RESPONSE TO THE DEPARTMENT FOR TRANSPORT
THE FUTURE DEVELOPMENT OF AIR TRANSPORT IN THE UK
NOVEMBER 2002 CONTENTS
Page No.
Executive Summary 2
Introduction 5
Format of Response 6
Overall Policy 6
The Regions outside the South East 11
The South East and Eastern Region 17
Appendix A 26
Appendix B 28
Appendix C 29
Appendix D 62
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Air Transport in the UK 1 SASIG: November 2002 EXECUTIVE SUMMARY
The Strategic Aviation Special Interest Group (SASIG) of the Local Government Association comprises some 75 local authorities that have an interest and responsibility for major aviation issues within their administrative areas. The population represented by SASIG is some 23 million.
SASIG has campaigned for many years for a long-term aviation strategy for the UK. Whilst looking 30 years ahead is difficult, it is the minimum time frame over which to ensure that any strategy can show the vision necessary to avoid incremental growth at existing airports.
SASIG accepts the Government’s mid point forecasts of 500 million passengers per annum at 2030 as the basis for formulating airports policy, but expects the Government to develop a strategy that has viability for at least another 10 years so as to accommodate higher or slower growth.
SASIG believes that policies based on predict and provide do not allow sufficient account to be taken of the need for aviation to meet its external costs. Policies based on predict and manage may both deny the travelling public the social opportunities that they will increasingly demand and deny the economic benefits to the UK. However, the best process is one of predict and plan. It allows for vision to help determine the right course of action.
SASIG expects there to be strong, local opposition to any individual project proposed by Government. That should not be a reason for the Government to avoid taking those difficult long-term decisions.
SASIG has a range of firm views set out below. Together, they form a coherent and essential aviation strategy.
1 SASIG EXPECTS the Government to maintain its commitment to publish an Airports Policy White Paper that looks 30 years ahead. Anything less will undermine the credibility of the aviation planning process.
2 SASIG COMMITS itself to working with Government in finding a long- term solution to meeting all or part of aviation demand in a sustainable way.
3 SASIG ACCEPTS the Government’s unconstrained forecasts as the basis for formulating aviation policy but feels that UK demand of 500 to 600 million passengers per annum (mppa) should be the planning horizon so that there is no shortfall of planned capacity in the event of the mid- point forecast being exceeded. Growth will not stop suddenly at 2030
Air Transport in the UK 2 SASIG: November 2002 and thus there is no reason to seek a neat fit between the demand forecasts and planned provision.
4 SASIG EXPECTS the Government to use the strength of the aviation industry’s economic driving force to assist rather than damage local economies.
5 SASIG EXPECTS airport growth to be conditional upon enforceable agreements to limit environmental impact to agreed levels, particularly for noise, air pollution and surface access.
6 SASIG ADVOCATES that the Airports Policy White Paper should provide a long-term solution with considerable vision. It should enable the growth of all or most of the regional airports providing a combined capacity of around 200 mppa. It should also provide for a firm capping of the existing main London airports at the capacity of the existing runways, with the provision of a new 24 hour airport in a suitable location to serve the South East.
7 SASIG ADVOCATES the concept of an environmental capacity limit for each airport and that step increases in capacity should only be provided where technological and operational improvements to reduce the environmental impacts can be demonstrated.
8 SASIG EXPECTS the aviation industry to meet “the external costs it imposes, including environmental costs”, as promised in the Integrated Transport White Paper. SASIG also EXPECTS the Government not to sanction growth until there is a clear methodology of calculating and resolving the payment of those costs.
9 SASIG EXPECTS the Government to take whatever measures are necessary to ensure that the development of the aviation industry is based on the Government’s own sustainability agenda.
10 SASIG EXPECTS the Government to ensure that a national aviation policy is rapidly embodied into new regional planning guidance and development plans for all regions of the UK.
11 SASIG ACCEPTS that, over the next 30 years, provision should be made for regional demand of around 200 mppa to be accommodated, subject to strict environmental safeguards at individual airports. Opportunities at the regional airports should not be frustrated by agreements that favour the five London airports, as has been evident in the past, nor by a shortage of suitably sited runways serving the London area.
12 SASIG ACCEPTS that, over the next 30 years, provision should be made for around 16 mppa in the South West region, with some emphasis given to good connections to both a new London Airport and the existing London airports.
Air Transport in the UK 3 SASIG: November 2002 13 SASIG ACCEPTS that, over the next 30 years, provision should be made for around 90 mppa in the Northern regions, with some emphasis given to good connections to both a new London airport and the existing London airports.
14 SASIG ACCEPTS that, over the next 30 years, provision should be made for at least 36 mppa in the Midlands. That provision could be increased to around 45 mppa through the expansion of Birmingham Airport subject to the acceptance of the local authorities in the area.
15 SASIG PROPOSES that the Government’s long term policy for the South East should be based on no new runways at Heathrow, Gatwick and Stansted. In the light of the Government’s current forecasts and the Government’s statement that “doing nothing is not an option”, a new airport should be developed into a potential 4/5 runway, 24-hour airport. On the understanding that the Government’s technical work has shown that Cliffe is the best new airport option, then the Government be encouraged to undertake further studies on that site and other sites to ensure that, at whatever site is finally chosen, the impact on both land take and nature conservation is minimised.
16 SASIG PROPOSES that, over the next 30 years, provision should be made for around 100 to 150 mppa at a new airport to serve the South East, with firm environmental safeguards and appropriate mitigation measures.
17 SASIG ACCEPTS that, over the next 30 years, provision should be made at Gatwick for around 40 mppa with a range of environmental safeguards on noise, air pollution and night flights.
18 SASIG REJECTS a further runway at Heathrow and PROPOSES that, over the next 30 years, the airport should be capped at 480,000 atms and around 89 mppa, with a range of environmental safeguards on noise, air pollution and night flights.
19 SASIG REJECTS further runways at Stansted and PROPOSES that, over the next 30 years, the airport should be capped at around 35 mppa, with a range of environmental safeguards on noise, air pollution and night flights.
20 SASIG SUPPORTS the continued development of Luton as a 1-runway airport.
21 SASIG REJECTS the suggested airport option at Alconbury as it does not fit with SASIG’s vision of a new airport in the South East.
Air Transport in the UK 4 SASIG: November 2002 INTRODUCTION
1 The Strategic Aviation Special Interest Group of the Local Government Association (SASIG) comprises some 75 local authorities that have an interest and responsibility for major aviation issues within their administrative areas. They established themselves within the Local Government Association so as to have a forum within which to discuss this specialist topic.
2 To this end SASIG has adopted a mission statement which reads:
“SASIG seeks to ensure that there is a national aviation strategy for the UK that reconciles economic, social and environmental issues in a sustainable way.
SASIG encourages airports and the aviation industry to operate in harmony with local government and with the communities they serve.”
3 Membership of SASIG is set out at Appendix A. The combined population of all the authorities listed is some 23 million people. SASIG thus presents a powerful voice of interested authorities, working within a democratic framework. SASIG is not a one-sided interest group but has the economic, social and environmental well being of the electorate to consider. SASIG has taken an overall view of the issues as they affect the whole of the UK. Inevitably some of the SASIG authorities do not support a small number of specific solutions. The extent of their reservations is shown in Appendix B.
4 SASIG welcomes the opportunity of responding to the Government on the "Future Development of Air Transport in the UK" and congratulates the Department for Transport on the extensive work that has been undertaken in preparing the consultation documents. SASIG also welcomes the fact that the White Paper, which will be the outcome of the consultation process, will look 30 years ahead and should therefore provide a reasonable, but minimum, planning horizon.
SASIG EXPECTS the Government to maintain its commitment to publish an Airports White Paper that looks 30 years ahead. Anything less will undermine the credibility of the aviation planning process.
5 SASIG has no illusions about the difficulty facing Government, local authorities, the aviation industry and indeed the population as a whole in finding an acceptable balanced solution. Whatever the solutions, there are bound to be those that are adversely affected and that seek to prevent the project taking place. Within SASIG’s own membership there are a variety of views on individual projects and in the extent to which demand should be met. There are two options to handling this dilemma. Either:
· Develop a set of policies and proposals that only includes the less contentious options. This is likely to result in no clarity in long term policy, under provision and then continuous contention over incremental growth.
Air Transport in the UK 5 SASIG: November 2002 · Take a long-term view and create a visionary solution that enables the aviation industry and the planning authorities to have certainty over the location and direction of growth for the next 30 to 40 years. Whilst this may upset those adversely affected, it is the only sensible strategic way forward.
FORMAT OF RESPONSE
6 SASIG's response to the consultation documents is based on a broad policy view, followed by a consideration of the main options and policy scenarios for each of the English regions. SASIG's membership does not cover Wales, Scotland and Northern Ireland and thus there are no specific comments on those areas. The implications for individual airports are then considered.
7 This response seeks to provide a concise view of those aspects of particular concern to SASIG. A very detailed study of some aspects, particularly as they affect the South East options, has been prepared by consultants, Berkeley Hanover Consulting (BHC). Their conclusions are included as Appendix C. It is worth noting that BHC, appointed by the then DTLR, were the lead authors of the appraisal methodology used in SERAS.
8 SASIG local authorities will, in the main, submit their own detailed observations on individual airports. However there are some key policy points on individual airports which are important and which are set out in the paragraphs below.
OVERALL POLICY
9 SASIG has previously argued for the management of future demand in aviation on the basis that such huge growth may not be sustainable in terms of a wide range of impacts such as noise, air pollution, localised urbanisation pressures and integration with wider regional and sub regional economic aspirations. Some of the SASIG authorities remain committed to this approach. However there is general recognition that the Government has been convinced that growth in aviation is essential for the UK economy and it is on this basis that this response is being made.
10 SASIG considers that there are three ways to take the aviation debate forward.
· Predict and provide – a much discredited process of meeting whatever demand arises without considering the sustainability of the solution. · Predict and manage – based on the assumption that some people will be denied the opportunity to travel by pricing or lack of infrastructure. If the extent of the management fails to be effective, then incremental un-planned growth is likely to follow. This is not a strategic way forward. · Predict and plan – this is the very essence of a strategic approach. It allows long term plans to be made that are flexible enough to be implemented more quickly or more slowly depending on their sustainability at the time.
SASIG COMMITS itself to working with Government in finding a long-term solution to meeting all or part of aviation demand in a sustainable way.
Air Transport in the UK 6 SASIG: November 2002 Forecasts of aviation demand
11 The consultation documents are all based on unconstrained demand forecasts for 2030 of some 500 million passengers per annum (mppa). This is a mid-point figure, with the high being 600 mppa and the low being 400 mppa. SASIG accepts that no forecasts can be expected to be accurate. However, the out-turn of some of the earlier forecasts has been at the high end of the range. On this occasion the forecasts show an average growth over the 30 year period of around 3.5% per annum. This is much lower than the 5 or 6% per annum over recent years. If growth continues at 5% per annum, then capacity at 2030 would need to be found for around 780 mppa.
12 In this current strategic planning exercise it is more important to use a robust demand figure than become too concerned about the date when that forecast is achieved. It is thus important not to underestimate future demand as it seems likely that there will be growth beyond 2030. On that basis 500 mppa may be reached a few years either side of 2030. If however plans are confirmed that provide an exact fit for, say 450 mppa, and then that figure is exceeded, the UK could find itself back in the position of having to take ad hoc, ill planned decisions as has characterised the aviation industry for the last 20 to 30 years.
13 SASIG notes that the forecasts are unconstrained. They have taken no account of infrastructure shortages nor of the extent to which the inclusion of external costs or other policy initiatives would change the figures.
14 The current exercise is setting the policy direction of aviation in the UK for at least 30 years. Any plan now that doesn’t provide a visionary solution could have pushed aviation provision in the wrong direction – for ever. It is important for the Government to create the best possible policy and avoid the ac-hoc solutions of the past.
