industry is effectively renationalised, the treasury is in a strong position to say no to other projects.

“We will continue to lobby strongly for it and it remains one of Transport for the South East’s top projects.”

Mr Rodda added: “This is a really important link that would help Reading and the whole of the south of England.

“It is important local businesses and people travelling to the airport.

“I will be raising this with ministers and asking them to continue supporting the link.”

https://www.readingchronicle.co.uk/news/18747921.reading-heathrow-train-line-delayed-two-years/

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See much earlier:

NetworkRail plans for improved rail link to Heathrow T5 from the west, by tunnel, go on show

NetworkRail has put plans for consultation, for a new rail tunnel, connecting the main line into London from the west with Heathrow Terminal 5.  The proposed link, subject to planning permission, includes a 3.1 mile (5km) tunnel from the Great Western Main Line at Langley to T5.  This could cut journey times between Reading and Heathrow and reduce road congestion, if passengers travelled by train instead of by car.  A series of public consultation events is to be held in Iver and Slough.  The rail plan was given the go-ahead by the government in 2012. There would need to be a new junction created between Langley and Iver stations. There are claims that the rail link would mean a quarter of people in the UK “within one interchange”  of Heathrow. The tunnel only travels under 2 houses so is not expected to cause too much disruption locally. The tunnel would go ahead regardless of whether there is a new runway, or not.  It is expected the tunnelling would take a year.  It has the potential to make journeys from the west faster and easier.  The timetable is for informal consultation now;  formal public  consultation in summer 2015; submission of application in early 2016; work starts spring / summer 2017; work completed and trains running by the end of 2021. 

https://www.airportwatch.org.uk/2015/02/networkrail-plans-for-improved-rail-link-to-heathrow-t5-from-the-west-by-tunnel-go-on-show/

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CAA review finds Heathrow ‘wasted’ money and was “inefficient” as costs of 2 tunnel refurb projects costs spiral

The CAA’s economic performance review concludes that Heathrow has “wasted” money on two ongoing tunnel refurbishment schemes and acted inefficiently.  The cost overrun of both schemes combined is estimated at £212.4M, although the CAA suggests that those costs could be inflated further by the time work is completed.  Costs on the cargo tunnel job between Terminal 4 and the Central Terminal Area have soared by £152M, from its approved £44.9M budget to the current final cost of £197M, the report reveals.  The cost of upgrading the main vehicular tunnel to Terminals 1, 2 & 3 has risen by £60.3M from an approved budget of £86M to £146.3M. On the cargo tunnel, the CAA states that “there is clear evidence that the actions of HAL may have directly contributed to wasted spending or lost benefits”. The delays have lead to a loss of benefits to consumers. Heathrow could have been more efficient in managing its work contractors. The CAA will now assess whether to remove costs associated with the tunnel refurbishments from HAL’s Regulated Asset Base (RAB) – which effectively means HAL would have to pay for cost overruns, rather than charging airlines.
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Heathrow ‘wasted’ money as tunnel refurb costs spiral

24 SEP, 2020

BY ROB HORGAN (New Civil Engineer)

Heathrow Airport Ltd (HAL) has “wasted” money on two ongoing tunnel refurbishment schemes, the aviation regulator – the CAA – has ruled.

A Civil Aviation Authority (CAA) economic performance review concludes that HAL acted “inefficiently” on refurbishments of a cargo tunnel and road tunnel servicing its terminals.

The cost overrun of both schemes combined is estimated at £212.4M, although the CAA suggests that those costs could be inflated further by the time work is completed.

Conclusions made in the CAA’s September 2020, Economic regulation of Heathrow paper  draw on independent analysis by Arcadis and Institute for Fiscal Studies.

The paper can be seen at:

CAA  Economic regulation of Heathrow: working paper on the efficiency of HAL’s capital expenditure during Q6 CAP 1964

Costs on the cargo tunnel job between Terminal 4 and the Central Terminal Area have soared by £152M, from its approved £44.9M budget to the current final cost of £197M, the report reveals.

