Does London Need Another Runway?

As the debate continues to rage, with Heathrow & Gatwick both claiming to be the best option for an additional runway, I thought it might be interesting to review the current situation and ask whether an extra runway is needed at all.

London has six international airports within an hour’s drive or train-ride of the centre: Stansted (north), City (east/central), Southend (east), Luton (northwest), Heathrow (west) and Gatwick (south).

The BBC recently featured a useful summary which pointed out that, “Transport Secretary Patrick McLoughlin has said the UK needs to increase its aviation hub capacity to compete with international rivals. That view is shared by some politicians and business leaders, but others argue that no credible case has been made.”

The situation is further complicated by the appallingly inaccurate forecasts made by UK’s Department of Transport:

From a purely competition-oriented viewpoint, it makes little sense to expand Heathrow, which already represents almost half of London’s passenger traffic:

Airport Pax %
HEATHROW 73,823,635 49%
GATWICK 39,048,023 26%
STANSTED 21,473,072 14%
LUTON 11,190,751 7%
LONDON CITY 4,051,915 3%
SOUTHEND 1,010,998 1%
TOTAL 150,598,394

Normally, I’d expect the competition authorities to be interested in this sort of situation, yet in this case we have a government department apparently prepared to expand a private firm’s dominant market position.

From an environmental perspective, Heathrow noise affects 725,000 people & there are claims that a third runway there would raise this to more than a million. Gatwick Airport by contrast claims that just 36,000 people are affected by noise from its flights.

One argument for expanding Heathrow was the idea that a large hub benefits from economies of scale: more routes attract more passengers, which in turn finance additional routes. Yet less than 1% of Heathrow’s passengers are transit, so where is the benefit?

Even some of Heathrow’s biggest customers are not in favour: Willie Walsh, CEO of IAG (owner of British Airways) was quoted recently as saying the £17.6bn price-tag “cannot be justified on any basis”.

Another factor which appears not to be considered is the dis-economies of scale that result from a very large airport: traffic congestion getting to & from the terminals (on rail as well as road); time taken to get through security etc. These factors can add significantly to total journey time (especially for short hops such as domestic routes) compared with using smaller regional airports. London City and my local airport in Jersey, Channel Islands are great examples of this: I can be through either airport in a few minutes.

If so little of Heathrow’s traffic is transit, why not move some of the domestic flights to other airports such as under-utilized Southend, thus freeing up slots at Heathrow for higher-value long-haul traffic?

And here’s another thought: in Asia, popular 1-2 hour intra-regional routes are often served by large aircraft such as 747s; in UK many of these routes use 737s or A319s but with many flights per day. Whilst this might appear to offer consumers more choice, perhaps CAA or Airports should consider runway pricing that encourages the use of larger planes & less frequent flights on these routes, thus freeing up slots to handle additional long-haul routes without the need for another runway.

 

This article first appeared on LinkedIn 7 September 2015

Does UK Need More Airports?

Reading the latest document from the Stop Stansted Expansion (which is excellent, and can be downloaded here) it strikes me that although there istechnically debate, nobody seems to be listening to what anyone else is saying.

Two of the graphics in SSE’s latest submission stand out so I’ve included them below. The first shows that UK already has substantially more commercial runways than any of our EU peer group or Japan.

The second shows that, with the exception of Heathrow there would appear to be plenty of spare capacity.

It seems likely that, as with the internet & computer software, airports can benefit from ‘network effects’ and that Heathrow has indeed been the prime beneficiary. So why, when Heathrow has so little growth capacity and other airports have so much, does the Airports Commission refuse to consider the use of Air Passenger Duty (APD) as a policy lever, by setting different rates for different airports? Similar approaches are used in traffic management (e.g. London’s Congestion Charge) and have been successful both in raising revenue and in controlling traffic.

I have to confess to having a personal interest in Stansted: my parents live about 20 minutes northeast of the airport. As I’m sure you can imagine, this can be both a blessing and a curse. Nevertheless, I’m against any expansion at Stansted for the following reasons:

1. It doesn’t seem as though we really need more airport capacity — rather, we need to be using the capacity we already have, better. For example, Southend Airport always seems pretty much deserted whenever I travel through it. SSE also makes an excellent point that in Asia one sees many domestic routes served by 747s or similar large aircraft whereas in UK instead we offer lots of smaller planes.

2. Stansted is really not a great airport:

  • it takes too long to get into London on the train (which is also unreliable and expensive);
  • car drivers cannot drop their passengers right outside the terminal, unlike most other airports (“for security reasons”, ostensibly, but in practice probably to maintain the taxi company’s monopoly);
  • there’s so much glass in the terminal buildings that the IRIS software can’t function;
  • there are no long-haul carriers and 92% of capacity is provider by Ryan Air and EasyJet.

3. Essex has a lot of really nice historic buildings and some lovely countryside, much of which would be under threat from any expansion of the airport.

It probably doesn’t help that all the airports are independently owned, either — after all, as with American politics the person who wins the debate (and the election) will be the one with the biggest bankroll, and in the case of the UK airports, that’s always going to be Heathrow. So the Airports Commission really has a duty of care to the British people to take that into account and attempt (at least) to be a truly unbiased arbiter. Some chance.

 

This article first appeared on LinkedIn 29 July 2014

The Trouble With Trains

I am a big believer in railways as a way of moving people & freight around a country quickly, efficiently and cheaply. It may well be the case that part of Japan’s post-War expansion was thanks to an extensive network of railways.

So I have given quite a bit of thought to UK’s HighSpeed projects, particularly HS2.

Here’s why I don’t think it can work — not to say it won’t get built, but rather than it won’t have the impact the government and its proponents claim.

I took my 17-year-old son to an Open Day at Sheffield University for the day yesterday. Before going, we looked at travel alternatives from London. The cheapest ticket by rail, purchased a week in advance, is about £76 per person return if you take very specific trains (i.e. no flexibility). The ‘standard’ flexible return ticket is more than twice that. By car, it’s a little longer journey but we did it on less than a tank of gasoline, probably for less than £50. So if the existing low-speed rail network can’t compete with a single traveller in a car (let alone two, or a car-full) how can HS2 possibly imagine it will attract anyone?

Presumably whoever has done the forecasts has assumed that all travellers are business-people who value their time over everything else. Even if this were the case (and it patently isn’t), many businesses would probably prefer their staff to spend a little longer getting there if it’s less than half the price. And that’s before considering that in a car I can leave when I like, stop for lunch somewhere that serves edible food, and so on.

Realistically, for HS2 to work either the government has to change road pricing so dramatically that the cost of going up the M1 doubles (tolls, gasoline taxes etc) orthey will have to subsidise HS2 hugely. Or the trains will be empty.

 

This article first appeared on LinkedIn 12 July 2014.