General News
Below are links to stories of general interest in relation to aviation and airports.
Spring Statement: there is to be a consultation about possible offsets for passengers for their CO2 emissions
The section relevant to aviation, under the heading "Clean growth" states: "The Budget 2018 set out how the government is accelerating the shift to a clean economy, building on the Industrial Strategy, Clean Growth Strategy, and 25 Year Environment Plan. The Spring Statement builds on this commitment: (several bullet points, of which the one relating to transport is: "to give people the option to travel ‘zero carbon’, the government will launch a call for evidence on Offsetting Transport Emissions to explore consumer understanding of the emissions from their journeys and their options to offset them. This will also look into whether travel providers should be required to offer carbon offsets to their customers." Note, this is not only mentioning aviation. And nothing is settled, till there is the consultation - no date given for that. [ All this seems to mean is nothing whatsoever to cut demand for air travel. Most offsets are useless, and do not achieve cuts in carbon. (Aviation CO2 emissions are added to the atmosphere, cancelling out whatever savings were achieved by the offset created elsewhere). AW note].
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How the UK government misled Parliament on Heathrow expansion and climate change
A new briefing from Friends of the Earth, West London, (FoE-WL) sets out how the government misled Parliament on the CO2 emissions that would be generated if a 3rd Heathrow runway was allowed. In its National Policy Statement (NPS) presented to Parliament in June 2018 the DfT said expansion could "be delivered within the UK’s carbon obligations ..” FoE-WL says unfortunately, there is no evidence to support that assertion. The advice on CO2 from the UK aviation sector is that it should not be above 37.5MtCO2 in 2050. But the DfT's own figures show this being exceeded. A 3rd runway would increase CO2 emissions by about 3.3MtCO2 per year. This information was not disclosed in the NPS presented to Parliament. Instead, data was buried in the mass of ‘supporting information’ (as usual). All the government has to offer is slight carbon efficiency gains per plane in future, and some use of biofuels (highly dubious) - and "carbon offsetting". In reality there is no global trading system of any sort on the horizon, let alone one which would offset aviation’s increase with genuine reductions elsewhere. It is unlikely the UN's CORSIA scheme, which the UK government is placing its trust in, will be effective.
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Severe impact of 3rd Heathrow runway on residents laid out in High Court hearing
The Government's approval of a third runway is being challenged at the High Court by a coalition of councils, residents, environmental charities and Mayor of London Sadiq Khan. Representing five London boroughs, Greenpeace and Mr Khan, Nigel Pleming QC said the plans could see the number of passengers using Heathrow rise to around 132 million, a 60% increase. Mr Pleming said: "The new development, if it goes ahead, will add, in effect, a new airport with the capacity of Gatwick to the north of Heathrow" and that the adverse effects and consequences for local residents of such an expansion are "bound to be severe". The legal challenges (other than the one by Heathrow Hub) say the Government's National Policy Statement (NPS) setting out its support for the project fails to properly deal with the impact on air quality, climate change, noise and congestion. The claimants argue the NPS is unlawful and should be quashed, which would mean the Government would have to start the process again and put it to another vote in Parliament. Scores of demonstrators gathered outside the court ahead of the hearing, addressed by MPs, Council leaders and campaigners. All are determined that this runways is NOT going to go ahead. The hearings will last for 2 weeks.
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Judicial reviews into government approval of Heathrow 3rd runway plans begins on 11th March
London’s High Court will on Monday 11th March begin a judicial review into the government’s approval of a third runway at Heathrow airport, with local authorities, environmentalists and rival bidders arguing the £14bn scheme should be scrapped. Five legal challenges to the decision are being heard together, including one brought by a consortium of local authorities (Hillingdon, Wandsworth, Richmond, Hammersmith and Fulham, and Windsor & Maidenhead), Greenpeace and London Mayor Sadiq Khan, on the grounds of air quality, climate change, noise pollution and transport access. The negative impacts of Heathrow already affect many councils, and those would get far worse with planned expansion to have 50% more annual flights. John Sauven, executive director of Greenpeace UK, said: “Governments are very happy to talk the talk when it comes to protecting the air we breathe and the climate we all share, but unfortunately getting them to walk the walk often takes legal action.” There is also a legal challenge by Heathrow Hub, which wants to build a 3rd runway by extending the current northern runway, rather than adding a runway further north. The hearings are expected to last about two weeks, with the judgment being reserved.