Meanwhile, the cost of upgrading the main vehicular tunnel to Terminals 1, 2 & 3 has risen by £60.3M from an approved budget of £86M to £146.3M.

On the cargo tunnel, the CAA states that “there is clear evidence that the actions of HAL may have directly contributed to wasted spending or lost benefits”.

It adds: “The Cargo Tunnel project faced significant cost overruns of around 400% against the original budget and is now forecast to be completed during H7 [the next funding period starting in 2022].

“We consider that this has led to a loss of benefits to consumers because of late delivery […] We also consider that if the risk of cost increases had been better assessed at the beginning of the project, more efficient contractual terms (in terms of risk allocation) may have been obtained by HAL through its procurement process.”

Design work for the project has been undertaken by WSP, with Mace providing contractor input and Brydon Wood onboard to provide offsite and DFMA expertise.

Earlier this month, HAL infrastructure & programme management office director Darren Colderwood told NCE how procurement for the scheme has moved towards the Project 13 model.  https://www.newcivilengineer.com/innovative-thinking/project-13-principles-help-heathrow-airport-save-time-and-cost-17-09-2020/

On the main vehicular tunnel upgrade, being carried out by BAM Nuttall in conjunction with M&E specialist VVB Engineering, the CAA report states that “Arcadis concluded that the project had been delivered efficiently to date, and HAL had, by and large, acted reasonably in trying to mitigate the contractor’s poor performance”.

It adds: “Arcadis found several examples of poor performance by HAL’s contractor on this project, including continuing discovery of defects within works already completed.”

However, the CAA concludes that HAL is ultimately responsible for its contractors’ performance.

“HAL is responsible for any inefficient management or delivery of projects by its contractors that increases cost or results in loss of benefit,” it states.

“So, this poor performance leading to delays and cost increases appears to indicate inefficiency.”

The CAA will now assess whether to remove costs associated with the tunnel refurbishments from HAL’s Regulated Asset Base (RAB) – which effectively means HAL would have to pay for cost overruns, rather than charging airlines.

The decision will be taken following a further consultation round and once work is completed on both projects.

HAL has repeatedly been accused of spending inefficiently by rival bidders to expand the airport. Last week Heathrow West chief executive Carlton Brown slammed HAL’s £500M sunk expansion costs as “shocking”.    https://www.newcivilengineer.com/latest/heathrow-expansion-rivals-sunk-costs-are-a-tenth-of-hals-shocking-500m-bill-15-09-2020/

Meanwhile, Heathrow Hub founder Jock Lowe told NCE that his proposal to extend the runway is the only “oven ready” expansion proposal left for Heathrow.   https://www.newcivilengineer.com/latest/heathrow-expansion-rival-claims-extending-runway-is-only-oven-ready-proposal-left-23-09-2020/

https://www.newcivilengineer.com/latest/heathrow-wasted-money-as-tunnel-refurb-costs-spiral-24-09-2020/

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The CAA paper says:

18. We will use what we learn in this review in setting our future policy for the
incentives and other arrangements relating to capex by HAL, including the capex
governance framework for H7. In particular, it will be important to take account of
the experience of this review in designing a stronger, more consistent and
targeted incentive regime, consistent with the approach set out in our August
2020 working paper.

19. We currently envisage that there will be at least one additional round of
engagement with stakeholders needed to quantify and present any potential
disallowances due to inefficiency. We will also consider if there is a case for
carrying out further reviews of the efficiency of HAL’s capex project for projects
delivered in the period 2019-2021. For example, if the IFS (or other stakeholders)
identify potential inefficiencies with a project (or projects) delivered during this
period.

