The flaws in the case for Heathrow

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 costs

by John Kay / October 15, 2015 / Leave a comment

A Gulf Air jet arrives over the top of houses to land at Heathrow Airport. © REUTERS/Stefan Wermuth

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.

Heathrow Airport is 15 miles west of central London. It has about 650 daily slots (a slot comprises one takeoff and landing), which equates to 470,000 aircraft movements, catering for 74m passengers a year. Forty-seven million passengers start or end their journeys at London and another 13.5m change planes there (and hence count twice). Heathrow became a hub airport when planes struggled to cross the Atlantic and remains a centre for “hub and spoke” operations, not only for British Airways but for the Lufthansa/United Star Alliance and the Delta/Air France/KLM Skyteam. Gatwick Airport, 25 miles south of the city, has around 350 slots, 262,000 aircraft movements and 39m passengers. Less than 5 per cent of Gatwick users are transfer passengers.

Heathrow has two runways and Gatwick one. (There are four at Frankfurt, JFK and Paris Charles de Gaulle). Heathrow has operated at full capacity for years and Gatwick is approaching it. Demand for air travel is growing, but little faster than GDP.

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Comments

Ray
October 18, 2015 at 16:48
Heathrow is totally unsuitable for third runway for all the reasons you mention; cost, noise and pollution. But also consider; Heathrow has reasonable access to central London. Heathrow has no public transport access North, South or West. The Airports Commission Final Report (ACFR) report just glosses over the difficulties of access. Diverting the M25 is in itself a massive project. The M25 round Heathrow is at a standstill every day, not just when it’s busy but every afternoon. It’s impossible to see how the M25 can accommodate any more cars. A rail link to the South /South West is fraught with problems. The proposed Airtrack route would run on lines which have fifteen level crossings, building bridges and under-passes are another massive engineering task. The ACFR seems hardly to have addressed any of these problems. Gatwick on the other hand has good rail links in all directions and there is ample space to widen the M23. The whole case for Heathrow seems founded on some wooly assumptions about the UK benefits; I fail to see how the benefits to the UK of a Heathrow or Gatwick expansion can be anything but the same. Getting the Government off the hook is a bit tricky, but can be done. First HMG announce that the 2nd runway will be build at Heathrow, then a bit later they announce that noise concerns and the need for a secure backup etc lead them to conclude that Gatwick can also have a second runway – provided funding can be arranged and the Governments liability is limited to couple of billion. Then once things start rolling; airlines plan their moves to Gatwick , costs escalate, the Heathrow project quietly fades away, at least for my life time.
Smike
October 19, 2015 at 16:18
The Thames Estuary option was the one that it seems likely other developed nation, from their record on infrastructure, would have adopted thirty years ago. It is closer to central London, has the development potential to last the rest of the Century, rather than 25 to 40 years, the prevailing wind takes polution away from London, the number of people overflown would be smaller, the costs would be defrayed by the redevelopment of much of the existing Heathrow area. All other options are sticking plaster palliatives. Boris Johnson got it right, but his championing of the option was probably what scuppered it politically

John Kay is an economist and author. His most recent book "Other People's Money" is published by Profile