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How Heathrow has been getting away with paying so little tax to the UK government
UK tax rules have allowed airports like Heathrow to pay far less tax than they should. It is estimated that Heathrow's foreign owners have been able to get a tax break of perhaps £120 million per year from the UK government. And the airport’s shareholders (which include the governments of China, Qatar and Singapore - with only 10% by the USS being British - .have paid themselves about £3 billion in dividends in 5 years. Rules on how firms can cut tax bills due to large debt interest payments began in 2017, but the Treasury has given an exemption for infrastructure projects like Heathrow. The think-tank, Taxwatch, said: “In the case of Heathrow, the benefits of the exemption appear to flow overwhelmingly to the owners of the company.” ..."The company was bought using a huge amount of debt. Instead of paying back the debt themselves, the new owners managed to push this liability on to Heathrow, making the company liable for large interest payments... The large debt repayments wiped out the company’s pre-tax profit.” Revenues at Heathrow have risen to £2.9billion but its owners have paid little corporation tax, due to massive debts. Between 2007 and 2014 the group reported a total pre-tax loss of more than £2 billion, and paid just £15 million in corporation tax. In the past 3 years it declared pre-tax profits of more than £1 billion, leading to corporation tax payments of £122 million (ie. £70 million in 2018 and £53 million in 2017.
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Heathrow issues €650m bond, to borrow more money, weeks before Brexit deadline
Heathrow Airport has placed a €650m (£558.9m) bond with only weeks to go before the UK is due to leave the European Union. The 15-year bond was backed by current and new investors, which were mostly European, and reached an order book in excess of €2.8bn (ie. there was demand of that amount). Heathrow said the high demand for the bond "shows investor confidence in Heathrow's expansion plans and resilience ahead of Brexit." The bond means Heathrow hopes to extend the duration of its debt portfolio - ie. taking more time to pay it all back - for its 3rd runway expansion plans. It said the funds will be used on day-to-day corporate spending. The airport's director of treasury and corporate finance, said: “The transaction delivers on our strategy of further diversification, longer duration and stronger liquidity." Heathrow hopes, at the earliest, that the runway might open in 2026 - but it has a large number of hurdles to overcome before them, including the long DCO (Development Consent Order) process, that is the equivalent of a planning application, but for a vast project - with the decision taken out of the hands of the local authority, and made by government instead (a process devised to avoid the sort of long delays they had on Terminal Five).
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ICAO working on rules to at least ensure its CORSIA carbon credits for aviation are not double-counted
Rules to avoid double-counting of CO2 emissions cuts in offsets to be used by the aviation sector through the (weak, ineffective) ICAO CORSIA scheme, are considered to be a step forward by some campaigners. But proper assurances are needed to meet aviation's climate pledges, so the claims of (sic) "carbon neutral growth" mean something. ICAO negotiators have agreed rules to prevent double-counting of carbon credits used to offset airline emissions. As air traffic growth outpaces efficiency improvements, airlines will be expected to pay for emissions reductions in other sectors to offset the climate impact. In one of its secretive meetings, ICAO has adopted broad criteria to ensure those carbon offsets are not also counted towards national targets - and they actually represent extra CO2 emissions savings. Campaigners are also calling for an age limit on eligible carbon offsetting projects and transparency around the way the rules are put into practice. There is a huge pool of dormant projects under the UN’s CDM that could, in theory, meet demand from airlines for carbon offsets. But most of those would continue cutting emissions, even without being used by aviation. So they are not additional.
