General News
Below are links to stories of general interest in relation to aviation and airports.
FT’s Jonathan Ford on massive doubts over Heathrow’s ability to fund its runway – without huge subsidy from taxpayers
Jonathan Ford, the City Editor of the Financial Times (who knows a thing or two about finance) on the Heathrow runway scheme. It would cost at least £14 billion (probably more with inevitable over-spends), and as Heathrow is already the most expensive airport in Europe, its ability to claw back money is limited - anyway, it cannot get airlines and passengers to pay until the runway is built and operating. Despite sales of some of its airports, totalling more than £4bn, its debt was still £13.4 billion in 2017. And "Heathrow’s 2017 accounts record a dividend of £847m for shareholders last year on after-tax profits of just £516m, implying that dividends were partially funded by taking on yet more corporate debt." Shareholders are not going to be happy to receive almost no dividend for several years. "Heathrow might try to ease the burden by discreetly pressing for public subsidy, figuring that once the state is committed to the 3rd runway it will not want to see the project come off the rails. The government should stand firm. Its decision to pick the most expensive of three runway options on the table was always predicated on the idea that all could be financed without state support."
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London Assembly reaffirms strong opposition to Heathrow 3rd runway
The London Assembly has reaffirmed its opposition to a 3rd Heathrow runway. It has agreed unanimously on a motion asserting its opposition. Caroline Pidgeon (Lib Dem) who proposed the motion said: “The case for a 3rd Heathrow runway is based on a number of false claims, ... a 3rd runway will create noise disturbance for a further 300,000 people and add to higher levels of air pollution in parts of London where air pollution already exceeds illegal levels. We can ensure we retain international connections without following the foolish option of the incredibly expensive third Heathrow runway. A third Heathrow runway comes at a huge price that is simply not worth paying for.” Léonie Cooper (Labour) said the runway would "have a far-reaching impact on almost a million London households within the next 30 years....the current plans to mitigate its adverse effects on the surrounding environment and the health and social wellbeing of local communities are inadequate. It is clear that the potential costs and risks to Londoners outweigh the projected economic benefits of the expansion ... the Government’s decision should be robustly opposed”. The Assembly "asks the Mayor to join with us to ensure that this threat to the health and environment of Londoners does not materialise.”
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Political fight over Heathrow brewing for the SNP in Scotland
With the final vote on a 3rd Heathrow runway expected within about 2 weeks, the political fight is intensifying, as the SNP have their conference on 8th and 9th June. It is important for the Heathrow vote, as the SNP (with 35 MPs) hold a potentially critical role - if they were to vote against the runway, it might be stopped - or only won by a tiny margin. Heathrow continues to throw money and the weight of its corporate lobbying at the SNP, schmoozing them at the conference, with an invitation-only event - as it has done at the other political conferences, trying to buy support and persuade MPs. By contrast with the hospitality and honey-tongued words by Heathrow in the conference, 3 residents who would lose their homes if the expansion goes ahead, drove for 13 hours overnight from Harmondsworth - to focus on engaging with SNP party members and politicians going into the conference. They spoke to several hundred, putting the case that the SNP should not be led astray by the promises of Heathrow - and many expressed concern at the party’s position of support for the runway, due to environmental concerns and a preference to see the development of further direct air links from Scottish airports, and a dedicated air freight hub in Scotland.
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Simon Jenkins on Heathrow: Government support for this polluting 3rd runway is macho folly
Characteristically brilliant and incisive article by Simon Jenkins. Well worth reading it all. Just a few snippets here: "The building of a third runway at Heathrow must be the worst decision taken by a British government in modern times. There is nothing in it but private profit for a Spanish company that appears to have the British cabinet in thrall. That a rich European city should expand rather than contract a major airport in a built-up area defies belief. ... The project will further congest and pollute what is already one of the most choking parts of the capital. Its air quality is illegal. The runway will suck economic activity into London, and away from the provinces. It will cost billions in public money. It is so expensive that even Heathrow’s old ally, British Airways, now opposes it. ... Air travel is overwhelmingly for leisure. Airports talk of “business use” because they are ashamed being part of the tourism industry, which Grayling never once mentioned. ...Grayling promises that the new runway will not go ahead if Heathrow does not “meet the UK’s air quality commitment”. But he knows it won’t. He knows neither his department nor Heathrow has ever kept a promise of this sort. ... [runway decision] resting not on its merits, but on whether Theresa May had the guts to push it through."
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Heathrow expansion will mean less direct international flights for Yorkshire, analysis shows
The Government faces considerable uncertainties in trying to push through the plans for a 3rd Heathrow runway, and get enough MPs to vote for it. Labour may oppose the plans, and analysis showed northern airports will lose out on thousands of international flights if Heathrow got a 3rd runway. The government hopes they can mislead the SNP with pledges of huge benefits from the runway, based on out-of-date figures for possible economic benefit from the runway, and crazily calculated (back of envelope, starting with the wrong number) calculations about possible future jobs. It is likely that Leeds Bradford Airport would see 4,449 fewer international flights a year by 2030 if the 3rd runway went ahead. Doncaster Sheffield Airport would lose 1,413 while the North’s major hub - Manchester - would lose 20,258. Keighley MP John Grogan, who requested the figures from the Commons Transport Committee, said Heathrow expansion would mean Britain’s regions losing out. The Labour MP also questioned the Government’s pledge to ring-fence 15% per cent of slots on the new runway for domestic connections to the rest of the UK. This can only happen if they are subsidised, and these flights almost always run at a loss.