SASIG ACCEPTS the Government’s unconstrained forecasts as the basis for formulating aviation policy but feels that UK demand of 500 to 600 mppa should be the planning horizon so that there is no shortfall of planned capacity in the event of the mid-point forecast being exceeded. Growth will not stop suddenly at 2030 and thus there is no reason to seek a neat fit between the demand forecasts and planned provision.
Economic costs and benefits
15 SASIG has previously expressed disappointment that the economic issues surrounding the aviation industry have not been independently studied. This is still the case. In all the numerous supporting documents that have been published there seems to be no Government sponsored research on this topic. Reliance is unfortunately still placed on the Oxford Economic Forecasting study, largely paid for and controlled by the industry.
16 SASIG does not dispute the huge economic benefits – but it must be acknowledged that there are huge economic and environmental costs of
Air Transport in the UK 7 SASIG: November 2002 achieving those benefits. It will be important in developing a national policy to ensure that, wherever possible, the economic benefits are directed to, and felt in, areas that need such a stimulus. Airport expansion in areas where the economy is overheated may bring some benefits to the UK economy but at the expense of the local economy. Equally the maximum benefits to the UK may not be realised if airport development takes place in over heated areas or those not the targets for major growth.
17 Aviation should be seen as a key driver of achieving the Government's wider policy objectives of securing sustainable economic regeneration that recognises the crucial links between economic, social and environmental progress. As airports generate huge economic benefits the Government needs to look seriously at new airport capacity in new geographical areas whereby employment and regeneration benefits can be secured, especially where other key criteria are met (e.g. private investments, transport integration). This approach will enable a complementary reduction of the economic and environmental pressures on over- heated areas around "successful airports".
18 Future investment in airports should complement wider policy objectives. Attributes of airport growth are urbanisation, employment growth and increased levels of surface access. The government rightly seeks to integrate transport and land use and greater emphasis should be given to "joined up" thinking by integrating airport policy with long term spatial strategies that are developing. Greater attention should be given to the needs of sub-regions where airport policy could offer significant economic drivers of change.
19 SASIG is concerned that, in illustrating the effects of airport options in the South East, no account has been taken of the induced and catalytic employment effects. One of the benefits of aviation to the UK is its ability to help attract inward investment to an airport location. In some parts of the country, particularly West London, failure in the consultation document to show those effects has minimised the environmental damage from excessive urbanisation. Equally, for those options associated with a planned growth area, then the stimulus of the airport has been minimised.
SASIG EXPECTS the Government to use the strength of the aviation industry’s economic driving force to assist rather than damage local economies.
Environmental capacity
20 Aviation policy has to balance the economic benefits with the environmental impact. At a strategic level, there must be an assessment made of the capacity of the UK to provide for a continuous growth of aviation provision, not just for 30 years but for ever. Once the locational policy has been settled it is then necessary to take steps to reduce to a minimum the adverse impact on people.
Air Transport in the UK 8 SASIG: November 2002 21 This will entail setting binding legal agreement about levels of impact and the controls to ensure those agreements are honoured. There are probably three main areas where such problems need to be overcome.
· Firstly noise. Apart from measures to minimise it, the suggestions for more generous compensation, set out in the consultation reports is welcomed. The basis of any noise policy should be that those people within the 57dBA contour (supposedly representing the onset of noise disturbance) should become entitled to mitigation. · Secondly air pollution. No houses should be allowed to remain in areas where the level of pollution exceeds the tightest standards current at that time. · Thirdly surface access. Challenging modal splits, for employees and passengers must be met, for each airport, such that passenger numbers cannot be exceeded if those targets are not being met. It will be essential to ensure that the rail and road proposals are funded in advance of new airport facilities coming on-stream.
SASIG EXPECTS airport growth to be conditional upon enforceable agreements to limit environmental impact to agreed levels, particularly for noise, air pollution and surface access.
A strategic overview of policy.
22 SASIG supports the overall policy scenario of the RASCO Reference Case (RRC) which largely assumes the continuation of current policies. SASIG considers that this is best achieved by growth in the regions and a new airport to serve the South East.
SASIG ADVOCATES that the Aviation White Paper should provide a long- term solution with considerable vision. It should enable the growth of all or most regional airports providing a combined capacity of around 200 mppa. It should also provide for a firm capping of the London airports at the capacity of the existing runways, with the provision of a new 24 hour airport in a suitable location.
23 However SASIG would like to stress that for such growth to be accommodated it is essential that the aviation industry demonstrates vast technological improvements to minimise its environmental impacts.
SASIG ADVOCATES the concept of an environmental capacity limit for each airport and that step increases in capacity should only be provided where technological and operational improvements to reduce the environmental impacts can be demonstrated.
24 The Government is committed to ensuring that aviation meets it external, including environmental costs. It is not clear from the consultation reports how this will be achieved in practice. Of particular concern are the global and local effects of air pollution where a solution is not directly within the control of the UK
Air Transport in the UK 9 SASIG: November 2002 Government. In addition noise, by day and by night, is unacceptable to large numbers of people. They need to be assured of a remedy.
SASIG EXPECTS the aviation industry to meet "the external costs it imposes, including environmental costs", as promised in the Integrated Transport White Paper. SASIG also EXPECTS the Government not to sanction growth until there is a clear methodology of calculating and resolving the payment of those costs.
25 SASIG would like to stress that the Air Transport White Paper should dictate a policy, which provides the best solution for the UK as a whole. This will entail balancing economic, social and environmental issues not just creating the policy that is best for the aviation industry.
26 The industry has argued that demand for air transport should be met where it arises with minimum Government intervention. SASIG would like to stress that Government intervention is required to assure that the various facets of the Government's Sustainable Development Strategy are met. Government intervention is essential to ensure the most effective and sustainable aviation industry. Positive assistance by Government was noticeable when the industry suffered the downturn in traffic as a consequence of the terrorist attacks of 11 September 2001.
SASIG EXPECTS the Government to take whatever measures are necessary to ensure that the development of the aviation industry is based on the Government’s own sustainability agenda.
Implementation of the Aviation White Paper
27 Once a White Paper has been published by Government it will be essential to ensure it is implemented. Initially the contents of the White Paper will need to be embodied in new Regional Planning Guidance (or Regional Spatial Strategies), even if the particular region is not necessarily happy with the Government’s policy. The regional policies will then need to be translated into Structure and Local Plans (or Local Development Frameworks). Thereafter it will clearly be for a developer to make the appropriate planning application. The White Paper must make it clear that the local planning authority should not debate the correctness of Government policy in determining the application or at any public inquiry that may be necessary.
28 Some proposals may come forward that are in conflict with the White Paper. There must be a clear presumption that they will fail to achieve a planning permission.
SASIG EXPECTS the Government to ensure that a national aviation policy is rapidly embodied into new regional planning guidance and development plans for all regions of the UK.
Air Transport in the UK 10 SASIG: November 2002 THE REGIONS OUTSIDE THE SOUTH EAST
Overall position
29 The suggested growth levels at individual airports, under the RRC scenario, are set out in Appendix D. Whilst these are generally acceptable to SASIG at a strategic policy level, it will in all cases be important to ensure that carefully designed environmental controls are established, monitored and maintained.
30 In addition, airport operators will need to work with the relevant local authorities, where this is not already being done, to establish improved public transport access to the airports so as to enhance the modal shift.
31 SASIG has always supported policies that seek as much growth at regional airports as is acceptable locally, particularly where economic regeneration is supported. One of the recent problems for regional airports has been the difficulty of maintaining or securing runway slots to the London airports. There has simply been a shortage of slots, yet the industry has not recently made a proposal for a new runway in the South East – seemingly preferring to build terminals and squeeze out the less profitable internal flights.
32 The result of this is that many regional airports have turned to Europe to be able to provide the necessary connections. In many ways, the passenger has not been disadvantaged as it may be of little relevance whether a connection is made in Schiphol or Heathrow. What presumably has mattered is that a UK airline – and thus the economy of UK plc – may have lost revenue to a foreign carrier.
33 SASIG suggests that the Government should consider using fiscal measures to help regional airports develop. One option would be the use of a passenger levy at South East Airports to help fund regional airport development.
34 In developing a new national aviation policy, SASIG would hope that the Government would fully support regional growth by allowing access to the London airports, principally for long haul connecting flights that cannot be provided within the regions. At the same time, strategic rail services should be improved to enable both city centre to city centre journeys and enable direct city to regional airport journeys thus integrating rail and air transport. Overall there should be greater emphasis on transport integration by steering investment towards airport/rail opportunities and aligning air transport with strategic rail policy to create a sustainable transport network.
Air Transport in the UK 11 SASIG: November 2002 SASIG ACCEPTS that, over the next 30 years, provision should be made for regional demand of around 200 mppa to be accommodated, subject to strict environmental safeguards at individual airports. Opportunities at the regional airports should not be frustrated by agreements that favour the five London airports, as has been evident in the past, nor by a shortage of suitably sited runways serving the London Area.
The South West Region
35 SASIG's position regarding the "Future Development of Air Transport in the South West" is as follows:
· The overall demand for the South West, as specified in the RASCO Reference Case, should be accommodated in the South West. The forecast for the South West in 2030 is 15.9 mppa compared to 2.9 mppa in 2000. · Demand at individual airports in the South West should be met at the various regional airports as set out under the RRC scenario. · Any increases in capacity should be accompanied by environmental safeguards to minimise any worsening of the noise climate and to mitigate the other environmental impacts. · Bristol should be developed as a regional hub but it is important to note that once it's environmental capacity limit is reached, it will be necessary for other airports in the region to share the excess demand. · SASIG does not support a new airport in the Bristol area since it will only be viable if there is no new runway capacity in the South East of England and if the existing airport closes. SASIG supports new runway capacity in the South East through the development of a new airport at Cliffe in North Kent (or a more suitable site if one can be found). · The development of a new airport in the South East will allow the South West better air access to the South East through slots at the new airport. The business community in the far South West have placed great significance on access to the London airports. · New capacity in the South East means that some passengers from the South West will continue to need to use the London airports and therefore SASIG supports improved rail links from the South West to London. These must serve all the main London Airports, particularly Heathrow and Cliffe (or a more suitable site if one can be found).
SASIG ACCEPTS that, over the next 30 years, provision should be made for around 16 mppa in the South West region, with some emphasis given to good connections to both a new London Airport and the existing London airports.
Air Transport in the UK 12 SASIG: November 2002 Implications for individual airports in the South West
36 Newquay Airport. The forecasts may be an underestimate now that the airport has a low-cost carrier operating from it. It is thought that the airport is likely to reach 2.0 mppa by 2030. An important issue for Newquay airport is the interaction between the civil aviation and military operations at the airport. The Ministry of Defence is due to publish a review on the airport. It is essential that the future operation of these two types of use at the airport is made clear in the White Paper.
37 Newquay is an example of an airport serving a more remote region of the UK. It will be important for the Government to take all possible steps to improve air serves to Cornwall.
38 Bristol and Bournemouth Airports. Both airports are only considered suitable for expansion with improvements to the surface access provision, for example potential rail links.
The North of England Regions
39 SASIG's position regarding the "Future Development of Air Transport in the North of England" is as follows:
· The overall demand for the North of England under the RASCO Reference Case should be accommodated in the region. The forecast for the Northern regions (comprising Yorkshire and the Humber, the North East and the North West standard regions) in 2030 is 89.4 mppa compared to 26.3 mppa in 2000. · It should be noted that the economic and social conditions vary greatly in the region and aviation policy should take account of these variations. · Demand should be met at the individual airports in the North of England, as under the RRC, except at Manchester Airport where growth may need to be limited so as to avoid higher levels of environmental impact. · Any increases in capacity should be accompanied by environmental safeguards to prevent a worsening of the noise climate and to mitigate the other environmental impacts. · SASIG supports the situation whereby some air services from the North of England to the South East are continued for those passengers seeking onward connections. SASIG does not support additional runways at the existing London airports and thus only a new airport will provide the readily available runway capacity. · SASIG supports the improvement of the high speed strategic rail links from the North to London. These should serve city centre to city centre and airport passengers, acknowledging that central London should then be well connected with all the London airports, particularly Heathrow and Cliffe (or a more suitable site if one can be found). · Continued access from the North of England to the South East will allow airports such as Newcastle to continue to grow.
