General News
Below are links to stories of general interest in relation to aviation and airports.
Heathrow says it won’t raise landing charges while building 3rd runway – IAG not convinced that’s true
The main customer of Heathrow IAG, which owns British Airways, has been adamant that it will not pay exorbitant landing charges at Heathrow well before a new runway opens. Now in a last ditch attempt to win them over (and anticipating a decision by the government to back their 3rd runway) Heathrow is claiming it can keep landing charges down till the runway opens. Heathrow' CEO John Holland-Kaye says: "Through the planning and build period, we can keep prices flat on average compared to today. ...What that means is that there will be some years where they are going down, some where they are going up." Whatever that means. IAG has feared that landing charges would rise from about £20 now to around £40 per flight. Heathrow already has some of the world's most expensive landing charges. But Mr Holland-Kaye's words did not impress IAG and the company said the average was calculated over a period stretching up to 30 years, and "Their figures cannot deliver their stated aim of making Heathrow and the UK competitive. " Last week, Alex Cruz, chief executive of British Airways, urged Heathrow's shareholders to finance the construction from their own funds, rather than by increasing charges to passengers and airlines. Heathrow's 9 month financial statement showed increasing debt for the company, and a huge hole in the pension scheme.
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Heathrow’s dividends to shareholders grow, but profits have plunged, pension deficit grows, and net debt grows
Heathrow has released financial figures for the first 9 months of 2016, to the end of September. They show a drop in profits compared to a year earlier. There is a pre-tax loss of £293 million, compared to a £552 million profit in the same period in 2015, due to various exceptional items. Its pre-tax profit before these items — which include fair value gains and losses on property revaluations — showed an 11% increase to £202m. Revenue edged up 1.2% to £2.1bn. Heathrow's consolidated net debt grew to £12.016 billion which was an increase of 2.3% from the same period last year, when it was £11.745 billion. Heathrow's pension fund dropped from a surplus of £104 million on December 31st to a deficit of £370 million in just nine months — a £474 million loss. The company attributed this decline to "financial volatility" following the Brexit vote etc. If this size of deficit continues, Heathrow will be required to put more money into its pension scheme. The Sunday Times recently said that Heathrow and Gatwick had each spent about £30 million on advertising and promoting their runway bids. The 9 month accounts show £13 million on "intangible assets" (probably advertising etc) this year, and £11 million in 2015. They also show £32 million of Corporation Tax paid, and Dividends paid of £486 million so far this year; £289 million in the same period of 2015; and £380 million in all of £2015.
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Possible timescale for consultations and processes needed for a new runway
If the government makes an announcement that it proposes to build a new runway at its preferred location, on Tuesday 25th October, that is merely the start of a process. And it could be a very long process, that may ultimately not end in a runway being built. Looking at the possible timescale, Patrick McLoughlin set out in evidence (Feb 2015) to the Transport Select Cttee, how he expected the timescale to work. This would all take probably at least two years, if there were not hold-ups at all, and no legal challenges. It is expected that the process could take at least four years in reality - getting past the next election (if that is in May 2020). The steps might be approximately: (1). A draft National Policy Statement published for consultation and laid in Parliament, at least 4 weeks after the announcement. (2). The consultation might be 4 months. (3). A Commons Select Cttee will examine the draft NPS and hold a 3 month public inquiry. (4). The Commons Select Cttee will then submit a report to the Secretary of State for Transport. (5). Once a final NPS is laid, debates and votes must happen within 21 sitting days of the House. (6). There might be more changes needed to the NPS and another vote. (7). The developer submits a development consent order to the planning inspectorate. (8). Then a planning inquiry and examination for 6 months. (9). The planning inspector will report to the Sec of State within 3 months. (10). The Sec of State will consider the report and announce a decision in 3 months. And this is not counting legal challenges, at any stage.
