The Future Development of Air Transport in South East
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THE FUTURE DEVELOPMENT OF AIR TRANSPORT IN SOUTH EAST ENGLAND MAY 2003 CONTENTS PAGE Summary 3 Context and background for BA’s position. 6 Answers to questions raised in the SERAS consultation paper: Section 1 How much capacity should be provided? (Qs 1-4) 11 Section 2 Where to provide new capacity? (Qs 5-13) 25 Section 3 Managing the impacts of airport growth. (Qs 14-21) 44 Section 4 Implementation of the White Paper and Next Steps 67 Appendices: I Runway capacity and projected growth in air traffic 69 II Analysis of potential “seeding” options 77 III BA’s preferred Heathrow option 81 IV Air Quality 87 V Stakeholder consultation 97 VI Surface access 103 DEVELOPMENT OF AIR TRANSPORT IN SOUTH EAST ENGLAND May 2003. Page 2 SUMMARY Aviation’s contribution and importance Aviation is an important sector of the UK economy, contributing 1.4% of GDP, or around £12.6bn in 20021. It generates 180,000 jobs directly and supports half a million other UK jobs. Aviation facilitates the export of a wide range of goods and services from all sectors of the economy. This is an industry in which Britain, despite its small size, plays a world leading role. “Sustainable development requires Aviation provides almost all international public transport a global economic system which services to and from the UK, and carries a significant share of supports economic growth in all international cargo transport, connecting Britain with every part countries. We need to create of the globe. Aviation is facilitating the UK’s transition to a conditions in which trade can more sustainable economy. flourish....” UK Sustainable Development Policy. Britain is an outward looking trading nation. Aviation’s importance has long been recognised and Britain has pioneered many new developments since the inception of aviation. As a result, the UK has developed one of the world’s best and most extensive networks of international air services. The UK’s air transport network is an irreplaceable national asset which is valued and used by a great variety of people and businesses in the UK. A key element of this network is the range of services provided from Heathrow, the UK’s only internationally competitive hub airport, which is particularly important for intercontinental services because of the connections it provides. We agree with the Government’s overall forecasts of traffic growth, but the UK’s ability to capture the economic benefits of this potential will depend on where and when the new runways are added. The different dynamics of longhaul and shorthaul travel need to be taken into account and the need for UK airlines and airports to be able to compete in increasingly contested markets. We expect longhaul traffic to grow more quickly than shorthaul, at around 4% pa over the next 30 years. A large portion of longhaul services need to be located at an efficient, competitive hub airport providing a good network of connecting services. Heathrow today caters for 80% of longhaul travel at the London airports but it is now being challenged as the world’s leading international hub. A competitive hub at Heathrow Heathrow is suffering from increasing congestion, delays and a lack of capacity for new services. As a result, the UK’s international transport network is eroding, while Continental airports are building up their networks. Paris CDG, for example, now offers a greater range of destinations than Heathrow. Amsterdam offers more flights to UK regional airports than Heathrow can. Action is needed to ensure the UK has a competitive inter-continental hub, or the success of the UK aviation industry and London’s position as a World City will decline. There is an overwhelming case for developing Heathrow. Adding a short runway in 2011 would be sufficient to maintain the competitiveness of the UK’s aviation hub at least until 2030. The new runway would be used for shorthaul flights, including restored UK regional services, to free up capacity on the main runways for longhaul growth. Two hubs? A major question posed by the Government is whether the UK could grow a second international hub airport alongside Heathrow. No other city in the world has developed two competing inter-continental hubs and we do not believe this would be possible in London in the coming 30 year period. A new 1 Oxford Economic Forecasting Report 1999. £12.6bn is calculated as 1.4% of UK Gross Value Added at Factor Cost of £903.3bn in 2002. DEVELOPMENT OF AIR TRANSPORT IN SOUTH EAST ENGLAND May 2003. Page 3 hub could not compete with established hubs at Heathrow and on the Continent, particularly if it was in an inconvenient location, or if operating costs were high. The two-hub concept depends on constraining Heathrow. We believe this would result in significant loss of economic benefits, disruption to the successful UK aviation industry and damage