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See earlier – 2018:

How Heathrow is happy to pay way over the odds, to increase its RAB, allowing more revenue

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. 

https://www.airportwatch.org.uk/2018/03/how-heathrow-is-happy-to-pay-way-over-the-odds-to-increase-its-rab-allowing-more-revenue/

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Sunday Times commentary on Heathrow: the cash machine with an airport attached

The Sunday Times reports that under a complex (perverse) incentive system, Heathrow is encouraged to spend as much as it can on developing the site. Heathrow’s investors earn returns based on the size of its “regulatory asset base” (RAB), under a formula set by the CAA.  So the more the airport spends, the more its owners can earn. It gives an example of £74,000 to cut down 3 trees, which is at least 20 times the normal price. These costs of developing the airport are recouped through passenger charges, and also set off against UK tax. The Sunday Times questions the efficiency, governance and transparency of the management of Heathrow.  It says the airport is demanding an insurance policy against the risk that the project goes wrong, and wants the CAA to ensure it will be compensated by airlines and passengers if there are unanticipated difficulties (eg. construction delays, or lower than anticipated passenger numbers or revenue). Scrutiny of Heathrow’s spending has been inadequate, there is no audit of the RAB, to show how the figure of £15.8bn for the expansion project is calculated, and Heathrow has not provided a detailed cost breakdown for the runway plans.

https://www.airportwatch.org.uk/2018/03/sunday-times-commentary-on-heathrow-the-cash-machine-with-an-airport-attached/

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Dodgy economics behind plans to expand our airports – they won’t tackle unemployment, or bring more money to the UK

A useful article from the New Economics Foundation looks at the reality of claims about the economic benefits of expanding airports. Traditionally airports have said they are vital for business travel; the reality is that a small proportion of air passengers are on any sort of business trip, and that is especially the case at regional airports. Most air passengers are British people flying on leisure trips abroad (to spend their money there).  Regional airports claim that they merely take passengers who would otherwise have flown from the larger airports, such as Heathrow and Gatwick. The reality is more people take cheap leisure flights from a convenient local airport.  There is always a lot of hype about the number of jobs that airport expansion will create, but in fact the sector has been automating as much as it can, and the number of jobs  – the “job intensity” – is lower than it was in 2007, while the number of passengers has risen significantly. Airports have also reduced squeezed the working conditions of some airport workers, to gain “efficiencies.” NEF says: “Despite what airport executives say, expanding our airports won’t tackle unemployment or bring more money to the UK.”
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THE DODGY ECONOMICS BEHIND EXPANDING OUR AIRPORTS

Despite what airport executives say, expanding our airports won’t tackle unemployment or bring more money to the UK.

BY ALEX CHAPMAN (New Economics Foundation – NEF)

15 SEPTEMBER 2020

Given the widely publicised collapse in international air travel, you’d be forgiven for assuming that expanding airports would be the last thing on aviation executives’ minds. Yet planning applications are currently under consideration for Leeds Bradford Airport and Southampton AirportBristol Airport just announced they are appealing North Somerset Council’s rejection of their plans; and Heathrow Airport refuse to accept their substandard mega-expansion is dead in the water.

The climate case against all of these projects is obvious. Regional airports try to claim that their expansions won’t create new flights – rather, they’ll simply steal flights from other airports around the country. But it only takes one look at the data to debunk this myth. More airport capacity leads to higher passenger numbers – and higher emissions. The last financial crisis slowed passenger growth, but only temporarily, and the sector is banking on a similar recovery from Covid-19.

At the national level, the economic case for increasing airport capacity has long been flimsy – and in the midst of a global pandemic and crippling recession, it is even more so. Politicians extolling the virtues of air travel will often refer to the benefits for business, but in reality the proportion of flights taken for business trips has been declining consistently for almost two decades. In 2019, only 15% of UK departures were for international business purposes, and only 4% for domestic business. Around 75% of departures were for international leisure trips. Of this figure, the majority (62%) are UK residents, meaning that far more UK residents fly out for leisure than foreign residents fly in.