Air Transport in the UK 13 SASIG: November 2002 · Manchester should continue to see an increasing range and frequency of services and so should continue to be capable of acting as an important regional hub. · In view of the wide regional economic disparities and sub-regional regeneration needs, capacity should be directed where social and economic objectives can be achieved. SASIG regrets that greater cognisance has not been taken of the European Union Objective 1 Areas at Liverpool and South Yorkshire, their social and economic conditions (low GDP) and the contribution that aviation policy can make to improving the long term economic competitiveness of these areas. · Capacity should be directed to airport opportunities that can accommodate high levels of public transport accessibility for both passengers and employees at airport sites. · The unsustainable and poor quality of surface access journeys for consumers that creates high levels of passenger leakage from the Yorkshire and Humberside region should be addressed. The high dependency of the region on Manchester Airport is not considered sustainable in environmental, economic or social terms. · SASIG is dismayed that the contribution that Finningley could make to meeting regional demand, particularly for those residents of the region that live east of the Pennines, has not been fully assessed.
SASIG ACCEPTS that, over the next 30 years, provision should be made for around 90 mppa in the Northern regions, with some emphasis given to good connections to both a new London airport and the existing London airports.
Implications for individual airports in the North of England
40 Manchester Airport. Under the RRC, Manchester is forecast to grow from 18.35 mppa in 2000 to 60 mppa in 2030. The existing infrastructure at the airport could provide capacity for 50 mppa or 340,000 atms. To meet the RRC forecast of 60 mppa for 2030 additional terminal capacity would be required and increased use of mixed-mode operations. These would bring substantial environmental impacts and therefore SASIG suggests an environmental capacity limit set at the level of 50 mppa at the airport. Additional facilities should only be provided if technological and operational measures would ensure no worsening of the environmental impact, particularly the noise climate.
41 SASIG considers that the future of Manchester Airport should be as a two-runway, regional hub airport. The impact of a third runway on the environment and local community is so severe that it should be ruled out in the White Paper. The excess demand at Manchester, which cannot be met due to the constraints, would then be spread across the other airports in the regions. Therefore the other airports in the three North of England regions can achieve a higher growth potential.
Air Transport in the UK 14 SASIG: November 2002 42 It will also be essential to continue to make step change improvements to the surface access provision to the airport, including setting challenging targets for the model split.
43 Liverpool Airport. This has fairly recently become a strong player in the North West region, particularly with the growth of the low cost airlines. It has the potential to grow in such a way that excessive pressure at Manchester is contained.
44 Doncaster Finningley New Airport. SASIG considers that the option of an airport at Finningley should have been fully evaluated in the consultation documents although the difficulties are understood, due to the pending decision on the Planning Inquiry. An equivalent analysis should have been conducted on a non- prejudicial basis to enable proper evaluation alongside other options should Finningley be approved.
45 If planning approval is given, its traffic could reach 5 mppa by 2030. Finningley would provide the opportunity for better services from the Yorkshire and Humber Region and the North Midlands sub-region such that the “leakage” of passengers out of the Region was reduced. It would also assist the Region in its economic aims and could help to ensure that other airports such as Manchester did not exceed or even reach their environmental capacity limits. In addition it would improve public transport accessibility to airports and regenerate areas of low GDP. Several other points are relevant:
· The Airport includes potential for heavy rail interchange facilities and is well placed alongside the strategic road network. The airport has the potential to become a transport interchange as envisaged in the Integrated Transport White Paper offering consumers a high level of service in the sub-region and adjacent regions. · The Airport would have low impact on the environment. In comparison with other airports, few people would live within the 57dBA noise contour and a small number would live in the PSZ. The site is not located in green belt and is located in a Strategic Economic Zone that can support related economic development. · The airport is located in an area of low GDP and within the European Union Objective I Area. It is estimated that the Finningley development will create over 7000 jobs in the region thereby increasing the GDP in the sub-regions by a full percentage point. Not only will the regeneration benefits be felt in the Northern region but also the Midlands, particularly the former coalfield areas of North Nottinghamshire and North Derbyshire.
The Midlands Region
46 SASIG's position regarding the "Future Development of Air Transport in the Midlands" is as follows:
· Under the RRC, the forecast for Birmingham Airport in 2030 is 33 mppa and East Midlands is 12.5 mppa, up from 7.5 mppa and 2.2 mppa in 2000 respectively.
Air Transport in the UK 15 SASIG: November 2002 · SASIG supports the growth at East Midlands to around 12.5 mppa by 2030 based on the use of the existing runway1. · SASIG supports the expansion of Birmingham International Airport initially through more intensive use of the existing runway/extended runway. Then providing the local authorities in the area are content with the concept of a new runway at Birmingham, SASIG accepts the suggested growth to around 33 mppa. · Any increases in capacity should be accompanied by extensive mitigation measures including improvements to transport access and measures to reduce the impact of noise on property and people.
SASIG ACCEPTS that, over the next 30 years, provision should be made for at least 36 mppa in the Midlands. That provision could be increased to around 45 mppa through the expansion of Birmingham Airport subject to the acceptance of the local authorities in the area.
Implications for Individual Airports in the Midlands
47 Birmingham Airport. Providing the Midlands local authorities are content with the concept of a new runway at Birmingham, SASIG supports the expansion of Birmingham International Airport in conjunction with extensive mitigation measures. SASIG understands that there is a new runway option being considered by Birmingham Airport which brings significant environmental improvements compared to the Government’s wide spaced proposal.
48 East Midlands Airport. SASIG does not support a second runway at East Midlands airport due to the environmental impacts, particularly the noise and air quality impacts of such an option. In the longer term, excess demand for East Midlands could be met at other airports such as at a new airport at Doncaster Finningley. Some passengers from the Midlands will continue to use the London airports and demand in the South East should be met by the development of a new airport at Cliffe (or a more suitable site if one can be found).
49 There is demand for night flights at East Midlands for freight operations mainly because there are no night flights restrictions at the airport. SASIG considers that the demand for freight operations could better be met at the new airport at Cliffe (or a more suitable London site if one can be found) in the South East which would allow 24-hour operation with minimum disturbance to residents.
50 New Airport Site. SASIG does not support a new airport site in the Midlands as it would only be viable if no new runways are provided in the South East. SASIG’s solution for the South East is a new airport at Cliffe or elsewhere, with room for considerable expansion and therefore there would be no need for a new airport in the Midlands.
1 NWLDC is of the opinion that the planning figure should be determined by an assessment of Environmental Capacity at each airport, to a common methodology, and that should determine the level of acceptable growth.
Air Transport in the UK 16 SASIG: November 2002 THE SOUTH EAST AND EASTERN REGION
51 Inevitably this region raises some of the most complex issues. Berkeley Hanover Consulting (BHC) has addressed some of them for SASIG. Their report is at Appendix C but a few of the key points raised are included here so as to help explain SASIG’s conclusions.
52 The relationship between the costs of any option and the likely revenue are important in that the net yield will clearly be a determining factor in implementation. BHC show that Cliffe has the highest net yield at £7.52bn, followed by Heathrow at £6.87bn and Stansted at £3.65bn.
53 The calculation of net economic benefits is important as it brings in the wider implications. But it is critically important to include only those factors that are appropriate. BHC argue that the inclusion of foreign passenger benefits and existing passenger benefits is wrong. Also the cost of noise and air pollution need to be factored in. The result of that re-calculation changes the ranking of the options as shown in the table below. It is not just the ranking that changes but the difference between the options changes. Cliffe now has economic benefits only £1bn less than the two higher options whereas in the ranking as reported the difference between Cliffe and the top option was over £6bn.
Ranking as reported Adjusted ranking LHR+1 & STN+2 STN+3 LHR+1 & STN+1 LHR+1 & STN+2 STN+3 Cliffe STN+2 LHR+1 & STN+1 Cliffe STN+2 LHR+1 STN+1 STN+1 LHR+1
54 One of the important factors in determining airport location is the integration with the existing policy base for an area. Such topics as the need to support regeneration initiatives, advantages to the local economy, availability of the low skilled labour needed by airports and housing opportunities need to help drive the right decision. In that the South East is very much a debate about the relative merits of Heathrow, Stansted and Cliffe, then some comparative data is included in the BHC report. Some of the key points are listed below.
The need for jobs and houses in London Area Jobs Housing Central 210,000 140,000 East 250,000 145,000 West 90,000 55,000 North 25,000 55,000 South 55,000 50,000
Air Transport in the UK 17 SASIG: November 2002 Differences in core catchment areas Area Labour force Number Unemployed % unemployed Heathrow 505,000 12,000 2.3 Stansted 137,000 2,130 1.6 Cliffe 438,000 16,000 3.5
Out commuting in the Thames Gateway Area Labour force Total employed Balance in area Kent Thames 273,000 184,000 -89,000 Gateway Essex Thames 322,000 208,000 -114,000 Gateway Outer London 475,000 267,000 -208,000 Thames Gateway Total 1,070,000 659,000 -411,000
Low skilled workers potentially available Area Unemployed Commuting out Potentially available Heathrow 5,600 -9,800 -4,500 Stansted 630 170 800 Cliffe 7,300 16,400 23,700
Housing assumed by SERAS above RPG by 2030 Package Time Frame LHR LGW STN LTN Total LHR+1 2000 to 2015 23,484 800 4,395 180 28,859 2016 to 2030 5,817 422 1,259 134 7,633 STN+1 2000 to 2015 0 809 22,380 669 23,858 STN+2 2016 to 2030 0 0 13,886 104 13,990 STN+3 2016 to 2030 0 500 17,789 80 18,369 * Cliffe was not assessed by SERAS in this area although we would expect it to have the least impact relative to the other packages.
55 All the above tables show that from an integration point of view, a new airport site to the East of London would fit much better with planning policies and aspirations than one in the West or North of London. It would also make better use of available labour supply and require less additional housing allocations. Indeed SERAS suggests that Cliffe would require no additional housing to the regional strategy.
56 There is an important range of factors that need to be compared between the various options, many of which are set out below. A more comprehensive chart is at Appendix D.
Air Transport in the UK 18 SASIG: November 2002 57 SASIG's position regarding the "Future Development of Air Transport in the South East and East" is as follows:
· That demand for air transport in the South East for 2030 is likely to be at least 300 mppa. SASIG’s position is that this demand would best be met through something approaching the stated maximum use of the existing runways at Heathrow, Gatwick, Stansted and Luton, supplemented with the development of a new, large, purpose built hub airport. · Despite the suggested capping of growth at these airports, there is still a need for the Airports Policy White Paper to propose measures to improve the surface access provision, particularly by public transport. · The concept of the option at Cliffe in North Kent would provide for such a new hub, but SASIG considers that there may be better new airport sites still needing detailed examination. · SASIG is opposed to new runways at the existing London airports of Heathrow, Gatwick and Stansted as the impact of them is unacceptable. These impacts are set out later, in detail, for each airport. · A new airport in the vicinity of the Thames estuary would be the economic driver to assist the long desired regional planning aim to create a more prosperous area East of London, just as West London has dominated the regional balance for far too long. · The new airport option would greatly curtail the increase in the noise and air pollution problems which plague the existing London airports, since relatively few people would be affected by aircraft noise and air pollution. A new coastal airport would allow 24-hour operation to meet the needs of air freight and to enhance operational capacity. Overall, Cliffe would have the lowest environmental impacts on people out of any of the runway options in the South East. · By adding new runway capacity at a new airport in the London Airports system, regional airports will be assured access to runway slots for interlining passengers. · The maximum use capacity (198.5 mppa) calculation in the consultation reports is misleading in that it is contingent on a replacement runway at Luton. The true maximum use capacity should be around 185 mppa.
