Airport News
Below are news items relating to specific airports
Local Authorities must question if it is justifiable, or a financial asset, to own an airport
There is a glaring logical inconsistency between the declaration of "climate emergencies" by councils, and the backing of local airports. That is particularly the case where the airport owns, or partly owns, the airport. The Local Government Chronicle has written that "councils’ declarations of climate emergency will be mere weasel words unless they lead to painful but necessary decisions being made." To achieve action on climate, councils need to take urgent and significant action. Helping an airport expand and increase its number of passengers, flights and CO2 emissions should no longer be happening. And while some airports were useful sources of income for councils in pre-Covid years, there is no certainty at all that will continue. Instead airports have been a sink for public money over the past year. Councils should not attempt to confuse the situation, by claims that airports are cutting carbon, becoming carbon neutral etc. That is only for their buildings, conveniently ignoring the carbon from the flights the airport facilitates. Councils need to accept that the restoration of passenger numbers to previous levels is not desirable.
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Teeside Airport bottomless pit for council cash – given another £10 million by TVCA
Teeside Airport is to get an extra £10m from the Tees Valley Combined Authority (TVCA), hoping to keep it afloat after Covid impacts. TVCA spent more than £40m buying the loss-making airport in 2019 following a previous election pledge by Mr Houchen to take it back from previous owner Peel. TVCA has also provided a further £19.4m to support operational expenditure, along with £15m towards capital expenditure, which has helped pay for a multi-million pound terminal redevelopment, new passenger lounges, bars etc. The Local Democracy Reporting Service (LDRS) said in November 2020 that the airport made a £2.6m loss in the previous 12 months. Its advocates say it could be profitable in about 6 years. Teeside Airport Ltd is governed financially by TVCA via another limited company, Goosepool, both being subsidiaries of TVCA, a structure which has been criticised by some for its apparent lack of transparency. Stobart Aviation, which operates Teesside Airport, has a 25% shareholding in Goosepool. Opponents of the handouts to the airport say too much is being spent on the airport and “The time for vanity projects is at an end – it’s time he started to deliver on the real needs of our people.”
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Uttlesford Council applies for judicial review of Stansted airport expansion plans
In May, the Planning Inspectorate (PI) approved plans by Stansted airport to expand its maximum number of annual passengers from 35 to 43 million. This had been opposed by Uttlesford Council, but the decision was challenged by the airport. Now Uttlesford District Council UDC) is trying to get this PI decision reversed, as it goes against the decision by a democratically elected council. UDC submitted its application to the court for a JR one day before its submission deadline, and the UDC leader John Lodge said the decision to apply for Judicial Review was taken after seeking legal advice. Local campaign, Stansted Airport Watch, had asked for a JR, so the decision is taken by the Secretary of State for Transport, not the PI. Since the PI decision, the government enshrined a new "Carbon Budget" into legislation. The Sixth Carbon Budget now aims to cut emissions by 78% by 2035 compared to 1990 levels, and for the first time, the carbon emissions of international aviation will be included in UK totals. That should mean the collective increases in carbon of all the airport expansion plans will have to be considered together, and none of the airports seeking expansion should be considered in isolation.
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Bristol Airport expansion (for 2 mppa more) public inquiry to will start on July 20th, for 10 weeks
The expansion plans would see passenger numbers grow from 10 million to 12 million a year. The public inquiry into the expansion plans is due to start on July 20 and last 10 weeks. The airport appealed against a decision by North Somerset Council last year to reject its expansion plans. Bristol City Council has also opposed the expansion with North Somerset Council saying it will ‘robustly defend’ the appeal. The inquiry will be held in person and online, via Teams, though requests had been made for it to be online only, due to Covid. Campaigners say any expansion of the airport would lead to higher carbon emissions, congested roads and more plane noise. A number of campaign groups including the Bristol Airport Action Network (BAAN) , the Parish Councils Airport Association and Stop Bristol Airport Expansion (SBAE) are all set to give evidence at the inquiry. The Planning Inspectorate team will be led by Philip Ware.
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Heathrow at risk of defaulting on its £15bn debt as UK-US flights not returning soon
Heathrow has now made a loss of at least £3 billion, due to the pandemic. It is now at risk of defaulting on its huge £15bn debt, after talks stalled over the return of flights between Britain and America. Heathrow had been depending on lucrative trans-Atlantic flights resuming by the start of July. At the end of June, Heathrow warned its bondholders that if its profits are £66m or more lower than expected by December 2021, then it will breach the strict rules governing its complex portfolio of loans. It does not look likely that flights to the US will return to anything approaching 2019 levels for a long time. Up to 2019, North America was Heathrow’s single biggest market making up almost 19m of its 81m passengers in 2019. Heathrow is believed to have the support of its lenders despite the prospect of a potential breach of its banking covenants, the rules that govern loans. Shareholders, which include Spain’s Ferrovial and the state of Qatar, injected £600m into the business when it faced the prospect of a similar breach last year.