The picture at the non-London airports looking to expand is even more extreme. Take Leeds Bradford: in 2017 only 7% of departing flights were for business purposes. The vast majority (85%) were international leisure trips, of which only 22% were taken by foreign residents. The rest were UK residents on their way out. It’s a similar story at all of the regional airports proposed for expansion.

Now, let’s consider the impacts of the global pandemic. Covid-19 has forced businesses into a mass adoption of remote working and online conference calls, and there has been plenty of polling which suggests that business and employee behaviours have changed for good. Business air travel, and its future role at airports like Bristol, Leeds Bradford, and Southampton, only looks set to decrease.

This means that business travel does not and will not drive the economics of airport expansion – instead, we must consider the impacts on international tourism. UK travellers flying abroad and international travellers flying into the UK spend about the same amount – around £700 per person. But as more UK residents fly out than international tourists fly in, the UK operates a significant travel spending deficit. Indeed, about £30bn moves out of the economy every year due to international travel. And the problem is getting worse: after inflation, this deficit doubled between 2012 and 2019, driven almost exclusively by increasing numbers of passengers flying out of the UK. At the same time, spending on domestic tourism has flat-lined since at least 2006, despite significant growth in both the population and economy.

What regional airport expansion does do is provide competitive advantage to the international tourism market. Flying becomes cheaper and easier at a time when the domestic tourism, hospitality, and leisure industries are crippled by the impact of Covid-19. Where do we want people spending their money? Opening a new airport terminal that offers cheap flights out of the country just as we attempt to rebuild our economy is the worst possible timing.

The last defence of the ambitious airport executive is that new airport capacity creates new jobs. But it’s not that simple. When we looked at the expansion of Southampton airport, we found that the economic value of these jobs (worth around £50m) is actually wiped out by the cost of the associated carbon emissions (worth around £28m-£85m) – that’s if we assume these jobs will ever materialise.

The issue with the promise of a plethora of airport jobs is the ongoing efficiency drive in the industry, driven by processes like automation. The ​job intensity’ of aviation (ie, the number of jobs per passenger) has been falling consistently for more than a decade. As shown in the figure below, and discussed in our recent report on crisis support to aviation, sector jobs have never recovered to their peak in 2007, despite huge growth in passenger numbers. We already have plenty of evidence that this trend will continue, as airlines exploit this economic crisis as an opportunity to squeeze working conditions and pursue further ‘efficiencies’.

Even without the dangers of increasing carbon emissions, the economics of airport expansion don’t stack up. As we look down the barrel of the climate crisis, a global pandemic, and a collapsing UK hospitality sector, it’s possibly the worst investment we could make.

Faced with an unprecedented economic recession and high unemployment, we do need economic stimulus and job creation. Infrastructure investment should — and likely will – be part of the next government budget. But instead of investing in industries like aviation, with low job-creation potential and high carbon emissions, we should be investing in green infrastructure and green jobs. At NEF we’ve found, for instance, that there is huge job creation and fiscal stimulus potential if we invest in upgrading and decarbonising homes.

Regardless of the size of our airports and the speed at which the sector decarbonises, job numbers in aviation are likely to fall. Rather than expanding airport capacity we should be seizing the opportunity presented by the government’s furlough scheme and supporting aviation workers to access new green jobs – upskilling and retraining under-used employees for careers in low-carbon industries.

https://neweconomics.org/2020/09/the-dodgy-economics-behind-expanding-our-airports

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See earlier:

 

UK had a tourism deficit of £33.9 billion in 2019, with 88% of that (ie. about £30.04 billion) due to air travel