SASIG PROPOSES that the Government’s long term policy for the South East should be based on no new runways at Heathrow, Gatwick and Stansted. In the light of the Government’s current forecasts and the Government’s statement that “doing nothing is not an option”, a new airport should be developed into a potential 4/5 runway, 24-hour airport. On the understanding that the Government’s technical work has shown that Cliffe is the best new airport option, then the Government be encouraged to undertake further studies on that site and other sites to ensure that, at whatever site is finally chosen, the impact on both land take and nature conservation is minimised.
Implications for Individual Airports in the East and South East
Air Transport in the UK 19 SASIG: November 2002 58 Cliffe New Airport. The option put forward for consultation is for a large airport with two pairs of parallel runways and a fifth cross-wind runway to enable night time noise-free flights – an important requirement of the aviation industry. SASIG considers that the development of such an option offers the UK the opportunity to move from a situation where airports grow incrementally as demand forces last minute decisions, to one of planned growth and long term capacity. In many ways this parallels the approach the French Government took many years ago when they judged Orly (Paris) to be “full” and chose to develop Charles de Gaulle at a location where transport links could be high quality and economic growth was welcomed. Cliffe has the potential to be a better hub than Charles de Gaulle – and hence a stronger more attractive airport.
59 SASIG acknowledges that the Government would need to provide incentives to ensure that some airlines move their operations to any new site. This could result in London having twin hubs, with Heathrow’s two runways continuing to provide the home base for one of the airline alliances and Cliffe providing for the other.
60 SASIG acknowledges that the new site, as proposed at Cliffe, would have a large ecological impact in terms of land take and impact on internationally designated habitats. However these impacts need to be weighed against the noise and air quality impacts on people should further runways be built at Heathrow and Stansted. SASIG notes that to mitigate against the ecological impact the SERAS study found that a new habitat in North Kent could be created for £230 million. Thus the bird problem is not only manageable but also cheaper to resolve than the compulsory purchase of many thousand of homes around Heathrow that BHC has estimated would cost in excess of £1bn.
61 A new airport at Cliffe has, in SASIG’s opinion, many advantages over other solutions:
· Cliffe has been identified by the Government as the best new airport option for the South East, having undertaken an exhaustive site search. · This must be one of the very few locations in the South East where adequate land is available with relatively low impact on people. · Cliffe could have good rail and road links to London and other regions. · Airport development would support the regeneration policies for the Thames Gateway. · A new airport in North Kent would remove the need for additional runways at the existing London airports. · Above all else, the development of Cliffe would be a visionary solution that would have the capacity to absorb passenger growth for the next 30 years and beyond. This includes the opportunity to ensure that state of the art facilities can be included to make the new airport safer, a more pleasant travelling experience and more profitable.
62 Equally Cliffe has disadvantages which need to be overcome:
Air Transport in the UK 20 SASIG: November 2002 · The impact on the RAMSAR site needs to be resolved by alternative provision, with adequate and generous funding so that there is an enhancement of appropriate habitats. · The relatively small number of properties affected is regrettable, although some of the “mobile homes” may be capable of being moved to an alternative site.
63 Alternatives to Cliffe. The Government and its consultants carried out an extensive search for a new airport site. SASIG cannot hope to check or repeat that work and in many ways has to take it on trust. But strong opposition is emerging to the Cliffe option. Such opposition appears to be more to the details of the option than the concept of a new airport site as a solution with the vision that is needed to support the role of aviation in the UK. It will be essential for the Government to re-visit the site search and evaluation process so as to test whether or not another site around the Thames estuary would have benefits and fewer adverse impacts.
SASIG PROPOSES that, over the next 30 years, provision should be made for around 100 to 150 mppa at a new airport to serve the South East, with firm environmental safeguards and appropriate mitigation measures.
64 Gatwick Airport. SASIG notes that the Government is upholding the legal agreement between West Sussex County Council and BAA at Gatwick and therefore ruling out the option of another runway at Gatwick from being included in the White Paper. On that basis SASIG expects to see Gatwick continue to develop as a 2 terminal, 1 runway airport.
65 There is a range of other agreements more recently entered into by BAA. These seek to control the impact of the currently agreed levels of growth. It is important that any of the wide-ranging policies that may be promulgated by the White Paper do not undermine the integrity of those agreements.
SASIG ACCEPTS that, over the next 30 years, provision should be made at Gatwick for around 40 mppa with a range of environmental safeguards on noise, air pollution and night flights.
66 Heathrow Airport. SASIG is disappointed to see the option of a new short runway at Heathrow included as one of the options for the South East, particularly since BAA asked for a new runway to be ruled out during the Terminal 5 Inquiry – and the Inspector endorsed that view.
67 Heathrow is badly sited for the country’s largest international airport. It is hemmed in by urban development and has flight paths over heavily built up areas. It is has outgrown its site and it is not suitable for further expansion.
68 The story of Heathrow has been one of “growth by stealth”. That must be ended – for ever. The Inspector who held the Terminal 4 Inquiry recommended in favour but felt that further growth should not be allowed. However the cap on movements, and hence environmental and social impact, was short lived. More
Air Transport in the UK 21 SASIG: November 2002 recently, the Inspector who held the Terminal 5 Inquiry again found in favour but stressed that such development must not be allowed to lead to another runway.
69 The residents in the area have a right to lose faith in the planning process. After what has been seen as a notoriously long but thorough public inquiry, the Government is now opening the door to growth yet again. It was a long inquiry because it needed to be a most thorough one. Rather than considering further growth at Heathrow, the Government should be taking the opportunity of maintaining a sustainable future for the airport based on the parameters established by the Terminal 5 decision.
70 Some of the impacts at Heathrow should be treated as so overriding that another runway should be abandoned. In particular:
· Currently, 307,000 people are said to be affected by noise (assuming the 57dBA contour is the correct level at which to measure both affect and disturbance). This is shown to reduce to 226,000 by 2015 but then increase again to 278,000 by 2030 without a new runway. But with a new short runway there will be 107,000 more people affected by noise in 2015 – a figure that remains through to 2030. No Government should sanction exposing 332,000 people to unacceptable levels of noise when other options exist. For example only 14,000 people would be affected by noise at Cliffe. It seems to be unlikely that any civilised country has an airport so close to its capital city that causes such unacceptable noise conditions. · The consultation report shows up to as many as 35,000 people likely to be affected by air pollution levels exceeding EU limits. That must be in excess of 15,000 homes, of which it seems likely that 3,500 are trapped between the new runway and the existing airport. On more optimistic assumptions about changes in technology, the figure only drops to 5,000 people. Comfort must be taken by the phrase “Another runway could not be considered unless the Government could be confident that levels of all relevant pollutants could be consistently contained within EU limits”. Yet the White Paper on future policy is due to be published early in 2003. If technology does not exist now to give guarantees of no exceedences, then it is not likely to exist in 6 months time. On this basis alone, the new runway must be ruled out. · The consultation report shows that there are currently 2,013 people living near Heathrow and subject to 3rd party safety risks. With a third runway that is shown to drop to 1,898 people. It is difficult to comprehend that an increase in the number of air traffic movements from 480,000 to 655,000 would result in less potential accidents. It is also relevant that all those atms fly over heavily built up areas, much of it being Central London. Again for comparison, Cliffe is shown to have only 24 people living in the Public Safety Zone. · Heathrow is already exerting extreme pressures on West London. Whilst it has been the driver of the local (and national) economy, further growth will bring damage to the extent that the benefits to the UK, of such things as foreign investment, will not be able to be captured.
Air Transport in the UK 22 SASIG: November 2002 · The economic effects shown in the consultation reports have been underestimated in that the induced and catalytic effects have not been shown. Such growth is inevitable and will either lead to massive pressure on the Green Belt or increasing the current pressure on existing firms in the area. The SERAS consultation report shows airport related employment rising from 92,000 to 118,000 – an increase of 26,000. Adding in the induced and attracted employment would result in a further 8,000 to 10,000 jobs. · One aspect of that congestion is the issue of surface access. The construction of Terminal 5 was shown, at the public inquiry, as likely to make the road, rail and underground network creak. The improvements that are now shown as necessary for a new runway are, in the main, needed for the do-nothing situation. · The costs of expanding Heathrow need to be revised so as to include the demolition and replacement of all the property affected by excessive air pollution (possibly 15,000 houses). It is also essential to include the costs of new terminals that are inevitable and are already being suggested as necessary by BAA. This will dramatically change the viability of the Heathrow new runway.
71 Overall, SASIG considers that the environmental impacts of a third runway at Heathrow, in particular the numbers of people affected by noise and air quality impacts, are too high and that a new runway at Heathrow should not be included in the White Paper. SASIG maintains that it is essential that the cap on the total number of flights of 480,000 given with the decision on Terminal 5 should be upheld. This cap is an essential control to mitigate the impact of Heathrow on its surroundings.
72 SASIG has a final concern over Heathrow. The airport, and indeed the aviation industry, has such an appetite for growth at Heathrow that if a new short runway is built then the inevitable consequence is that there will be later pressure for that to be changed into a full runway. After all, that was one of the options tested in the current exercise. A short runway at Heathrow still leaves a huge shortfall in demand unmet. If Heathrow was to be the first runway to be built, then the aviation industry would surely not build elsewhere until they had tested an expansion of that third runway.
73 Once the Government goes down the policy line of another runway at Heathrow, then other options, such as Cliffe, will not seem sensible and the door will be open to continue past policies of incremental growth at Heathrow.
74 SASIG believes that it is now essential for the Government to give a clear policy statement to the aviation industry that Heathrow is full and will never expand beyond 2 runways and five terminals. The industry will then see the benefits of growth at a new airport as their major, and only, expansion opportunity.
SASIG REJECTS a further runway at Heathrow and PROPOSES that, over the next 30 years, the airport should be capped at 480,000 atms and
Air Transport in the UK 23 SASIG: November 2002 around 89 mppa, with a range of environmental safeguards on noise, air pollution and night flights.
75 Stansted Airport. The local authority has just agreed that Stansted airport should expand to 25 mppa. SASIG considers that Stansted’s location makes it unacceptable as an option for future runways in the South East. Further growth would involve large scale urbanisation in a rural area and have a heavy environmental impact on the nearby population. The current relatively limited public transport access to London would not be readily capable, without excessive cost, of being improved to the standards needed for a major international airport.
76 SASIG supports the continued operation and development of Stansted as a one runway airport. The Government has indicated that the maximum capacity of the airport with one runway might be 35 mppa.
77 Stansted has, in many ways suffered the same fate as Heathrow – promises of restrictive policies later broken by pressures for growth. Stansted has been nominated as the third London airport several times and has had several reprieves. The result of the 1981/83 inquiry was firm commitment to strict limits on growth, with a single runway that was destined to be underused at 15 mppa. The Inspector, as a condition for the grant of planning permission for up to 15 mppa, recommended that the Government should give an unequivocal undertaking that a second main runway should not be constructed. The Government, in its decision letter, unreservedly accepted the Inspector’s conclusions. The concept of one, two or even three new runways is a bitter pill for the local residents to now swallow.
78 One of the key features of airport location is the extent to which an airport can enhance or damage regional planning aspirations. An airport in the wrong place forces a change to a regional plan. Stansted does not need to be a major hub airport to support the current South East Plan and there is no justification in seeking to change the plan when a new airport at Cliffe (or elsewhere) can enhance the prospects of an improving East London corridor.
SASIG REJECTS further runways at Stansted and PROPOSES that, over the next 30 years, the airport should be capped at around 35 mppa, with a range of environmental safeguards on noise, air pollution and night flights.
79 Luton Airport. SASIG supports the continued development of Luton airport as a 1- runway airport. The balance of advantages and disadvantages of a replacement runway are not an issue on which SASIG wishes to comment except that such marginal increases in capacity should not be allowed to detract from an overall vision for the South East.
80 It is also important to recognise that the capacity of a new runway should not have been included in the calculation of the capacity of the maximum use of existing runways. A replacement runway at Luton needs careful consideration to ensure that it can reduce the environmental impact whilst increasing capacity.
