The Airports Commission model was flawed and risks steering the Prime Minister towards the wrong answer—and if Heathrow is picked, saddling customers with higher costsby John Kay / October 15, 2015 / Leave a comment
Dear Prime Minister, Within the next few weeks, you will have to make one of the most significant, and controversial, decisions of your premiership: whether to expand London’s airport capacity, and if so, whether to choose Heathrow or Gatwick. You will be faced with several thousands of pages of documents prepared by the Airports Commission which you appointed, and an even larger volume of submissions from interested parties.
Howard Davies, chair of the five-person Commission, concluded emphatically in his report published on July 1st that the right solution was to expand Heathrow. He overstates that case. The Commission has given too much weight to a model which includes an excess of detail, and makes too many assumptions about the distant future. It should have focussed on a limited number of central issues: the value of a hub, the costs of the rival options, the nature of airline competition, the value of landing slots and the cost of capital. Above all, the analysis suffers from a mechanical projection of the present into what is in reality a highly uncertain future.