The current clampdown on international air travel has helped the UK Balance of Payments, by reducing the country’s trade deficit by almost £3 billion per month.  This is from the “tourism deficit”, which is the amount by which the amount spent by British people travelling and spending abroad, exceeds the amount spent by visitors to the UK. Figures released on 22nd May by the government’s  Office of National Statistics (ONS) show that the UK posted a record trade deficit of £33.9 billion on international tourism in 2019.  This is more than £2 billion above the 2018 figure which was itself a record tourism trade deficit.  The ONS data shows 88.2% of the tourism deficit was due to air travel.  UK residents made 93.1 million visits abroad in 2019, spending a total of £62.3 billion overseas. By contrast, overseas residents made 40.9 million visits to the UK, spending £28.4 billion. The net result was a £33.9 billion deficit in the UK Balance of Payments. Just 9.0 million of the 93.1 million overseas visits (9.7%)  by UK residents in 2019 were for business purposes. The lack of money leaving the UK comes at the expense of countries such as Spain, Greece and Italy losing billions of €s in revenue from UK tourists. 

https://www.airportwatch.org.uk/2020/05/uk-had-a-tourism-deficit-of-33-9-billion-in-2019-with-88-of-that-ie-about-29-8-billion-due-to-air-travel/

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2014

Birmingham Airport wildly optimistic in anticipating 8,000 jobs from its runway extension

David Cameron has visited Birmingham airport, and effusively welcoming the announcement that 8,000 new jobs would be created, principally as a result of the long-awaited runway extension, with anticipated direct links to destinations like the West Coast of America and China. Shamelessly linking the airport jobs announcement with totally unrelated Government tax-cutting measures, the PM boomed: “The announcement of 8,000 jobs from Birmingham Airport is more great news in a week when we are cutting tax for 26 million hard-working people and taking over three million people out of income tax altogether.” Paul Kehoe used the PM’s visit for his PR purposes.  Kehoe says by 2020 he forecasts Birmingham airport will have 15 million passengers a year, up from 9 million now. He claims this will create 4,000 jobs on-site and a further 4,000 in the immediate supply chain (doubtful figures, generally involving much double counting and optimism). “Politicians and business leaders are very good at talking the talk, but not always so assiduous at walking the walk.” 

https://www.airportwatch.org.uk/2014/04/birmingham-airport-wildly-optimistic-in-anticipating-8000-jobs-from-its-runway-extension/

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2103:

Ryanair added 138 jobs per extra million passengers 2011 – 2013, but claim 1,000 jobs are created per additional million passengers

Ryanair is putting out statements that in its deal with MAG at Stansted, to increase the number of Ryanair passengers by 50% over 10 years, that it will – allegedly – create 7,000 new jobs. This claim is based on an outdated, and very frequently trotted out, assumption that some 1,000 new jobs are created for each additional 1 million passengers flying on an airline. The full service airlines, flying a lot of first class passengers on long haul flights, have a high ratio of staff to passengers. The cheapest low cost flights, offered to European destinations by the no-frills airlines, do not.  Recent figures from Ryanair’s annual reports, show that between 2011 and 2013, Ryanair had an extra 7.2 million passengers, but only 996 more staff. That works out as about 138 new Ryanair  jobs per extra million passengers. Recent figures from EasyJet’s own data show that in 2012, for each additional million EasyJet passengers, there were 41 new EasyJet jobs. There will be some extra airport jobs, to support more flights – but the level is nowhere remotely near 1,000 per million. That figure is exaggerated at least 5-fold, or more.  In reality Ryanair creates as few extra jobs as possible, because it shaves costs to the bone. 

https://www.airportwatch.org.uk/2013/09/ryanair-added-138-jobs-per-extra-million-passengers-2011-2013-but-claim-1000-jobs-are-created-per-additional-million-passengers/

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Plan B Earth case for Supreme Court appeal by Heathrow, against Appeal Court ruling that ANPS was illegal, due to Paris Agreement

On 7th and 8th October, there will be a Supreme Court hearing of the appeal, by Heathrow airport, 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.
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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:

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(1) HEATHROW AIRPORT LIMITED
Appellant

[Arora is no longer pursuing the appeal]

-and-

(1) FRIENDS OF THE EARTH LIMITED
(2) PLAN B. EARTH
Respondents

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CASE FOR PLAN B. EARTH

https://planb.earth/wp-content/uploads/2020/09/SC-Plan-B-case-final.pdf

J. CONCLUSION

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.