Air Transport in the UK 24 SASIG: November 2002 SASIG SUPPORTS the continued development of Luton as a 1-runway airport.
81 Alconbury. SASIG does not support the suggested option at Alconbury. The key strategic issue is that it seems only viable if there is constraint on other South East options. This does not fit with SASIG’s vision of a new airport in the South East.
SASIG REJECTS the suggested airport option at Alconbury as it does not fit with SASIG’s vision of a new airport in the South East.
Options for Other South East Airports
82 London City Airport. SASIG supports the continued development of London City to 5 mppa, provided the issue of interference of air traffic control between London City and the new airport at Cliffe (or elsewhere), can be resolved.
83 Southampton Airport. SASIG supports the development of Southampton Airport up to 3 mppa, which is the forecast demand up to 2030 in the RRC. There are, however, concerns that the constraints and impacts identified in the consultation documents will effectively prevent this growth being achieved.
84 Norwich Airport. SASIG supports the continued growth of Norwich airport to 0.7 mppa, which is the forecast demand for 2030 in the RRC. If demand is sufficient, then this figure could be exceeded so as to provide improved services for local residents, providing the necessary surface access improvements are made first.
85 Second tier airports. SASIG accepts that these play an important local and/or business role, subject to any constraints imposed by local agreements.
SE/JWB 12.11.02
Air Transport in the UK 25 SASIG: November 2002 Appendix A Membership of SASIG by Region
North West Region
Macclesfield BC Knowsley MBC Liverpool City Council Wirral MBC
North East Region
Yorkshire and Humber Region
Bradford MBC Doncaster MBC
West Midlands Region
Shropshire CC Telford & Wrekin Council Warwick DC Warwickshire CC West Midlands Joint Committee (Wolverhampton, Walsall, Dudley, Sandwell, Birmingham, Solihull & Coventry)
East Midlands Region
Bassetlaw BC High Peak BC Leicestershire CC N W Leicestershire DC
East of England Region
Bedfordshire CC Broadland DC Cambridgeshire CC East Hertfordshire DC Essex CC Harlow Council Hertfordshire CC Huntingdonshire DC Luton BC South Beds DC Southend on Sea BC Uttlesford DC
Air Transport in the UK 26 SASIG: November 2002 South East of England Region
Aylesbury Vale DC Buckinghamshire CC Canterbury City Council Crawley BC Eastleigh BC Elmbridge BC Epsom & Ewell BC Guildford BC Hampshire CC Hart DC Horsham DC Mid Sussex DC Mole Valley DC Reigate & Banstead BC Rushmoor BC Shoreham Joint Committee (Wothing BC, Brighton & Hove Council) South Bucks DC Spelthorne BC Surrey CC Tandridge DC Thanet DC West Sussex CC Winchester City Council Woking BC Wokingham DC
London
Bromley LB Ealing LB Greater London Authority Hammersmith & Fulham LB Hillingdon LB Hounslow LB Kingston upon Thames Royal Borough Newham LB Richmond upon Thames Royal Borough Wandsworth LB Windsor & Maidenhead Royal Borough
South West Region
Bath & NE Somerset Council Dorset CC Newquay Joint Committee (Cornwall CC and Restormel BC) Salisbury DC
Air Transport in the UK 27 SASIG: November 2002 Air Transport in the UK 28 SASIG: November 2002 Appendix B Reservations Expressed at SASIG Meeting on 1 November
Aylesbury Vale DC Luton BC (1N) Bassetlaw BC Macclesfield BC Bath & NE Somerset Council Mid Sussex DC (2U) Bedfordshire CC Mole Valley DC Bradford MB Newham LB Broadland DC Newquay Joint Committee (Cornwall CC and Restormel BC) Bromley LB (1N) Buckinghamshire CC (1U; 2U; 3U) N W Leicestershire DC Cambridgeshire CC Reigate & Banstead BC Canterbury City Council Richmond upon Thames LB Crawley BC (1U; 2U; 3U; 4N) Rushmoor BC Dorset CC Salisbury DC Doncaster MBC Shropshire CC Ealing LB Shoreham Joint Committee (Worthing BC, Brighton & Hove East Hertfordshire DC Council) Eastleigh BC South Beds DC Elmbridge BC South Buckinghamshire DC Epsom & Ewell BC Southend on Sea BC (2N) Essex CC (1U; 2N; 3U; 4N) Spelthorne BC Guildford BC Surrey CC (1U; 2U; 3U) Greater London Authority (1U; 2U) Tandridge DC Hammersmith & Fulham LB Telford and Wrekin Council Hampshire CC (2U) Thanet DC (1N) Harlow Council Uttlesford DC (2U) Hart DC Warwick DC Hertfordshire CC (2U; 3U) Warwickshire CC High Peak BC Wandsworth LB Hillingdon LB West Midlands Joint Committee (Wolverhampton, Walsall, Horsham DC Dudley, Sandwell, Birmingham, Solihull & Coventry) Hounslow LB West Sussex CC (2U) Huntingdonshire DC Winchester City Council Kingston upon Thames LB Windsor & Maidenhead RB Knowsley MBC Wirral MBC Leicestershire CC Woking BC (1U; 2U; 3U) Liverpool City Council Wokingham DC
At the SASIG meeting on 1 November 2002 some authorities were not able to support a small number of specific comments in the report. Others had not yet made a decision on those topics. The list below identifies the 4 topics that concerned some of the member authorities. Where they asked for their opposition on a numbered topic to be recorded they are annotated as “N”. Where they had not yet determined a view they are recorded “U”.
The 4 topics are: 1 The principle of a new airport to serve the South East (paras 22; 57) 2 Specific mention of Cliffe as that new airport (paras 57; 58) 3 Rejection of a new runway at Heathrow (para 71; 74) 4 Rejection of a new runway at Gatwick (para 64)
Air Transport in the UK 29 SASIG: November 2002 Appendix C
THE FUTURE DEVELOPMENT OF AIR TRANSPORT IN THE UK: SERAS
A Technical Report for SASIG
Berkeley Hanover Consulting Suite 23 Coleridge House 4/5 Coleridge Gardens London NW6 3QH
Tel: 020 7372 2600 Fax: 020 7372 2662 Email: [email protected] November 2002 SERAS: Technical Report
Table of Contents
1 INTRODUCTION 1 Background to Technical Report 1 Scope of Research 1 Approach 1 Format and Acknowledgements 1 2 MAJOR ENVIRONMENTAL CONCERNS 3
Ecology at Cliffe 3 Environmental Impact at Heathrow, Stansted and Cliffe 3 Conclusions 6 3 COMMERCIAL VIABILITY 7
SERAS Exercise 7 Projected Financial Performance 8 Seeding: Scale and Mechanisms 10 Viability of Cliffe 13 4 ECONOMIC BENEFITS 15
Introduction 15 What is Measured and What is the Pecking Order? 15 Necessary Amendments and Recalculations 17 Changes to the Pecking Order of Packages 19 Conclusions 20 5 INTEGRATION ISSUES 21
The Importance of Integration 21 A Brief Review of the Integration Impacts at LHR, STN and Cliffe 21 Cliffe and Regeneration in Thames Gateway 23 Issues of East West Planning 24 Some Concerns with SERAS Impact Analysis 25 Recalculating the Impacts 26 Conclusions 27 6 FINAL COMMENTS 28
How Accurate are the Comparative Assessments between Options? 28 Is Cliffe a Better Long Term Solution for the South East and the UK? 28 The Consequences of Incrementalism 29 Summing Up 29
Berkeley Hanover Consulting SERAS: Technical Report APPENDIX A – AIRLINE ALLIANCES 30
APPENDIX B – SERAS PACKAGES 31
Berkeley Hanover Consulting SERAS: Technical Report 1 INTRODUCTION
Background to Technical Report
1.1 The Strategic Aviation Special Interest Group (SASIG) commissioned Berkeley Hanover Consulting (BHC) in August 2002 to undertake the necessary research to provide detailed economic advice to SASIG members on the UK Government’s consultation report2 and accompanying documentation upon the future of aviation in the South East and, in particular, on the proposed option of a new airport at Cliffe. After a series of presentations to the Client, this report provides the technical conclusions of our research.
1.2 For the sake of brevity, we have had to assume that readers of this report are fully informed of the SERAS methodology and the combinations of airport options (Packages) in the SE contained in the consultation documents. For reference, a brief summary of the Packages is contained in Appendix B.
Scope of Research
1.3 Our research has concentrated upon four core areas as follows:
· identification of key environmental concerns; · a realistic assessment of the commercial viability of a new airport; · a review of the SERAS assessment of economic benefits; and · a reappraisal of the integration benefits that would arise from a Cliffe solution in the context of similar benefits that would arise at LHR and STN.
Approach
1.4 The technical paper is based on four main sources:
· SERAS technical reports; · SERAS background documents; · Unpublished data supplied by the Department of Transport (DfT); and · Detailed discussions with interested parties and consultants.
1.5 BHC applied the data from the SERAS reports and the DfT for making certain estimates and adjustments, (such as for recalculations of economic benefits and employment impacts) in areas where we believe there are legitimate concerns with SERAS’ original analysis.
1.6 As a part of this research, BHC has held detailed discussions with most of the key parties and/or their advisers. These discussions have provided further insights into the SERAS findings.
Format and Acknowledgements
1.7 Chapter 2 discusses the major environmental concerns associated with airport expansion in the SE and, in particular, with the construction of a new runway at Heathrow. Chapter 3 addresses the commercial viability of a new airport at Cliffe.
2 The Future Development of Air Transport in the UK: South East, DfT, (2002) Berkeley Hanover Consulting 1 SERAS: Technical Report Economic benefits of the proposed SERAS Packages are discussed in Chapter 4. Chapter 5 covers integration issues at Cliffe and compares these impacts with those likely to be generated at Heathrow and Stansted. The final chapter presents our broad conclusions.
1.8 Whilst we are grateful to SASIG, the DfT and other interested parties for their help with the research, we would like to stress that the views expressed in this report are solely those of Berkeley Hanover Consulting and do not necessarily reflect the views of SASIG or the Local Government Association (LGA).
Berkeley Hanover Consulting 2 SERAS: Technical Report 2 MAJOR ENVIRONMENTAL CONCERNS
Ecology at Cliffe
2.1 The land in the Thames Estuary and especially in the Marshes has a very high ecological value and is designated as a Ramsar and SSSI site. The construction of Cliffe airport would substantially affect these sites of international importance. Most importantly, the bird populations in the wetlands would be affected by noise and visual disturbance. If Cliffe was built, then: “the creation of significant areas of new habitat (off-site compensation) is likely to be the only accepted form of compensation.”3 A study carried out for SERAS4 has identified a possible new habitat in North Kent that could be created for around £230 million and hence the justifiable concerns about the birds, whilst serious, is not regarded by SERAS as an insurmountable nor prohibitively expensive problem. Comparing this with the predicted scale of emissions at an expanded Heathrow that would have a potential cost in excess of £1bn (see Chapter 4) places this figure and concern into perspective.
2.2 We understand that the UK Government would not have proposed the Cliffe option if the SERAS evaluation had shown that an airport at this site was ecologically unacceptable. We also understand that additional research is currently being undertaken for the DfT on this subject.
Environmental Impact at Heathrow, Stansted and Cliffe
Safety
2.3 The safety risks of Heathrow are far greater than for the other SERAS options as a result of the sizable number of houses near to its boundaries. The construction of one new runway would ‘endanger’ another 1,900 people, although according to the main consultation document: “…there is nothing which at this stage would rule out on safety grounds any of the runway options appraised.”5 Cliffe has a minimal safety risk in comparison to both Heathrow and Stansted.
