The debate over extra London hub capacity, which has been simmering for some time now, has been re-ignited by the Mayor of London, Boris Johnson, threatening to take the UK Government to court in judicial review proceedings if it does not make a decision before 2015 on expanding London’s airport capacity.
The UK Government has appointed a Commission, led by Sir Howard Davies, (the Davies Commission), which is tasked with considering the case for all the airport expansion opportunities in the South of England, which will produce an interim report with recommendations by the end of 2013, but will not deliver its final report until after the next UK general election in summer 2015. Boris Johnson has called the UK Government “blind” and “complacent” for setting this timetable and for “dithering” and “delaying” in shelving until 2015 a decision on extra runway capacity:
“The Government programme to address the looming aviation capacity crunch in the UK is far too slow, and I am hugely concerned that their intended timetable sets a course for economic catastrophe. The inertia is being fully exploited by our European rivals who already possess mega-hub airports that they intend to use to erode our advantage.”
The chief executive of Qatar Airways, Akbar Al Baker, threw petrol on the flames of this debate when he said during his presentation in October at the Aviation Club in London:
“Heathrow is bursting at the seams and has already reached a critical point. No capacity increase will inevitably lead to further economic hardship with job losses and businesses closing down. Heathrow is already losing out to European neighbouring hubs. Measures to expand need to be taken soon to avoid a catastrophic situation in the future.”
The spectre of judicial review proceedings raised by Boris Johnson, which would involve a High Court judge being asked to review the UK Government’s decision to establish the Davies Commission and report back in 2015, is seen by many as posturing, but there is widespread consensus that the Government needs to ask the Davies Commission to deliver its final report next year, not in three years time.
The Government has been roundly criticised for failing to make concrete decisions on the longterm aviation strategy for the UK, and the Southeast of England capacity crunch in particular, and in order to do so, it will need to work through the Davies Commission’s review of new runway proposals at Heathrow, Stansted, Luton, the Thames Estuary, and most recently Gatwick. Gatwick announced in mid-October that it intends to apply for planning permission for a second runway, which would increase its capacity to 70 million passengers a year and require the construction of a third terminal building. The timing of this announcement will push Gatwick into the airport expansion review, but there is an agreement in place that prohibits construction of any new runway at Gatwick before August 2019.
BAA is stepping up its campaign for a third runway at Heathrow, and has asked the Davies Commission to rule out in its interim report scheduled to be delivered at the end of 2013 the two “splithub” options, which are the so-called “Heathwick” solution, with a new express rail link linking Heathrow and Gatwick, and the “split” hub of Heathrow and Stansted. BAA believes these two options should be ruled out well in advance, so that the Davies Commission can focus on more realistic solutions.
A report published in October by Policy Exchange, a UK think tank, says that the “first best solution” is to build four new parallel runways, in two sets of pairs, immediately to the west of the existing Heathrow Airport site, which would reduce noise over West London and save costs, because existing terminals and infrastructure at Heathrow could be used. The report says that if a new four runway airport at Heathrow proves politically unfeasible, the next best option is a four runway airport at Luton. The report does not rule out an extra, third runway UK airports update – government accused of dither and delay option at Heathrow, but says the Thames Estuary airport proposal is just not practical, because it would be too difficult to get to for too many people and would present greater environmental and construction challenges than expansion at Heathrow. Controversy over a third runway at Heathrow was stoked further in October by the publication of a study by the US university MIT and Cambridge University, claiming that the number of deaths caused by air pollution would more than double from the current 50 a year to 150 a year by 2030 if a third runway at Heathrow is built.
There are many who believe that there will never be any political consensus on additional London hub airport runway capacity, among them Willie Walsh, CEO of International Airlines Group, who says: “quite honestly, my view is that we will never see another runway at Heathrow, and we will never see a Thames Estuary airport.”
In other UK airport news, BAA has announced that it will not mount a further legal challenge against the ruling of the Court of Appeal in July upholding a 2009 UK Competition Commission ruling instructing them to sell three of their airports; Gatwick, Edinburgh (or Glasgow), and Stansted. BAA’s decision not to take their case to the UK Supreme Court brings to an end a legal saga that goes back as far as March 2007, when the UK Office of Fair Trading referred BAA to the UK Competition Commission, which has led to BAA selling off Gatwick airport for £1.5 billion in October 2009, and Edinburgh airport for £807 million in April 2012. BAA fought hard to challenge the ruling compelling them to sell Stansted as well, having always contended that the UK Competition Commission failed to recognise that Stansted and Heathrow serve different markets.
The decision by BAA not to appeal to the highest UK court came just one week after Qatar’s sovereign wealth fund announced the purchase of a stake in BAA. BAA will retain ownership of Heathrow, Glasgow, Aberdeen and Southampton airports, but the sale of Stansted will now proceed. The sale price is £1 billion and bidders are known to include Manchester Airports Group, with some early interest thought to have been shown by Citi Infrastructure Partners, Macquarie and Deutsche Bank’s Infrastructure arm RREEF, Morgan Stanley’s Infrastructure arm, JP Morgan, and Li Ka-shing’s Hong Kong infrastructure arm, CKI. Apparently an Information Memorandum sent to bidders claims that removing Stansted from BAA’s ownership could produce immediate savings on running costs of £5 million a year. Ryanair, which accounts for 70% of Stansted’s traffic, wanted to acquire through a consortium a 25% stake in the airport, but has now withdrawn from the bidding, having been advised by BAA that they would exclude Ryanair and any Ryanair related consortium from the Stansted sale process.