Airport News
Below are news items relating to specific airports
CAA likely to prevent Heathrow increasing its airport charges to cover Covid losses of £1.7bn
Heathrow wanted to increase charges to compensate for the economic fallout of the coronavirus pandemic. But its regulators, the CAA, have rejected its request to increase airport charges by £1.7bn to Covid losses. The CAA said Heathrow's demands were not “proportionate”. Heathrow operates under a regulatory mechanism that allows it to increase airport charges based on the costs it incurs, but this has to be agreed by the CAA. Separately, Heathrow is waiting on a final decision from the CAA on whether it can recharge airlines £500m for costs it has built up, prematurely, in (unwise)preparation for the building of a 3rd runway - even before all legal and planning hurdles were overcome. Heathrow said revenue losses in 2020 and 2021 would be more than £2.2bn - ie. the £1.7billion + the £500 million. The CAA now has a consultation (ends 5th Nov) on Heathrow's request for RAB adjustment. IAG, said “Heathrow is a wealthy, privately owned company which should seek funds from its shareholders as many other businesses in our industry have done to weather this pandemic. We look forward to participating in the CAA's consultation process."
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Heathrow Airport expansion: Supreme Court Appeal hearing on the ANPS. Briefing by Friends of the Earth
The hearing at the Supreme Court of the appeal by Heathrow against the judgement of the Appeal Court, in February took place on 7th and 8th October. The case is whether the Airports NPS (ANPS) is illegal, because it did not properly consider carbon emissions and the UK's commitments under the Paris Agreement. Friends of the Earth have explained their arguments, against those of Heathrow. (It is complicated legal stuff ...) There is no onward appeal from the Supreme Court. If any one of the grounds that won in the Court of Appeal remains, and the Supreme Court agrees that the Order made by the Appeal Court should still stand, then the ANPS will remain of no legal effect [ie. not valid or legal] until reviewed. [So the runway cannot go ahead]. The Secretary of State (SoS) for Transport must then consider if the government wish to leave it at that, or review the ANPS policy framework, to amend it. If the SoS does that, s/he will probably need to make changes that materially alter what the ANPS says. Such changes will need to be approved by Parliament following consultation, before the new ANPS can come into force. And if the FoE Strategic Environmental Assessment (SEA) challenge wins, there would need to be a new SEA and a new public consultation.
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Heathrow’s Supreme Court case: can it avoid paying for the failed 3rd Runway?
The Supreme Court will, on 7th and 8th October, hear the appeal by Heathrow airport, against the ruling by the Appeal Court, that the Airports NPS is illegal. Rival scheme to build a Heathrow runway (keen to expand the airport), "Heathrow Hub" explains why Heathrow is going ahead with this further expense of the Supreme Court hearing, when it is struggling with huge financial problems and the reduction in demand for flights, due to Covid. The way Heathrow's finances work is that, the more it spends - therefore increasing the size of its Regulated Asset Base (RAB) - the higher the return it can earn, and the more it can charge airlines. So it has a vested interest in keeping its spending high, to the fury of the airlines. Heathrow Hub say: “It is not commonly understood that if Heathrow abandoned its Supreme Court case then the CAA would be unlikely to approve its attempt to recover the £550m it has spent on the failed 3rd Runway, including a provision for its legal costs." If Heathrow did not struggle to the end, to try to get the runway approved, it would have to finance those huge costs itself. Hence the reason for going ahead with the legal process, even though Heathrow admits no new runway is needed for at least 10+ years.
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Unite threatens strikes at Heathrow this autumn over huge pay cuts and “fire & rehire”
Unite, the Union, has been a keen backer of expansion at Heathrow for years. Members have for a long time been told that their jobs are at risk, without a 3rd runway. But their loyal support has been somewhat abused by Heathrow, which has tried to reduce the pay and conditions of workers at the airport, for years. How Unite is angry at the treatment its members are getting, while Heathrow struggles with the dramatic fall in the number of passengers. Unite says its members will strike this autumn, over the company’s attempts to cut the pay of 4,000 workers by up to £8,000 per year, which is around 25% of their pay. They will start balloting for industrial action on Thursday 8 October with the ballot closing on Thursday 5 November with strikes following soon after. Unite has dismisses HAL’s cries of poverty pointing to the vast salaries paid to senior executives - its chief executive was paid £3 million in pay and pensions last year - and asking why the salary sacrifice does not start at the top of the organisation. There were 49 directors at Heathrow who earned over £21 million between them last year (that averages £428,500 per year each).
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Exeter Airport receives huge funding boost from Council to avoid it having to close
A package of funding worth nearly £1million designed to ensure Exeter Airport can avoid the "worst case scenario" of closure has been unanimously backed by East Devon District Council's cabinet. The combination of the collapse of Flybe, as well as the coronavirus pandemic, has led to the airport facing ruin. Passenger numbers in May 2019 were 97,000 and in May 2020 the equivalent figure was just 9. From the beginning of the financial year to the end of the July passenger numbers dropped by 99.5% compared to the same period last year. The Council approved a package of measures including a further deferral of £180,000 of business rate relief, forward-funding the airport’s share of the Long Lane enhancement scheme - nearly £750,000 - and to endorse the concept of a "sustainable aviation cluster" centred on Exeter Airport. It is not clear that the money is enough to keep the airport going, and save the jobs of 96 employees. It might eventually still need to close. East Devon District Council is expected to approve the measures.
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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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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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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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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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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."