Table 2.1: Population Subject to 3rd Party Safety Risk 1 New 2 New 3 New 4 New Max Use Runway Runways Runways Runways LHR 2013 1898 - - - STN 1 254 320 1273 - Cliffe - - - - 24
Daytime Noise
2.4 SERAS Stage 2 estimated daytime noise impacts of additional runways in all packages. However, in Stage 3 these figures were reviewed under certain assumptions:
· Aircraft types which are likely to represent different proportions of the future aircraft fleet;
3 SERAS Stage 2 Findings Report, 11.6.61, p.405 4 SERAS Stage 2 Findings Report, 11.6.48, p.401 5 The Future Development of Air Transport in the UK: South East, DfT, (2002), p.44 Berkeley Hanover Consulting 3 SERAS: Technical Report · The noise rules likely to apply to future aircraft fleet6.
2.5 Sensitivity tests based on these assumptions estimated that the number of people affected by daytime noise would be substantially lower than in the core tests. The main consultation documents quotes only the results of sensitivity tests. The table below present the number of people affected by daytime noise according to core and sensitivity tests.
Table 2.2: Daytime Noise in 2030: Population Subject to 16-hour Noise >57dB (‘000s) Package Core test Sensitivity test LHR Max Use 379 287 LHR+ 1 477 332 STN Max Use 9 6 STN + 1 24 14 STN + 2 35 24 STN + 3 35 28 Cliffe+4 27 14
2.6 Heathrow has by the far the greatest negative environmental impact in this indicator. 332,000 people would be affected by noise pollution with one extra runway at Heathrow according to the sensitivity test, whereas the figure for Cliffe, a four- runway airport, is 14,000 (half that of a four runway Stansted). The core test figures for each package are correspondingly higher.
Night Flights
2.7 The main consultation document states, “…with the exception of Cliffe, none of the options assume an increase in night flight numbers”7. This statement can be slightly misleading since it does not distinguish between night time (11.00pm to 7.00am) and night quota (11.30pm to 6am) flights. The table below presents the numbers of people affected by night time noise for different packages.
Table 2.3: Population Subject to 90dB SEL Footprint Night Time Noise LHR Max STN Max LHR + 1 STN + 3 Cliffe+4 Use Use 123,000 191,000 4,000 19,000 8,000
2.8 Again, the impact at Heathrow is significantly higher than for the other options, with LHR+1 affecting an extra 68,000 number of people at night. Adding three runways to Stansted affects an extra 15,000 people and affects more than twice as many people as Cliffe.
Air Quality
2.9 An additional runway at Heathrow clearly generates very serious problems with NO2 emissions and this could potentially lead to the compulsory purchase of up to 16,000 dwellings to comply with EU regulations - far above the loss stated in SERAS of 261
6 SERAS Stage 3: Appraisal Finding Report, p.78 7 The Future Development of Air Transport in the UK: South East, DfT, (2002), p.45 Berkeley Hanover Consulting 4 SERAS: Technical Report dwellings (the impact of which is described as “Medium Adverse”8 by SERAS). Not only would this hugely add to the cost of an extra runway at Heathrow (possibly £1bn, see Chapter Four) but it could also represent an insuperable barrier to Heathrow’s expansion, as the local authorities of the neighbouring boroughs believe that an extensive acquisition purchase of dwellings would not be acceptable on urban blight grounds.
2.10 We have included the base costs of acquisition in the adjusted economic benefits calculations in Chapter 4. Our views here are related to the potential unacceptability of such a wide-scale policy of acquisition. Indeed, there may be other significant costs related to such a policy and the extensive reduction of urban residential communities could result in knock-on impacts to the remaining elements.
2.11 The table below relates to those people directly affected.
Table 2.4: NO2 Emissions: Number of People Affected by Exceedances of NAQ/EU Limits9 LHR Max STN Max Use LHR + 1 Use STN + 3 Cliffe+4 2015 14,500 35,000 0 N/A N/A 2030 N/A 33,400 N/A 300 0
2.12 According to the sensitivity tests carried out during the SERAS study, even in the best case scenario with very optimistic projections of improvements in technology, 5,000 people would still be exposed to above EU limits with a new runway at Heathrow. In comparison, Stansted does not have a major problem with NO2 emissions, whereas Cliffe has no such problem at all.
Land Use Impact
Table 2.5: Land Take For Airport Development LHR+1 STN+3 Cliffe+4 261 dwellings* 226 dwellings 777 dwellings Residential Medium Adverse Medium Adverse High Adverse 18ha 24ha Commercial Negligible Low Adverse Low Adverse Public 2 buildings 1 building 3 buildings buildings Low Adverse Low Adverse Medium Adverse Agricultural 288ha 1179ha 2022ha land High Adverse High Adverse High Adverse Recreationa 63ha 747ha Encroachment 13ha Footpath, l land Low Adverse High Adverse Medium Adverse 228ha Encroachment Green Belt None None High Adverse *As argued earlier, this loss could in fact be up to 16,000 dwellings
2.13 In reviewing the above table, there does not appear to be large differences between
8 SERAS Stage 2 ASTs 7.13-4 9 The numbers quoted in the table are unweighted total numbers (i.e., absolute numbers of people subject to emissions impact). For comparisons between the packages weighted averages might be more useful, where Heathrow generates by far the highest impact (more than 50,000 people affected). Berkeley Hanover Consulting 5 SERAS: Technical Report the options on land take grounds but if the projected loss of dwellings at Heathrow is nearer the loss estimated through NO2 emissions, then the situation changes completely. Even disregarding this factor, the loss of land near Heathrow is more damaging than loss of land at Cliffe given the importance attached to the Green Belt in the heavily urbanised Heathrow area. We would also suggest that urbanisation at Stansted is more damaging than at Cliffe as the Thames Gateway is already planned to become significantly more urbanised, as discussed in Chapter 5 of this report.
Conclusions
2.14 Any airport development generates negative environmental impacts but a comparative approach can illustrate the crucial importance of location in determining the degree of these impacts. With the expansion of Heathrow, it is the large number of local residents that are affected mostly by noise and air quality impacts; whereas at Cliffe, the airport would primarily affect the wetland bird population. Crucially, these birds can be moved at a reasonable cost whereas the scale of relocation required for the people of Heathrow may be unacceptable on many grounds and hence expansion becomes unjustifiable. On a range of indicators, from emissions (35,000 affected compared with 0) to noise pollution (322,000 affected compared with 14,000), Heathrow has a detrimental impact on significantly more people than Cliffe. Stansted, whilst not on the same scale as Heathrow, also compares badly to Cliffe in the areas of population subject to safety risks, noise and emissions.
2.15 Overall, the development of a third runway at LHR could be deemed environmentally unacceptable based on the SERAS assessments on the practicality and consequences of a policy of extensive housing acquisition by the airport developer.
Berkeley Hanover Consulting 6 SERAS: Technical Report 3 COMMERCIAL VIABILITY
SERAS Exercise
3.1 The forthcoming White Paper will provide a framework for airport expansion. Private sector companies will be expected to undertake the expansion, catering to the needs of their customers - UK and foreign airlines. Whether the expansion foreshadowed by the framework takes place will crucially depend on its anticipated commercial viability. SERAS has, therefore, had to assess this.
3.2 SERAS undertook a spreadsheet financial analysis based on assumed airport revenues and operating costs and more detailed capital costs of each scheme. These assessments have not been tested with existing airport operators, potential developers or financial institutions likely to provide the finance. Doubtless this Consultation Exercise will receive views on the plausibility of these financial projections.
3.3 BAA currently owns Heathrow, Gatwick and Stansted - all three airports are economically regulated. Their long-term returns are heavily conditioned by regulatory policy, which is determined by the Government. Without Government intervention, clearly any expansion of their sites will require BAA's willing endorsement.
3.4 BAA need not be the developer/operator of Cliffe; indeed competition between major London airports might produce some benefits. SERAS is silent on the future regulatory environment, although the Booz Allen Hamilton report10 examines airline strategy and possible ways of financing a new hub.
3.5 SERAS also looked at scenarios where revenues were raised by various mechanisms. This exercise broadly established the scale of revenue increases required to materially raise the rate of return on the investment in each Package. As is shown below, relatively small increases in revenue per passenger can sharply improve the rates of return.
3.6 Given the scale of SERAS' passenger projections and limiting Heathrow's future expansion to at most a single additional runway, it follows that either Stansted or Cliffe will, under the larger Packages, grow to a size that will confer international hub status. At present, no conurbation operates with two international hub airports. An important question posed in the Consultation is whether two London airports could operate as international hubs. The inherent risk in breaking new ground is likely to require a higher rate of return.
3.7 With the larger Stansted Packages and Cliffe, SERAS assumed that a two-hub London would indeed 'work'. Mindful of the experience of Stansted's steady but slow evolution, they 'seeded' the expanding airports with airline passengers very early in their development. This means they are assuming that enough airlines can be ‘persuaded’ to move a significant proportion of their flights from existing airports to the new development or rapidly expand their operations at the new development so that interlining activities11 can take place there. SERAS suggests that this seeding
10 New South East England Airport - Airline Development Strategy, Booz Allen Hamilton, (2001) 11 International interlining refers to passengers from various overseas origins being consolidated at a UK hub for onward transfer to destinations outside the UK. Interlining can occur to UK regions too. Berkeley Hanover Consulting 7 SERAS: Technical Report could reflect perhaps one of the major airline alliances12 (See Appendix A for a list of Airline Alliances) moving to the new development.
3.8 Seeding, therefore, facilitates and speeds the take up of new capacity and delivers revenue at a higher level earlier than might be the case. This helps to raise the commercial viability of the relevant packages. SERAS is relatively non-committal on its preferred inducements to persuade an alliance to move to the emerging second hub.
3.9 This chapter provides SERAS' results of its viability analysis, including the various charging scenarios, and examines seeding in a little more detail. The chapter then focuses on the commercial viability of the Cliffe Package.
Projected Financial Performance
3.10 SERAS assumed the following airport revenues and operating costs per passenger for each airport. These were applied across the board on all Package assessments.
Table 3.1 Revenues and Operating Costs per Passenger by Airport, £bn Airport Revenue Cost Net Yield Gatwick 10.43 -5.59 4.84 Heathrow 13.39 -6.52 6.87 Stansted 9.53 -5.88 3.65 Cliffe+4* 13.39 -5.87 7.52 *The figures for Cliffe are a SERAS estimate
3.11 These figures for existing airports reflect 1999/2000 net yields. SERAS assumed that Cliffe would have the same operating structure as Heathrow and hence the same revenues per passenger as Heathrow. The revenues comprise both aeronautical and non-aeronautical charges13 and thus reflect the continuation of the single till principle currently used by economic regulators14. The operating costs at Cliffe are assumed to be lower by an arbitrary amount to reflect the improved efficiency of a new, large, planned site. The logic that sees net yields being high at Cliffe as a new hub, is not extended to the Stansted packages.
3.12 In the analysis all revenues and costs are converted to nominal terms using a 2.5% inflation assumption.
Table 3.2: Capital Costs of Airport Packages New Runway Date Capital Cost* Airport Options Operational £m 1st Runway LHR 2011 3,984 1st Runway STN 2011 3,970 2nd Runway STN 2018 2,037 2nd Runway STN 2021 2,037
12Partnerships between international airlines enhance their networks and provide customers with seamless travel options around the globe. 13 For 1999/00 Heathrow's aeronautical income per passenger was £4.96 while its non-aeronautical income per passenger was £8.43. 14 The CAA favours moving to a dual till system and this is under discussion with the Competition Commission. Berkeley Hanover Consulting 8 SERAS: Technical Report 3rd Runway STN 2024 1,917 1st & 2nd Runway Cliffe+4 2011 9,844 3rd & 4th Runway Cliffe+4 2021 3,464 *Costs of construction, including allocated surface access investment
Berkeley Hanover Consulting 9 SERAS: Technical Report 3.13 Table 3.2 shows the capital costs of the various runway developments. The Stansted 2nd runways vary in their date depending whether they are part of a Heathrow combination or not. The much higher capital costs of Cliffe are quite apparent. However, SERAS is in two minds about the Benfleet Crossing and the Wennington rail link and their exclusion would make a modest reduction in Cliffe's capital costs. Furthermore, one must bear in mind that greatly more capacity is being provided at Cliffe and that it will embody newer more efficient design throughout.