to the UK’s international air services network. It would also weaken the long term chances of any regional airport developing into a second UK hub. Consumers make their own choices in competitive markets. Many passengers denied access to Heathrow will not use Stansted or Cliffe instead. Transfer passengers are more likely to use Continental airports. Some businesses would relocate near to better continental hubs. Holidaymakers may go by car or decide not to come to the UK. Government intervention could stop Heathrow’s success, but it could not make an inconvenient or expensive airport succeed. We also note that a brand new hub at Cliffe, while superficially attractive, would not avoid environmental difficulties. Despite the noise advantage, we understand that Cliffe is opposed by the relevant local authorities and by national environmental bodies. It would also appear to be difficult to integrate the airport into UK airspace. We are not aware of any serious positive support for Cliffe. Developing non-hub airports An internationally competitive hub is needed to allow growth of longhaul services. Away from the hub, the main requirement is to allow shorthaul growth, which is expected to be slower and to generate lower economic benefits. There is considerable scope for shorthaul traffic growth to make use of spare airport capacity in the South East. Regional airports such as Birmingham could also cater for more locally generated shorthaul demand. As spare airport capacity fills up, the case for building a second new runway becomes strong. Gatwick is the preferred location from a commercial perspective, because it is well located for passengers, has good rail connections and is an established based for charter airlines. This could be developed after 2019 or beforehand if local communities agreed and the case can be made. Heathrow first The net economic benefits of all options starting with a new short runway at Heathrow dwarf those of non-Heathrow packages, even when an allowance is made for environmental costs. Our assessment of the overall economic benefits of adding a short runway at Heathrow, net of “global warming” costs, is £37bn. The Government’s analysis, which in our view understates the economic benefits of developing Heathrow, relative to the other hub options at Cliffe and Stansted, still shows that Heathrow generates by far the greatest economic benefits per unit of capacity. Adding a wide spaced runway at Gatwick, following one at Heathrow, would increase total net benefits to £65bn. Later in the period, there is likely to be demand for a third new runway in the South East. Our analysis indicates that adding this runway, at Stansted for example, as the third part of the “package” would increase total net benefits to £80-90bn. However, given uncertainties in forecasting this far ahead, we cannot be certain that a viable case could be made for building a third new runway in South East England during the 30 year period. We recommend that the option is kept open so that the case can be reviewed nearer the time. Sustainable development Consistent with the Government’s sustainable development policy, which requires a balanced approach towards economic, social and environmental issues, we recommend that the overall policy aim should be to capture as many of the economic benefits as possible, while dealing responsibly with environmental impacts. DEVELOPMENT OF AIR TRANSPORT IN SOUTH EAST ENGLAND May 2003. Page 4 The most important environmental issue, climate change, is not affected by runway location. We have long accepted that aviation’s contribution to global warming can and should be managed. The immediate priority is for aviation to take responsibility for carbon emissions, the main contributor to global warming. The most efficient and effective way forward is for aviation to be brought into an open international system of emissions trading. We do not support a tax on kerosene. There is no case for adopting a policy of demand management simply to avoid making difficult decisions about expanding national infrastructure. Policies to deal with environmental issues, such as emissions trading, will have an effect on demand, but these effects have been incorporated into Government traffic forecasts. Fixing a limit on growth would be unsustainable. Local environmental impacts will be significant for all options. These differ according to location and must be addressed. Managing local impacts at Heathrow Building a third runway at Heathrow would, in our view, be sustainable if it is accompanied by an environmental framework to limit local noise and air quality effects. We have sought to engage local communities in consultation as part of the process of developing this response and we remain willing to engage in future consultation exercises. We propose that the runway is moved East so that the Church, graveyard and ancient Tithe Barn at Harmondsworth can remain in situ.