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George Monbiot: Climate change means no airport expansion – at Heathrow or anywhere
An excellently written and eloquently argued piece by George Monbiot sets out why the UK should not build a new runway. Not at Heathrow. Not at Gatwick. Worth reading the whole article. Some extracts: ... "There is only one way to prevent aviation from wrecking the planet. We need to fly much less ... The correct question is not where, it is whether. And the correct answer is no. .... There is only one answer that doesn’t involve abandoning our climate change commitments and our moral scruples: nowhere. ... The prime minister cannot uphold the Paris agreement on climate change, which comes into force next month, and permit the runway to be built. ... [airlines] seek to divert us with a series of mumbo-jumbo jets, mythical technologies never destined for life beyond the press release. Solar passenger planes, blended wing bodies, hydrogen jets, algal oils, other biofuels: all are either technically impossible, commercially infeasible, worse than fossil fuels or capable of making scarcely a dent in emissions. ... Having approved the extra capacity, the government will discover that it’s incompatible with our commitments under the Climate Change Act, mull the consequences for a minute or two, then quietly abandon the commitments. It’s this simple: a third runway at Heathrow means that the UK will not meet its carbon targets."
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IATA forecasts UK air passengers by 2030 perhaps 25 million below DfT – so no need for a runway as early as 2030
IATA, the airlines’ trade association, expects that with a "hard Brexit" the number of UK air passengers could be 25 million fewer than government forecasts. 25 million passengers is about the entire annual throughput of Stansted. Though all forecasts are bound to be inaccurate, the problems of the weaker £ and changes to the relationship with the EU are likely to cut demand for air travel in the coming decade. Heathrow etc are keen to claim (having been totally against Brexit before the Referendum) that the UK now needs even more airport capacity. The reality is more than demand may fall, after 4 years of rapid growth before the EU referendum. IATA expect a hard Brexit (more likely) could cause air traffic to be 8-9% lower than with a soft Brexit (less likely). IATA’s forecast of 257 million UK flyers would equate to a total of just over 290 million passengers, including transfers, by 2030. (About 251 million in 2015). The Airports Commission believed, based on DfT forecasts, that a new runway should be constructed in the UK by 2030, predicted an increase to 315 million passengers by 2030. With the lower forecasts, that would not be till 2040. IATA's revised forecasts indicate air passenger demand near the lower limit of the DfT forecasts.
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Runway decision by Cabinet due 25th October, no Commons vote, and NPS consultation for new runway all next year
The Cabinet met today (18th October) and did not come to a formal agreement on backing a Heathrow runway. However it is widely believed to be the preferred option of Mrs May and most of the Cabinet. There will be another meeting of the Cabinet next Tuesday, and after that a statement will be made by Chris Grayling in the House of Commons, on which runway location is chosen. There will not be a vote in Parliament soon afterwards, as had been speculated. Instead - as had always been known - there will be consultation next year on the Airports National Policy Statement, which is needed before a development as large as a runway - a Nationally Significant Infrastructure Project - can be applied for. The government hopes to have the Airports NPS completed, put to Parliament to vote on, and finally published (designated) by around the end of 2017 or early 2018 . She has written to all Cabinet Ministers laying out what they can, and cannot do, in terms of opposing the Cabinet runway decision. Ministers opposed to her decision have to ask her approval first to be permitted not to toe the line .... This is aimed especially at Boris Johnson and Justine Greening. Mrs May says: “…. no Minister will be permitted to campaign actively against the Government’s position, nor publicly criticise, or call into question the decision-making process itself. Ministers will not be permitted to speak against the Government in the House.”
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PM faces Tory problem if Zac Goldsmith stands as anti-Heathrow candidate in by-election
The Standard reports that Theresa May faces an awkward problem, if she backs a 3rd Heathrow runway, if Zac Goldsmith resigns his Richmond Park seat and causes a by-election. Zac held a private meeting of the Conservative group at Richmond Park where he confirmed he is ready to run as an independent. The group also voted in a secret ballot to support Zac rather than an official Conservative candidate, if one stood for the seat. Twickenham MP, Tania Mathias, who is also fiercely against the runway, agreed to support Zac, even though it is strictly against the party’s rules for an MP to back anyone standing against an official party candidate. For a Conservative not to stand, or to be beater significantly, would be very awkward for Mrs May. It is believed that the runway announcement will be made on Tuesday 25th October. At the Cabinet meeting on 18th October, ministers were allowed to discuss the runway issue for the first time — though critics of a 3rd Heathrow runway, such as Boris Johnson and Justine Greening, were only invited to comment and not to vote. The government was expected to hold a vote in Parliament (Commons, not Lords) within a week or so of the decision, to get the endorsement of MPs for the decision. This is now not going to happen. Zac would need to decide when to resign, for greatest impact.