3.14 SERAS evaluates the cash flow of the packages using earnings before interest, depreciation, taxation and amortisation. This cash flow is used to calculate the net present value (NPV) and internal rate of return (IRR) of the packages.
3.15 SERAS uses a nominal discount rate of 12.5% equivalent to a real discount rate of 9.76%. The CAA (June 2001) reported "preliminary estimates of the real pre-tax cost of capital for the designated airports of 6.1%-9.2%". The assumed rate exceeds a normal Weighted Average Cost of Capital for regulated industries. All the same, the financial sector will decide the terms upon which they will provide capital mindful of the risks of such large, lumpy investments and the long period over which returns will be earned.
3.16 Figure 3.1 below shows the NPV and IRR for the relevant Packages. These figures include the surface access costs charged to the project, which can make a significant difference to the Package performance.
Figure 3.1: NPV and IRR of the Various Airport Packages - Core Assumptions 15
Package Financial Performance
NPV (Left Scale) IRR (Right Scale)
0 8 STN LTN LHR STN STN 1st STN 2nd STN 1st STN 2nd & Cliffe 4 rwys
3rd 7 -500 6 -1000 5 -1500 4 % IRR
£m NPV 3 -2000 2 -2500 1 -3000 0
Max Use LHR STN STN+1&2 STN+1&2&3 Cliffe +1 +1 Packages (see App B for further details) 3.17 Certain packages are assessed in phases of development. Cliffe's results are given for 4 runways as a whole. It is clear that the capital costs are front end loaded as the earthworks for all four runways are undertaken in the early development phase. None of the Packages generate positive NPVs on the assumptions made while the IRRs oscillate around 5%-7.5%. These performances do not take account of amortising the debt, which is assumed to be about 80% of the capital outlay, something of acute interest to a developer.
15 SERAS Stage 2, Financial Modelling and Analysis, Halcrow, (2002), Table 7.3 Berkeley Hanover Consulting 10 SERAS: Technical Report
Berkeley Hanover Consulting 11 SERAS: Technical Report 3.18 SERAS undertook a number of simulations working with higher yields and levies on different combinations of airports. Taken together it would appear that within a regulated context it is possible to raise IRRs with relatively modest additions to the revenue streams. For example, "Allowing aeronautical revenues to increase by 1% per year in excess of RPI would typically add between 2 and 3 percentage points to the IRR of a new runway"16.
Figure 3.2: Effect of Passenger Levies on Package IRRs*
Internal Rates of Return on Package Components
Cliffe Option A2(4) -3rd & 4th
Cliffe Option A2(4) -All
STN Option 7 - 2nd & 3rd
STN Option 7 - 1st All Airports Levy £2 STN Option 11- 2nd Individual Airport Levy £4 STN Option 11- 1st Base Case
STN Option 5
LHR Option E4
LTN (Max Use)
STN (Max Use)
0 5 10 15 20 25 30 %
*For a description of the Options, please refer to Appendix B
3.19 Here quite modest levies can push the IRRs to much higher levels on the assumed volume of passengers.
3.20 The next chapter shows there are significant economic benefits, particularly for passengers. At today's airport charges and operating costs insufficient revenue is generated to justify the investment. Since these charges are regulated and passenger benefits are high it is possible in principle to raise charges, transferring some of the benefit from passengers to airports.
3.21 Charging a new capacity passenger levy at all airports would spread the burden and provide a more stable revenue base. It would also tend to be neutral in terms of switching demand from one airport to another. If the levy was made at the developing airport only then this would make that airport relatively less attractive to airlines, whose customers have to pay more. This would tend to counter measures intended to seed the new development at Cliffe or Stansted (see below). A third option might be to have a passenger levy set higher at existing airports. Where the new development was not in BAA's hands, they might argue that their efforts to grow their business is directly benefiting their competitor and that the levy is unfair discrimination.
16 SERAS Stage 2, Financial Modelling and Analysis, Halcrow, (2002), p50 Berkeley Hanover Consulting 12 SERAS: Technical Report Seeding: Scale and Mechanisms
3.22 Seeding is achieved in SERAS' modelling exercise by raising the flight frequencies offered at Stansted and Cliffe. These higher frequencies then attract more passengers. From the opening of 2011 Stansted is seeded long haul services equivalent to 40% of Heathrow's such services in 1998. "The seeded frequencies at Cliffe amount to 40 percent of Heathrow's 1998 scheduled services, 23 percent of Gatwick's 1998 charter services and 11 percent of Stansted's 2000 low cost services"17. A significant amount of this seeding would have to occur early on but also as runways are added. Thus Cliffe requires a far larger and broader level of seeding than Stansted.
3.23 Table 3.3 shows the reported differences in financial performance with and without the seedings.
Table 3.3 Effects on IRR of Seeding Options at Stansted and Cliffe 18 Package No. Runway Option Seeded Unseeded 7 STN Option 5 5.8 4.7 14 STN 2nd & 3rd 5.3 4.6 21 Cliffe 3rd & 4th 8.3 5.3
3.24 The figures show phased development at Stansted and Cliffe. For the early phases of both Stansted and Cliffe, seeding adds 1% point. This is not a large figure but not so small that it can be ignored. The second phase of expansion at Stansted has seeding adding 0.7% but for Cliffe's second stage it is large - 3%.
3.25 The importance of seeding to Cliffe in the second phase of development may not necessarily reflect action needed to fill the incremental capacity but the dynamic effects of seeding in the earlier phase provide an important momentum to the commercial viability later.
3.26 The mechanisms to galvanise the transfer of significant capacity are not spelt out. There are, however, natural advantages that Cliffe might offer airlines that could induce them to switch; some are shared with Stansted:
· The terminal and other facilities could be designed to operate as a hub (among other things alliance facilities might be usefully grouped) · The measure of spare runway capacity would allow co-ordinated waves of incoming and departing aircraft (Heathrow's steady stream makes connections harder to synchronise) · Congestion and delays should be less which is not only better for their customers but reduces airline operating costs; EU Service Quality Requirements might be easier to meet · Growth at the airport is assured, which permits airline companies to draw up long term plans with a measure of certainty; a measure of growth for remaining airlines at Heathrow also becomes possible; · At Cliffe, the possibility of night flights allows certain hubbing opportunities to be exploited (particularly with S.E. Asia)
17 The Future Development of Air Transport in the UK: South East, DfT, (2002), 11.6, p.84 18 SERAS Stage Two, Financial Modelling and Analysis, Halcrow, (2002) Berkeley Hanover Consulting 13 SERAS: Technical Report 3.27 However, airlines also have to confront a series of disadvantages: · Being a first mover means an airline is gambling on others following on a sufficient scale · Movers are leaving a profitable location at Heathrow · As a result of leaving, slots are liberated for competitors (though this depends on how liberated slots are actually allocated at existing airports under these circumstances) · Alliances are not the same as companies; they are an expression of mutually convenient arrangements; their permanence therefore has a fragility that individual airlines will have to weigh in the decision to move.
3.28 Whilst a new hub would provide a cheaper operating environment and relatively unlimited room for expansion for airlines that move there, they bear the risks and those remaining at the previous hub reap the benefits. In the longer term, capacity is constrained at Heathrow and growth opportunities all but disappear. Continued expansion at Heathrow in line with even constrained demand is not on offer from SERAS. Airlines therefore have to weigh the longer term implications of having their future growth capped.
3.29 SERAS concludes that: "The current regulatory environment would be unlikely to facilitate the movement of carriers to a new airport."19 They continue: “we expect that this would need to be accompanied by changes at Heathrow."20
3.30 Switching mechanisms within the current regulatory possibilities might entail:
· materially raising the real cost of airline operations at Heathrow relative to the new airport - a pricing solution · using physical planning caps on capacity elsewhere (say using the planning system) or applying traffic distribution rules (e.g. on long-haul flights to Heathrow) and an unambiguous statement that no future expansion will occur at Heathrow.
3.31 Physical planning limits normally result in an inefficient use of resources but on the other hand it can be argued that the market cannot send the correct signal to use new capacity efficiently. This is because an airlines assessment of the risks of moving are dependent upon the decision of other airlines to move and this information is not being communicated by the pricing system in advance of capacity being built.
3.32 Raising the costs of operating at Heathrow might be justified on two counts:
· Heathrow is a non-expandable (sic) scarce resource and excess demand should be reflected in the pricing to airlines; 21 · Heathrow has, reportedly, a serious NO2 emissions problem that requires lower service throughput, which could be achieved by a swingeing emissions tax.
19The Future Development of Air Transport in the UK: South East, DfT, (2002), 15.13, p.113 20The Future Development of Air Transport in the UK: South East, DfT, (2002), 15.15, p.113 21This is discussed in more detail in Chapter 2 Berkeley Hanover Consulting 14 SERAS: Technical Report 3.33 The latter has precedents at other airports. The incidence of tax needs to be geared to a sustainable level of emissions, which may or may not be consistent with a level of switching required to seed adequately a new airport.
3.34 Raising aeronautical charges at Heathrow would produce a windfall gain to BAA as well as inducing airlines to think about other airports for their services. BAA's increased profitability should ideally signal to them to expand capacity, if not at Heathrow, then elsewhere. There would have to be an agreement to do this within the regulatory framework. Under this scenario, BAA retains and uses the extra revenue at Heathrow to expand development elsewhere. The risk of the project is spread in this fashion because even if airlines are slow to move from Heathrow, BAA earns a premium on those remaining there.
3.35 The above arrangement is not available for Cliffe if another airport operator is developing it. Whilst the inducement to airlines to move would continue, BAA's additional profitability is not leading them to expand capacity in the London area. There is no social reason for permitting this so an offsetting tax on BAA's Heathrow assets would have to be introduced to clawback the additional revenue or a similar alternative mechanism. At present regulated airport charges tend to set maximum levels and, of course, BAA might choose not to raise airport charges to permitted level, in order to keep its new competitor weak. The more that is clawed back from BAA through other mechanisms, the less the incentive for them to raise aeronautical charges.
3.36 Raising airport passenger duty at Heathrow would raise the cost to passengers and deter demand. Airlines would have the incentive to avoid the tax on their passengers' behalf by switching to a new hub. In these circumstances the additional revenue accrues to the Government and so does not constitute a signal to build more capacity.
Viability of Cliffe
3.37 The net present value of the entire Cliffe development on the above core assumptions makes Cliffe the least attractive. However, it is important to compare package with package rather than the components of the package. The financial analysis conducted by SERAS looks at each option (e.g. developing an additional second runway at Stansted) but does not make the assessment over all the options that constitute a package (e.g. an additional runway at Heathrow plus two additional runways at Stansted). Clearly Cliffe looks less attractive because it provides in one go the sort of capacity that is not quite achieved elsewhere across multiple sites. Adding the NPVs of the separate options into package totals provides an imperfect, though better focus.22 Alternatively, one could bear in mind the quite different capacities being achieved.
Table 3.4 NPV of Packages (£m)23 Increase in Max. Packages NPV Mppa LHR+1 -887 27 LHR+1 & STN+1 -1,760 74 LHR+1 & STN+2 -1,960 94
22 Passenger distributions will be different with combined options (LHR & STN) affecting revenues so adding separate NPVs is not likely to show the real situation. 23 BHC Estimates Berkeley Hanover Consulting 15 SERAS: Technical Report STN+1 -873 47 STN+2 -1,073 67 STN+3 -1,278 94 Cliffe+4 -2,435 113
3.38 There is some uncertainty about the need for the Wennington rail link and the Benfleet crossing and hence whether they ought to be added to the airport's development cost. SERAS estimates that Cliffe's NPV would fall from £-2,435m to £-2,273m. BHC also understands from a number of sources that the costed indicative layout is on the high side. If true this will bring Cliffe more into line with the Heathrow/Stansted combinations.