 

See the full document at

https://planb.earth/wp-content/uploads/2020/09/SC-Plan-B-case-final.pdf

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See earlier:

 

Supreme Court to hear Heathrow appeal, against judgement on the Airports NPS by the Appeal Court, on 7th and 8th October

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.” 

https://www.airportwatch.org.uk/2020/05/supreme-court-to-hear-heathrow-appeal-against-judgement-on-the-airports-nps-by-the-appeal-court-on-7th-and-8th-october/

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See earlier:

Supreme Court grants Heathrow and Arora permission to appeal against the Appeal Court ruling on the ANPS

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 …

Click here to view full story…

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Heathrow urged by 5 councils to end 3rd runway ‘fantasy’ – instead focus on cutting CO2 and noise

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.”
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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.

https://www.richmond.gov.uk/heathrow_urged_to_end_third_runway_fantasy

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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.

https://teddington.nub.news/n/richmond-council-urges-heathrow-to-end-third-runway-39fantasy39

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Tax-free sales by airports, ports etc for overseas visitors to end by 1st Jan 2021, with lower duty-free import allowances

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).
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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.

https://www.independent.co.uk/travel/news-and-advice/tax-free-sales-duty-free-airport-shopping-vat-eu-b435514.html

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Heathrow said that for the first 6 months of 2016, it made £62 million from duty and tax-free; 

From Moodie report

https://www.moodiedavittreport.com/heathrow-airport-retail-revenue-up-7-7-in-first-six-months-of-2016/ 


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Details of the current amount that can be brought into the UK from EU and non EU countries is at

https://www.travelsupermarket.com/en-gb/blog/travel-advice/how-much-duty-free-can-you-bring-into-the-uk/#:~:text=You%20can%20bring%20in%20200,both%20half%20of%20your%20allowance

EU is now:

110 litres beer
90 litres wine
10 litres spirits
20 litres fortified wine
until 31st December 2020

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Non-EU is now: 

16 litres beer
4 litres wine
1 litre spirits OR
2 litres fortified wine

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More on global duty free sales

Global duty free & travel retail sales up +12.9% in 2018, says Generation Research

Source: ©The Moodie Davitt Report

https://www.moodiedavittreport.com/global-duty-free-travel-retail-sales-up-12-9-in-2018-says-generation-research/

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Heathrow area risks fate of 1980s mining towns, says airport boss – area too dependent on the airport

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.
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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.”

He defended issuing section 188 notices to unions, threatening to put thousands of long-serving staff on inferior contracts, after four months of talks failed to reach any conclusion.

“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.

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See earlier:

Heathrow tells staff to take pay cuts of 15-20% or face job losses

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.”

….. and it continues with more from Heathrow …

https://www.theguardian.com/uk-news/2020/sep/02/heathrow-tells-staff-to-take-pay-cuts-of-15-20-or-face-job-losses

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Heathrow “to slash staff pay by up to a third” becoming a “low cost employer”after collapse in air travel

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.

Click here to view full story…

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Heathrow saddled with £504 million bill from thwarted expansion

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.
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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
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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”.

https://www.newcivilengineer.com/latest/heathrow-saddled-with-500m-bill-from-thwarted-expansion-08-09-2020/ 

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See earlier:

 

BA hits out over £500m bill for Heathrow failed 3rd runway plans that it wants to pass on to airlines

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 farA 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.

Click here to view full story…

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BA hits out over £500m bill (Category B costs) for Heathrow failed 3rd runway plans that it wants to pass on to airlines

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.