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Southend airport owners, Esken, to get £20 million loan from CGI, to keep it going
Southend Airport is to get a £20 million cash injection (over 3 years) to boost its recovery from the Covid pandemic. Airport owner, Esken, has agreed a loan with US private equity firm Carlyle Global Infrastructure (CGI) – which will lend £120 million to Esken, which can be converted into a 30% stake in the airport. They hope it will help the airport survive, and attract low cost airlines for holiday flights. Only 147,000 passengers flew through the airport in the financial year end February 28 – compared to 2.1 million the year before. Of these 147,000 passengers, 68,000 flew in March 2020 before travel restrictions took hold – so only about 78,000 used the airport since March 2020.
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European airports want to be able to charge airlines more, due to Covid financial losses
European airports association, ACI Europe, says airports face financial problems that will curtail efforts to decarbonise for a decade - unless governments and regulators help them financially. ACI Europe director general, Olivier Jankovec, called for changes to airport charges and a review of EU rules on state aid. Airports want to be able to charge airlines more. He said Europe’s airports took on over €20 billion in additional debt last year which is now financing them. He thought “Recovery this summer will be cash-intensive and revenue-weak.” Analysis for ACI Europe by consultancy firm AlixPartners suggests airport revenues will be below their capital spending requirements for 10 years to 2032, leaving airports no choice but “to slash” investment plans. ACI complains that airlines have had financial support, but airports have not. And they claim efforts to reduce carbon emissions will be slowed down [though having fewer flights and passengers would help anyway ...]
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CE Delft study shows alleged economic benefits of London City airport greatly exaggerated
In December 2020, London City Airport published its Master Plan, after various consultations. This claims: "Taking all benefits into consideration, the proposed growth could add £586 million [annual benefit in 2035] to the UK economy. Adding this impact to the £1.5bn impact that LCY is currently expected to reach under CADP, the airport could reach a £2bn annual contribution to the UK economy by 2035." This was based on figures produced by a report for the airport by Ove Arup in April 2019. All that was in the heady days before the impact of Covid on air travel ... A report by the consultancy, CE Delft, looked carefully at the figures of supposed future economic impact, and found name exaggerations and errors. CE Delft consider that the £586 million in economic impact in 2035 is an overestimate. Our study suggests the economic impact is likely to be smaller than £ 353 million + PM (plus or minus things that is impossible to calculate). This disparity in estimates is partly as local impacts are not additional at the national level, according to the UK’s transport analysis guidance WebTAG. Also that trade impacts should not be taken into account, according to WebTAG.
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Airport expansion plans looking less likely due to Covid and climate awareness
UK airports continue to do badly, due to the pandemic and travel restrictions, and it is anticipated that they could lose £2.6bn between April and September, if Covid continues to limit travel. The industry is also, unwillingly, having to consider their role in worsening climate breakdown, and whether it is acceptable for the sector to be expanding. “Many investors and fund managers could question in future whether airports sit well within their portfolios". Only Gatwick, which is 50.01% per cent owned by Vinci, has made use of the Bank of England’s Covid corporate financing facility, for temporary grants and loans. Most airport owners have pared down their operations, staffing and costs, and cut dividends, to save money. Lenders are appreciating that the airports have huge financial problems, that they cannot solve while Covid continues to limit air travel. But the FT says there will be limits to the goodwill by lenders, as it is no longer certain that airports will remain a safe investment, generating predictable and high income streams - or be acceptable ethically. Now ACI warned of a “severe airport investment crunch” in Europe as it had to take on more than €20 billion of additional debt last year. That makes expansion plans look doubtful.
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British Airways might abandon Gatwick, for Heathrow, if 80% slot use rules are reinstated
British Airways has revived plans to abandon Gatwick and concentrate operations at Heathrow, according to industry sources. This is due to fears by BA's owner, IAG, that it could lose lucrative take-off and landing slots at Heathrow. BA first considered leaving Gatwick more than a year ago in anticipation that demand for air travel will remain depressed for a number of years. The landing slots at Heathrow are very much sought-after and expensive, each costing tens of millions of pounds. Usually airlines have to make use of 80% of their slots, or risk losing them. This was suspended due to Covid, and this waiver was initially due to end in late March. Transport Secretary, Grant Shapps, then extended it, with no given end date. If the waiver is finally ended, then British Airways would want to be sure of keeping its lucrative Heathrow slots, by moving more of its activities there, from Gatwick - where the slots are less valuable.