General News
Below are links to stories of general interest in relation to aviation and airports.
Andy Slaughter: The case against Heathrow expansion keeps getting stronger – but will the government listen?
The publication of the Transport Select Committee (TSC) report into the Airports National Policy Statement (NPS) has been interpreted by the government and Heathrow as a green light for expansion to proceed. Whilst the TSC recognised the strategic case for a third runway, the real story is the significant shift in position from a select committee that has long been supportive of a expansion to one that is highly critical of the lack of detail in the plans. The robust list of recommendations in the TSC report highlights areas where significant work is still required before the government bring the final NPS to parliament for a vote. The TSC report also includes several additional conditions of approval to be included in the final version of the NPS on air quality, surface access, connectivity, costs and charges, noise, community impacts, resource and waste management. The NPS is the document against which the Heathrow planning application will be judged, and if it lacks sufficient detail on these key issues then it will not be strong enough to hold the airport to account. There is little evidence to suggest that parliament can have confidence in simply trusting Heathrow. I "urge my parliamentary colleagues to read the report. Those who do will understand why they should vote against the NPS when it is brought to parliament."
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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.
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“Deliberately misleading” on Heathrow economics. It’s not NEF but the Dept for Transport…
The New Economics Foundation (NEF) has published a report on the economics of the Heathrow 3rd runway. They looked at the DfT's figures (all publicly available material) and have concluded that the runway is a very bad bet economically for the UK. Using the Government’s own formula for assessing transport schemes, Heathrow expansion along proposed lines would be rated as either ‘poor’ or ‘low’ value for money. At best, in net present value (NPV) terms, building the North West Runway (NWR) at Heathrow would yield an economic benefit of £3.3 billion. At worst, in net terms there would not only be no economic benefit whatsoever, but a significant financial cost of up to £2.2 billion, to be borne either by the airport, its investors, airlines, passengers or perhaps even government (ie. then taxpayers). Andrew Pendleton, one of the authors of the report, commented: "it is not us that now forecast a worst-case scenario for Heathrow expansion of £2.2 billion of net costs, but the DfT. Similarly, it isn’t NEF that has thrown out a whole set of models produced for the 2015 Airports Commission, but the Government’s own analysts at the DfT." If Heathrow has to satisfy the caveats required in the Transport Committee report, the costs of the runway would be even higher (and net benefit even lower). The DfT and the government continue to push for the runway - but NEF says they should think again.
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Negative impacts of Heathrow expansion to economy and the regions highlighted in new report
A report on Heathrow’s third runway plans has revealed that the impact on the economy is likely to be negative with significant concerns about potential costs falling on taxpayers. Indeed, using the Government’s own methodology the scheme would be rated as either ‘poor’ or ‘low’ value. The report "Flying Low: The True Cost of Heathrow’s Third Runway", by the New Economics Foundation, was commissioned by the No Third Runway Coalition to examine the Government’s own data and analysis that has been used to justify their position of support for the north west runway at Heathrow. It found that airports outside London would experience a reduction in aviation traffic which would, in turn, at the very least lead to “grow more slowly” and could in fact lead to lead to a reduction in jobs at airports in regions across the UK, through displacing of jobs from other (regional) airports, as well as from other sectors. The report also identified that a ‘more targeted’ approach was needed to support a UK-wide air freight strategy. Chair of the Coalition, Paul McGuinness commented: “Further, it must be unacceptable for Heathrow to claim their proposals will be privately financed whilst seeking protections from the public purse for potential delays in construction and inaccuracies in passenger demand forecasts.”
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Transport Committee MPs demand strict limits on Heathrow noise and pollution due to a 3rd runway
Heathrow’s third runway should be blocked unless the government introduces tough new restrictions on costs, pollution, aircraft noise and night flights, according to MPs. The transport select committee said that safeguards designed to protect local residents and airport passengers had to be strengthened before the plans are approved. The cross-party group ultimately supported the proposed northwest runway, concluding in a report that it was the best option for airport expansion in the southeast. However, it said the NPS should only be passed by MPs if crucial new conditions were imposed on the airport to limit its environmental and economic impact. In a series of recommendations, the report said approval should only be granted if Heathrow can guarantee not to worsen air quality in west London or increase the number of polluting cars being driven to the airport. The MPs called for the proposed existing six-and-a-half-hour ban on night flights to be extended to seven hours. The report also said that the government’s previously lenient assessment of aircraft noise should be rerun to provide a “fair view of the range of possible noise impacts”. They demanded more clarity on the funding and timing of road and rail links, and much more. The government is expected to respond to the report before drafting its final NPS.
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Transport Committee demands serious changes to Government’s Heathrow case before any vote in Parliament
The Commons Transport Committee has produced the report on its inquiry into the Draft Airports NPS (ie. on the proposal for a 3rd Heathrow runway). The report states: "Once costs are considered, the net economic benefits for the NWR [North West Runway] scheme are relatively small at a maximum of £3.3 billion over 60 years and in fact, may be negative if future demand falls." It highlights the absence of a large amount of necessary material from the Government’s draft NPS; it demands that evidence must be presented to show that the scheme is both affordable and deliverable - before any vote is put to MPs. The report contains a highly critical assessment of the cost to the taxpayers, passengers and airlines of expansion. There was also expression of major concerns about the lack of clarity on surface access proposals and costs on the rerouting of the M25, the methodology of calculating air pollution impacts and a considerably more radical approach on noise impacts. Though a NPS was expected to be put to Parliament before the summer recess in July, there must be evidence clarifying the number of areas of concern before MPs should be asked to vote. It is unlikely the necessary information could be obtained in time for an early summer vote - or even one in 2018.