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BA hits out over £500m bill for failed airport plans

Heathrow airport is considering passing on the bill for its failed third runway on to carriers

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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.

Judges blocked Heathrow’s controversial £14bn expansion seven months ago over climate change concerns – but not before the airport spent hundreds of millions of pounds in preparation.

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.”

Heathrow application to Planning Inspectorate for DCO now delayed from summer 2020 to “towards the end of the year”

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.   

https://www.airportwatch.org.uk/2020/01/heathrow-application-to-planning-inspectorate-for-dco-now-delayed-from-summer-2020-to-towards-the-end-of-the-year/

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Aviation regulator, the CAA, losing patience with Heathrow expansion – approve only £1.6bn before DCO granted

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. 

https://www.airportwatch.org.uk/2019/12/aviation-regulator-the-caa-losing-patience-with-heathrow-expansion/


 

Heathrow ordered by CAA to rein in 3rd runway costs – to ensure it is built economically and efficiently

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.   

https://www.airportwatch.org.uk/2019/12/heathrow-ordered-by-caa-to-rein-in-3rd-runway-costs-to-ensure-it-is-built-economically-and-efficiently/


How Heathrow is happy to pay way over the odds, to increase its RAB, allowing more revenue

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. 

https://www.airportwatch.org.uk/2018/03/how-heathrow-is-happy-to-pay-way-over-the-odds-to-increase-its-rab-allowing-more-revenue/


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CAA consultations on the economic regulation of Heathrow

There was a CAA consultation in December 2019 on the economic regulation of Heathrow airport

https://publicapps.caa.co.uk/docs/33/CAP1871%20Early%20expansion%20costs%20condoc%20v1.6.pdf

This followed the CAA consultation in summer 2019

https://consultations.caa.co.uk/corporate-communications/economic-regulation-of-capacity-expansion-at-heath/?mc_cid=6f341d29db&mc_eid=a0ba8f5af2

This said:

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Category A costs are:

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.

Heathrow plans to increase 3rd runway costs – to £2.9 bn – before approval, hoping it will be too costly to scrap its plans

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. 

https://www.airportwatch.org.uk/2019/07/heathrow-plans-to-increase-3rd-runway-costs-to-2-9-bn-before-approval-hoping-it-will-be-too-costly-to-scrap-its-plans/


Willie Walsh reiterates that he will fight Heathrow runway, due to cost; content with 3 hub system for IAG instead

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.

https://www.airportwatch.org.uk/2016/05/willie-walsh-reiterates-that-he-will-fight-heathrow-runway-due-to-cost-content-with-3-hub-system-for-iag-instead/

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Luton Council’s £60m loan to Luton Airport company set for approval ‘in private’

A £60m loan by Luton Borough Council to its airport company is set for approval, in private, by the executive later this month. The first of two emergency loans – together totalling £83m – has gained the support of Luton Council’s scrutiny finance review group, at the second attempt. The second loan worth £23m to London Luton Airport Limited (LLAL) is scheduled for the 2021/22 financial year, after the council’s emergency budget in July.  The Labour controlled council were forced by the Liberal Democrats to discuss the loan report in public. But officers asked for the council to take legal advice and defer the issue. It seems that 5 five Labour councillors recommended the council’s executive approve the £60m loan deal, with the 3 Liberal Democrats in opposition.  The executive will formally decide upon the loan at its meeting on Monday, September 14th. The Liberal Democrats said the almost £400m in loans are secured against the assets of the company. “But, the council already owns all of LLAL’s assets by virtue of its 100% ownership of the company. It follows that for all practical and accounting purposes the £400m loans are unsecured.”
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Council’s £60m loan to Luton Airport company set for approval ‘in private’

A £60m loan by Luton Borough Council to its airport company is set for approval, in private, by the executive later this month.

By Euan Duncan (Luton Today)
Tuesday, 1st September 2020

The first of two emergency loans – together totalling £83m – has gained the support of the local authority’s scrutiny finance review group, at the second attempt.