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Surprise ! Former Airports Commission chair and Sir John Armitt urge MPs to back Heathrow 3rd runway in vote
The former Chairman of the Airports Commission, Sir Howard Davies, and a Commissioner on the Airports Commission, Sir John Armitt, have written to MPs urging them to vote in favour of a 3rd runway at Heathrow after the Cabinet approved the government's plans earlier this week. Neither of them has been working on aviation issues recently and, frankly, their letter illustrates that they probably have not kept up with the details. But MPs will probably be persuaded, by this further lobbying on behalf of the government and Heathrow. They gloss over, as of course, does the DfT, the difficult issues of noise, air pollution, impact on the regions, cost to the taxpayer, carbon emissions etc. Their only focus is that the runway might prevent the UK being "inward-facing" after Brexit, and that it "meets the test of the national interest" (glossing over local impacts). To show just how ill-informed their letter is, that "In respect of aviation noise, our analysis indicated that the number of people affected by an expanded airport would be fewer than at Heathrow today." A letter with a good chance of being put straight into hundreds of MPs' waste (recycling) bins?
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SNP “promised” 16,000 new jobs if it backs 3rd runway – but that figure is crazily inflated – as Heathrow & DfT well know
The Conservative government may need the SNP’s support if some of its MPs rebel against the new Heathrow runway - which is likely. The SNP will demand guaranteed extra slots for Scottish flights into London in return for the party’s support for the 3rd runway. Ian Blackford, the head of the SNP’s parliamentary group in London, said the party had not taken a decision on runway yet - and would only do so if Scotland stood to benefit. Their backing may not be guaranteed, though that had been assumed - particularly after Keith Brown, Scotland’s infrastructure secretary, believed there might be 16,000 Scottish jobs, created by the project. That figure of 16,000 jobs is what Heathrow has, for several years, been peddling. Along with similarly inflated claims for all the regions. The number was derived by a consultancy called Quod, in a flimsy little 4 page paper, with no methodology, no date, no author etc. It is based on the assumption that Heathrow would provide an economic benefit (NPV) to the UK, over 60 years, of £147 billion. That number is now known to actually be about £3.3 billion, at best (if not a negative number). The SNP would be very ill-advised to believe Scotland will benefit; in reality its airports would be damaged by allowing the runway. Tragic if they vote in favour of it, because they have not checked out the facts properly.
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Labour knows the Heathrow 3rd runway plans fail their 4 tests – so may vote against the NPS
Theresa May’s plans for Heathrow expansion are facing an unpredictable Commons vote after Labour indicated that the runway plans do not pass its four key tests. These require (1). noise issues to be addressed, (2). air quality to be protected, (3). the UK’s climate change obligations met and (4). growth across the country supported. Labour may refuse to vote for the plans when they come before MPs for a vote on the National Policy Statement (NPS) - ie. the runway - in the next 3-4 weeks. With Boris Johnson expected to be (so convenient ...) "out of the country" and several Tory MPs voting against it, the government needs Labour and the SNP to vote in favour. However, Jeremy Corbyn’s office said the issues of air pollution, noise for residents, regional connections and greater capacity were crucial. The revised NPS, published on 5th June, is barely changed from the draft and does not include measures that convincingly pass the 4 tests. This suggests that Labour could either whip a vote against the 3rd runway plans or at least order its MPs not to back the Government. The SNP has not so far indicated if it will vote in favour, though they have become aware that the Heathrow runway is likely to damage Scotland and its airports. Labour and SNP MPs are concerned about yet more money being spent on London, rather than in the regions, and on the possible vast cost to taxpayers.
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Government deal to bail out Heathrow if runway plan fails – possible massive cost to taxpayers
Back in October 2016, the government did a deal (The Statement of Principles) with Heathrow (HAL), in which there are clauses implying the government would bail out any costs to the airport, if it does not finally get government approval to expand. There is no end date for the agreement. Though the document states it is non-binding, the wording is ambiguous - a gold-mine for lawyers? Justine Greening revealed this massive risk to taxpayers in Parliament, saying Heathrow "have somehow managed to get a poisoned pill agreed by DfT that means the taxpayer has to cover all their costs if things go wrong. Isn’t this the worst kind of nationalisation? The public sector and taxpayers bearing all the Heathrow downsides and risks but the private sector owning all of the upside and financial returns.” The Statement of Principles says: “HAL reserves its rights (including but not limited to its rights to pursue any and all legal and equitable remedies (including cost recovery) available to it under law) in the event of: .... The withdrawal of the Government’s support for aviation expansion for Heathrow Airport only after the Secretary of State has stated that HAL’s Scheme is the scheme it prefers in accordance with paragraph 1 of Part 1.” This was only mentioned in passing in the NPS and Justine is seek urgent clarity of the clause, in order to give an opportunity for the issue to be discussed in the House of Commons before MPs vote on the NPS proposal - within 3 weeks.
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Transport Secretary admits Heathrow 3rd runway would be bad for Birmingham Airport
Chris Grayling, Transport Secretary, in announcing formal backing by the government for the 3rd Heathrow runway, has admitted that this will be bad for business at Birmingham Airport. He said Birmingham would face “greater competitive pressure” as a result of Heathrow having a 3rd runway. The line Grayling is taking, to try and reassure regional airports, is that the 3rd runway will encourage more domestic flights. However, he knows perfectly well that it is up to airlines, not airports or government, to determine which routes they fly - unless given hefty public subsidies to keep unprofitable routes in operation. His assurances to regional airports are all qualified by statements like Heathrow will try, government will support etc. Nothing concrete. But as Birmingham Airport is so close to Heathrow, there will not be domestic flights to Heathrow, and all that will happen is Heathrow takes passengers away from Birmingham, and long haul destinations will increasingly be served exclusively by Heathrow. The government is well aware of this harm an expanded Heathrow will do to long haul services from other UK airports.