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Government confirms a Heathrow runway shorter than 3,500m invalidates the NPS (so why is HAL consulting on it?)
There was a Lords debate on the issue of Heathrow, and a possible 3rd runway, on Thursday 15th March. There were many important contributions from Baroness Kramer, Baroness Jones and many others. One point that emerged was that, while the Airports NPS (on which MPs are expected to vote in the summer) looks only at a 3rd runway 3,500 metres long, Heathrow has its own (inappropriately premature) consultation at present, in which it considers a shorter runway. Lord Tunnicliffe asked: "Heathrow is now consulting on a scheme with the third runway being 3,200 metres long. That is all over the web. If it presents a scheme for 3,200 metres, does paragraph 1.15 mean that the document is invalid? It seems to say that the only scheme that the Government will consider is one for 3,500 metres. .... Have the Government got themselves in a trap where their provisions and the newly preferred scheme by Heathrow are incompatible?" To which Lord Young of Cookham (Spokesperson for the Government, for the Cabinet Office) said: "... The noble Lord, Lord Tunnicliffe, asked me whether anything less than that would invalidate the NPS, and the answer is, yes, it would." There were also important contributions on other issues, including the very negative implications for regional airports, from a 3 runway Heathrow. .
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Britain intends to stay in Europe’s ETS (including aviation) until at least 2020
Minister of State at the Department for Business, Energy and Industrial Strategy (BEIS) Clare Perry, has confirmed that Britain intends to remain in Europe’s emission trading system (ETS) until at least the end of its 3rd trading phase (running from 2013-2020). The status of Britain’s participation in the scheme following the country’s exit from the European Union in March 2019 had been unclear until now. Formal agreement is still needed, but BEIS wanted to provide certainty for companies covered by the scheme until at least 2020. Currently aviation is included in the ETS, but after serious earlier opposition and difficulties, it covers only flights made within Europe, between European countries - none leaving, or entering, Europe. Clare Perry said Britain is committed to using a price on carbon as a means to reduce emissions but would use the country’s exit from the European Union to “take the opportunity to see if there are other opportunities” to achieve this.
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Heathrow critics say it should face sanctions on broken promises if it tries to raise landing charges with a 3rd runway
Critics of Heathrow are calling for formal sanctions to be imposed on the airport if it fails to meet promises linked to its third runway expansion scheme. Airlines are very reluctant to pay higher landing charges at Heathrow, if there is a 3rd runway. Heathrow’s boss John Holland Kaye has claimed the amount airlines pay for each of their passengers to land at the airport will remain “close to current levels” once the new runway is built. But evidence provided to the influential Transport Committee of MPs in Parliament claimed there are “weak incentives placed on Heathrow to tackle costs aggressively”. Heathrow's landing charge per passenger now is about £22, but less for domestic flights. Heathrow also makes over £8 per passenger through retail and car parking. London's Deputy Mayor for Transport Valerie Shawcross has called for there to be a 'clear enforcement mechanism' against Heathrow if it breaks expansion pledges, including its hope of half its passengers to use public transport by 2030, (without any formal mechanism for enforcing this). ... “There is precedent [for a major infrastructure project] to be refused where particular thresholds or goals are not met and I believe this should be systematically applied to pledges made by both Heathrow and the Secretary of State [Chris Grayling],” ... “A clear enforcement mechanism should also be included for imposing a cap on flights when such pledges are breached.”
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Alistair Osborne (The Times) on the nonsense of MPs voting for a Heathrow runway, in the absence of most necessary details
Alistair Osborne, Chief Business Commentator in The Times, has written scathingly about Heathrow's runway plans, and the lunacy of MPs being asked to vote on them - in the absence of just about all the key information they would need. He says: "MPs are always voting on things they don’t know much about. But you would think that, by now, a few facts would have been established ahead of this summer’s big vote — on the £14 billion third runway at Heathrow." And the main message from Heathrow's current consultation is "how much is still up in the air — a point you hope MPs on the Transport Committee will raise in their report [on the Airports NPS] due by Friday." ..."Yet it’s on the basis of these sketchy plans that MPs will vote for or against the project." Heathrow are not even sure of the length and exact location of their 3rd runway. That is, says Alistair "One reason, maybe, for one glaring hole in the consultations: no news on flight paths. Indeed, Heathrow admits that it will not even be consulting on “flight path options” until “around 2021” — years after the MPs have voted. Other things that won’t be resolved before the MPs vote: "the project’s cost, final design, safety case, road and rail links, noise and air quality. Or to put it another way, just about everything we need to know. After half a century in the planning, you’d think Heathrow could do better than that."