The second loan worth £23m to London Luton Airport Limited (LLAL) is scheduled for the 2021/22 financial year, after the council’s emergency budget in July.

The ruling Labour group on the council was outmanoeuvred by the Liberal Democrat opposition when it first asked the review group to consider the loan on August 6.

Two Labour councillors serving as directors of LLAL, Amy Nicholls and Tahmina Saleem, had to leave the meeting along with Conservative group leader John Young, who chairs the review group.

This allowed the Liberal Democrats to win a vote to discuss the loan report in public.

But officers asked for the council to take legal advice and defer the issue.

At the rearranged meeting on Thursday (August 27), councillor Young voluntarily stepped aside, while councillors Nicholls and Saleem were notably absent – with their Labour replacements entitled to vote.

This means that the five Labour councillors are likely to have recommended the council’s executive approve the £60m loan deal, with the three Liberal Democrats in opposition.

The executive will formally decide upon the loan at its meeting on Monday, September 14.

The Liberal Democrats said before the meeting: “The latest briefing issued by the council repeats the deliberately misleading claim that all the loans it makes to its airport company are secured.

“In fact, the almost £400m in loans are secured against the assets of the company.

“But, the council already owns all of LLAL’s assets by virtue of its 100 per cent ownership of the company.

“It follows that for all practical and accounting purposes the £400m loans are unsecured.”

LLAL provided £29m to the council last year and £9.9m to charities and community groups locally.

But the pandemic severely disrupted the aviation industry, “which has led to a dramatic fall in LLAL’s income”, according to the council website.

“LLAL requires a loan to ensure it can continue to provide vital funding to the town, in the short-term, while the aviation sector recovers,” it said.

“The council is proposing to borrow £60m and then lend it to LLAL, as it can borrow money at a cheaper rate of interest than LLAL.

“LLAL will repay interest on the loan to the council at a higher rate than the amount the local authority borrows it at.

“As a result, the council gets interest payments (£16m in 2019/20) from LLAL, which it can use to fund local services.

“Without this loan, LLAL could become insolvent and cease trading,” the council added.

“At worst, the council could lose control of the airport, and the benefit of the income it generates altogether.”

LLAL would pay back the full amount at the end of the loan period.

“It’s the intention that once the loan has been arranged it will be secured through a fee that becomes a fixed charge on LLAL’s capital assets,” explained the council.

“LLAL owns London Luton Airport, land around the airport including the business park, Century Park, Stirling Place and the Luton DART.

“The value of these assets exceed LLAL’s borrowing.

“LLAL has reserves, but these have been used to cover its huge drop in income this year.”

https://www.lutontoday.co.uk/news/politics/councils-ps60m-loan-luton-airport-company-set-approval-private-2958505

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See earlier:

Luton airport delays expansion plans, due to Covid and stated intention to be “greener”

In 2019 Luton airport put out plans to expand, from 18 million passenger per year, (mppa) up to 32 million. This expansion, being over 10 mppa, needs to go through the Development Consent Order (DCO) route, rather than a normal planning application.  The airport is owned by Luton Borough Council which is also the local authority that should regulate it.  Now with a massive decline in air travel demand, due to Covid, Luton airport has decided to delay the process, and not submit its DCO this summer, as originally intended, but in 2021. It claims it wants to be more “green” with less environmental impact, etc etc (tricky with so many more passengers and flights, and thus more noise, more CO2,  more air pollution and more congested surface transport). Local opposition groups are pleased about the delay, as is Hertfordshire County Council, which is against the plans due to the adverse noise impact. Luton is too dependant on the airport, and so has suffered from the loss of jobs, and income from the airport, due to the pandemic. It would be wiser to delay until there is clarity on the government policy on aviation carbon, in its ambition of aiming for zero carbon by 2050.

Click here to view full story…

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