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Tory MPs opposed to 3rd runway warn of chaos in the party if PM opts for Heathrow
The Sunday Times understands up to 60 Conservative MPs are against a 3rd Heathrow runway - which would be the biggest parliamentary rebellion since Theresa May took power. In the summer a Comres poll of 150 MPs showed 20% against the Heathrow runway. That would translate to a lot more than 60 MPs, out of the full 650, even ignoring the SNP and the regions. There may be such an outcry that the party could have to reverse any support for Heathrow, if that decision is made in the next few weeks. Zac warns that the risk of Heathrow plans having to be abandoned should worry its potential investors. The Tory MPs opposing the Heathrow runway say they plan to use every parliamentary tool available to delay the final approval of the runway, if Mrs May declares support for it. There could be a “regret motion" in the House of Lords to show the depth of feeling in Parliament, which would cause damage and increase the chances of a judicial review being successful. The rebel MPs also plan to use 3 consultations expected to be launched if Heathrow gets the go-ahead – on planning approval, air space changes and the local impact of expansion – to increase MP opposition. Dozens of Labour MPs are against the runway, though it is thought that Jeremy Corbyn would not be able to enforce a whipped vote for opposition.
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Greenpeace to join with 4 councils in legal challenge against Heathrow 3rd runway
Greenpeace UK has joined forces with Hillingdon, Richmond, Wandsworth and Windsor and Maidenhead councils to prepare grounds for a joint legal challenge against Heathrow expansion. More claimants could join the alliance in the coming days as media reports have suggested a final decision has now been delayed until 25th October. Greenpeace and the four local authorities say both Heathrow expansion schemes would be unlawful due to their unrivalled environmental impacts, which include exacerbating illegal levels of air pollution, increasing Europe’s worst aircraft noise footprint and stretching the local transport network beyond breaking point. The councils jointly instructed Harrison Grant Solicitors to prepare their legal strategy last year and Greenpeace will now share costs and bring new environmental expertise to the partnership. The campaigners also worked together back in 2010 to successfully overturn the Brown Government’s backing for a 3rd runway in the High Court. Later that year the scheme was emphatically ruled out by the incoming Cameron Government. Heathrow current expansion scheme is even bigger and has more severe environmental impacts than the 2010 proposal, and will fail the same legal tests. New evidence on the severe health impacts of air and noise pollution make the new scheme far less likely to pass judicial review.
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BBC believes runway decision / announcement not on 18th but on 25th October
The BBC's Kamal Ahmed reports that Theresa May is not going to make an announcement on runways on the 18th October, as many had expected. The decision instead may be on Tuesday 25th October - and the announcement the same day in Parliament. This will be to to allow Cabinet ministers to express their views. "Sources in Whitehall told the BBC that expansion at Heathrow is the clear front runner." The BBC believes Mrs May has made it clear she wants to hear the wide-ranging opinions of colleagues in Cabinet, and they will discuss the issue at tomorrow's meeting. But no final decision is expected. It will then be left to the Economic Affairs (Transport) sub-committee, [ie. runways sub-committee] chaired by Theresa May herself, to make the final choice on whether to back Heathrow or Gatwick - or both with one after the other - as those are the options the government has seemingly limited itself to. Boris Johnson and Justine Greening, in Cabinet, are fiercely against a 3rd Heathrow runway. Senior Treasury officials believe Heathrow is the better option for boosting UK economic growth (though the Airports Commission's own reports show this could be as low as a total of £1.4 billion over all the UK over 60 years, taking all costs into account. That is a vanishingly small figure]. Heathrow has the benefit of fitting in with HS2 for links to the rest of the UK.