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Epsom & Ewell Borough Council sends highly critical response to Heathrow’s expansion plans – inflicting hugely more aircraft noise on them
Epsom & Ewell Borough is an area that is currently overflown by Heathrow planes at about 6,000 and 7,000 feet. Its Council has submitted a robust response to Heathrow's airspace change consultation, furious about the vastly worse noise burden with which the borough is threatened. The proposals would perhaps mean additional flights operating as low as 3,000 feet at a frequency of up to 47 flights per hour for arrivals, and 17 flights per hour for departures. Even the extra flights, in the short term, through IPA, could result in 25 flights per hour operating as low as 3,000 feet between 6am to 7am and 6 flights per hour at other times. Cllr Eber Kington, Chairman of the Council's Strategy & Resources Committee, said the changes could mean a four to five-fold increase in noise levels in addition to the significant additional impact from the frequency of flights overhead and the impact on air quality. Cllr O'Donovan complained at how bad the consultation was. Residents are angry that their own MP, Chris Grayling, is pushing for these hugely damaging noise impacts on his own constituents and voters - with inevitable decrease in local quality of life.
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Heathrow in 2018 made 58.8% of total revenue from aeronautical; 24% from retail (which includes 4.24% – £126 million – from car parking)
Heathrow has reported a retail revenue increase of 8.6% to £716 million in the year ended 31 December 2018 compared to a year earlier. Total revenue in the period rose 3% to £2,970 million. Retail is 24.1% of that. It was 22.9% in 2017 and 22% in 2016). Retail revenue per passenger was £8.94 (up 5.8% from £8.45 in 2017, which was up 4.5% on 2016. Heathrow says growth in retail income was due to increased passenger traffic in the period to 80.1 million (up 2.7% from 78 million in 2017, which was up 3.1% on 2016) and Heathrow's new "call to gate initiative - which increases passenger dwell time in the departure lounge." The amount of income from car parking, which is included in retail, was £126 million in 2018, (up 5% on the £120 million in 2017, which was itself up 5.3% on 2016.) Car parking made up 17.6% of total retail income in 2018, and 18% in 2017). Car parking income was £114 million in 2016 and £107 million in 2015. Heathrow made £128 million in 2018 from "other retail" which "reflects a significant increase in advertising income from improved utilisation of advertising spaces."That was up 17.4% from £109 in 2017, and £110 million in 2016. Aeronautical income was £1,745 million in 2018, 1.7% up from £1,716m in 2016. Aeronautical income was 58.75% of total revenue in 2018, and was 60.53% of total revenue in 2016 when it was £1,699 million.
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Heathrow’s shareholders get £500m as profits rise (including income of £126m from car parking)
IAG, the owner of British Airways, is angry that Heathrow has paid out £500 million in dividends to its foreign investors while charging its airline customers more. IAG says the dividend payments – now totalling £3.5 billion since 2012 – make Heathrow more costly for airline passengers (so slightly deterring them from flying perhaps). Heathrow said "It is right that our shareholders receive returns in record years and it will ensure we expand whilst keeping airport charges close to 2016 levels." Heathrow's top shareholders include the Qatar Investment Authority, Singapore's GIC and the China Investment Corporation. Its largest single investor is Spain's Ferrovial. The only UK shareholder is the Universities Superannuation Scheme (USS) with a 10% stake. Heathrow's figures out last week show revenue growth of 3% to £2.97 billion in 2018 with 80.1 million passengers (up 2.7% from 78 million). Car parking income was £126 million (up 5% from £120 million in 2017). Retail revenue per passenger was £8.94 (up 5.8% from £8.45 in 2017). Total retail income was £716 million (up 8.6% from £659 million in 2017). Heathrow paid £70 million (2017: £53 million) in corporation tax.