3.39 The Government has the power to engineer the returns on airports through the regulatory system by effectively transferring benefits from passengers to airports. The precise mechanism for doing this for Cliffe depends on whether BAA is likely to be the developer/operator. At present it would be perverse commercial practice for BAA to show any keenness, allowing the company to extract the best terms possible from the Government. However, BAA will have a genuine concern that the amount of investment it could be asked to make by the SERAS and RASCO is too high. They are currently funding the building of T5, Stansted is to be expanded shortly and Maximum Use implies further growth and then there is a potentially large investment at its Scottish airports. Indeed, it has a current 10 year capital investment programme of some £9bn. This growing capital intensity in its business may persuade BAA that they would prefer a more modest runway investment scenario for London. At present Cliffe's front-loaded construction plan is likely to be less attractive.
3.40 Of course, BAA does not have to be the next provider of London's new capacity, though it does have great experience. Other airport operators, probably from overseas, might wish to bid for the opportunity. Two major airport providers in the London area might well produce the advantages associated with greater competition. Furthermore, the airport operator does not necessarily have to be the owner/developer. BAA operates airports overseas that are not in its ownership. If the Cliffe Package was financially attractive, investors would come forward and undoubtedly acquire the relevant airport management expertise from an existing major operator.
3.41 If Cliffe is selected as the way forward, the financial mechanisms likely to be employed will depend on whether BAA is the airport developer. The cost of financing airport expansion will depend on the perceived financial risk. This in turn depends on the speed with which airlines develop services at Cliffe. However, raising regulated charges at all London's major airports would allow BAA, if it is the developer, to spread the financial risks. The incremental revenue is not exclusively tied to the rate of take up at Cliffe. If the Cliffe developer is not BAA then levying all passengers at London airports could similarly spread the risk.
3.42 In addition, there still needs to be an instrument to encourage early switching from Heathrow to prevent the rather slow expansion experienced by Stansted. The NO2 problem at Heathrow could be resolved by an environmental levy. This would raise the cost to airlines of using Heathrow. A relatively higher ceiling on airport charges, mainly the aeronautical charges, would similarly encourage switching. This would not be anti-competitive since airlines have the option to move if they value the peculiar advantages of Heathrow less than the costs of using it. Presumably BAA's shareholders would question their Board if they did not use this facility fully. Finally
Berkeley Hanover Consulting 16 SERAS: Technical Report there could be higher passenger duties at Heathrow or a relatively higher new capacity passenger levies. The higher aeronautical charges are likely to be the most efficient since they can be targeted at, for example, long haul services (Heathrow is cheap on this score). This would assist the rate at which interlining services can build at Cliffe. However, this requires the Competition Commission accepting "dual till" pricing.
Berkeley Hanover Consulting 17 SERAS: Technical Report 4 ECONOMIC BENEFITS
Introduction
4.1 The cost-benefit exercise is a crucial part of the SERAS analysis. If a package has no net economic benefits there is not an economic case for proceeding with it. All the Packages identified in the Consultation document generate positive economic benefits. However economic benefits are not the sole criteria . There are likely to be some non- economic advantages and disadvantages of these packages, but nobody would build an airport to achieve these other advantages because they are invariably cheaper to achieve through some other route. So the net economic benefits provide the rationale for a given level of airport capacity of a given configuration at a given location and then a balance has to be struck against the non-economic net disadvantages.
4.2 This chapter, therefore, presents the pecking order of the various packages in terms of their net economic benefits. The difference between them and between a do-nothing scenario allows one to gauge whether, say, the environmental costs that are not part of the cost-benefit analysis are outweighed or not by the economic benefits.
4.3 The chapter takes issue with some elements of the calculations undertaken by SERAS and recasts them to present a revised pecking order. This is the base from which the non-economic trade-offs should be made.
What is Measured and What is the Economic Pecking Order?
4.4 The principal economic costs and benefits evaluate the following:
· Generated Passenger Benefits (foreign and resident) · Existing Passenger Benefits (scheduled foreign and resident) · Producer benefits (airport revenues less operating costs) · Freight user benefits · Government Revenues
Figure 4.1 SERAS Core Net Benefits Package Costs & Benefits, Unadjusted
CLIFFE Generated Benefits UK LHR+1 & STN+2 Generated Benefits Foreign STN+3 Existing Benefits UK LHR+1 & STN+1 Existing Benefits Foreign STN+2 Freight User Benefit Producer Benefits STN+1 Government Revenue LHR+1 Costs -10,000 -5,000 0 5,000 10,000 15,000 20,000 £m
Berkeley Hanover Consulting 18 SERAS: Technical Report 4.5 Figure 4.1 above shows the relative contributions of each component to the net benefits as presented by SERAS and unadjusted by BHC. These net benefits are measured relative to the Maximum Use Scenario and not the Base Case24. There are a few noteworthy features:
· On the whole net benefits tend to rise with capacity, except for Cliffe, as does the Benefit-Cost Ratio. This is not surprising since even the largest provision still does not meet unconstrained demand so there are always increasing benefits, albeit at rising costs. · Cliffe's capital costs are proportionally much larger than other options. · Generated passenger benefits are the largest single source of benefits. · Producer benefits are substantial from Cliffe reflecting the net yield figures ascribed and described in Chapter 3.
4.6 If the net benefits of a package are larger than another, then all other things being equal, it is the preferred option. The implication of this is that there is a strong case for accepting the larger rather than the smaller options. In addition the larger capacities provide a longer term framework for the industry to grow in a sustainable fashion. Given the failure of Government's of all colours to grasp the nettle of airport expansion in the past and the tendency to prevaricate under nimbyist pressure, the current approach seems the time to make genuinely long term plans. This not only spares the industry from damaging uncertainties but also those localities that will find their communities periodically candidates for the next phase of expansion. Furthermore surface infrastructure can not only be better planned but new routes safeguarded.
Figure 4.2 Package Economic Pecking Order, Unadjusted
Net Benefits Relative to Cliffe, Unadjusted
8,000
6,000
4,000
£m 2,000
0
-2,000 LHR+1 & LHR+1 & STN+3 STN+2 Cliffe LHR+1 STN+1 STN+2 STN+1 Package Differences 6,580 4,295 4,128 1,010 0 -623 -1,379
4.7 Figure 4.2 above shows the pecking order of packages relative to Cliffe. If one continues with the preference for more rather than less capacity then LHR+1 & STN+1 and STN+2 drop out of contention. On this basis LHR+1 & STN+2 and STN+3 are well ahead of Cliffe.
Necessary Amendments & Recalculations
4.8 A number of amendments to the core net benefit calculations are justified in the
24 Maximum Use generates £4.9bn net benefits relative to the Base Case. The figures in this chapter focus upon the net benefits of additional runways in the South East. Berkeley Hanover Consulting 19 SERAS: Technical Report considered view of BHC:
· Benefits accruing to foreign residents should be omitted because it is conceptually incorrect to include them; · Existing benefits both to foreign and UK residents should be excluded because while conceptually correct, the method of estimation is flawed; · The net noise costs, though measured and recorded in physical terms, have also been evaluated in economic terms - for comparative reasons they should be included in the cost-benefit exercise. · The NO2 problem at Heathrow should be evaluated, since it is relatively straightforward to arrive at an approximate net cost.
4.9 The reasons for these adjustments and the way BHC has implemented them are explained below.
Foreign Benefits
4.10 Foreign benefits ought to be excluded from the final assessment of a national policy on how national resources should be re-distributed. They may be retained if the Department wants to monitor the distribution of benefits but they should not form part of the net benefit total. If they were included for any package, it is possible, by way of an extreme example, that all the costs would fall on UK residents while all the benefits accrued to overseas residents. If the benefits exceed the costs, there would be a prima facie case for continuing with the package despite the fact that UK residents were made worse off! The focus should therefore be on the net benefits that UK residents enjoy from the redistribution of their resources. Indeed this is the Treasury guidance in the Green Book.
4.11 Of course, one might argue that surely there must be some benefit derived from all the foreign visitors that shift the locus of their expenditure from home to the UK. There is and it is captured by the higher profits that UK firms enjoy from supplying these foreign visitors. However, restricting capacity also results in fewer UK residents travelling and spending abroad. Since these citizens are likely to spend their money in other ways, they will raise profits of UK firms. So the effect on UK firms' profitability of an increase in airport capacity is that some will experience more foreign demand but less domestic demand. SERAS shows that UK residents travelling abroad slightly exceed foreign visitors to the UK. In the absence of any further analysis it seems reasonable to assume that what is lost on the swings is gained on the roundabouts. What is clear is that the foreign passenger benefits captured by SERAS measures the value of the trip to overseas residents and not the value to UK firms catering to them.
4.12 The BHC adjustment has been to remove all foreign generated passenger benefits. The average sum removed across all the Packages is £1.9bn but the range is broad from a low of £0.7bn at Cliffe to a high of £3.2bn at LHR+1 & STN+2.
Existing Passenger Benefits
4.13 This measures the benefits of wider choice experienced at existing airports by a cohort of passengers already using the airport. As services expand at an airport that cohort has a wider choice over the time of day that they can travel. SERAS' calculation takes the cohort of users in the Base Case (or Maximum Use) and subtracts them from the increased number of passengers in the Package case. This inter scenario passenger difference is used as the basis of the calculation of Existing Berkeley Hanover Consulting 20 SERAS: Technical Report Passenger Benefits.
Berkeley Hanover Consulting 21 SERAS: Technical Report 4.14 Cliffe of course has no existing passengers and as a consequence actually returns a negative figure. Yet if one looks at Cliffe, it must be the case that the cohort of passengers in the first year will enjoy wider choice in the second year if services have expanded in the intervening period. The airports from whence an 'alliance' is transferred would suggest that their passengers have less choice but choice benefits must accumulate at Cliffe over the years. BHC’s view is that in the Base Case and the Package Case, the existing passengers travelling in year 1 should be credited with benefits in year 2 if they continue to travel and services have increased. This continues over the horizon of the assessment for each package and then the difference should be taken between the two series. BHC does not argue with trying to evaluate the benefits of wider choice but feels that it is unsafe to include the current estimates.
4.15 BHC has omitted all existing passenger benefits in our adjustments. The amounts removed are smaller then the Generated Passenger benefits, averaging £0.84bn. They range from -£0.3bn at Cliffe to £1.7bn at LHR+1 & STN+2.
Noise Costs
4.16 These are disproportionately experienced at Heathrow. SERAS uses differences in house prices to capture social valuations in areas with and without airport noise. BHC does not question the approach and has made no judgement whether or not current noise indices properly measure the number of people affected. SERAS presents some examples, which we would have liked to be extended to all the final Packages. Clearly, if noise problems are captured through a valuation mechanism they should not be assessed again as a physical measure or index.
4.17 BHC has applied, roughly, a rule of thumb reported by SERAS where noise costs are given as a percentage of capital costs for some airport options. The capital costs were reworked for each package and suitably discounted before applying these percentages. Typically this adds over £0.3bn to the Heathrow options and around £30- 40m for the Stansted and Cliffe options.
Cost of NO2
4.18 This applies only to Heathrow, where NO2 emissions exceed Air Quality regulations. Action has to be taken by the local authorities to prevent this happening. If the additional runway is provided at Heathrow, either there has to be just sufficient flights to prevent the breach of air quality or the aircraft have to undergo a technical improvement just to land at Heathrow. Since the Base Case, which includes the expansion due to T5, also generates an air quality breach, it seems reasonable to assume that reducing flights would be incompatible with the expansion Package. Sensitivity scenarios suggest that with improved technology the figures associated with an extra runway could be lower but BHC have stayed with the core population affected in our own estimates (35,029 by 2015). The only option apparently available to local authorities is to compulsorily purchase the affected dwellings or insist that BAA purchase the dwellings to remove the occupants from the emissions. It could argued that one should not be creating an unhealthy environment in the first instance.
4.19 BHC has made a rough estimate of the capital cost of purchasing in 2015 the dwellings involved at an average price of £168,000 (a figure used in SERAS' noise analysis). The figure was then discounted at 6% to return a capital sum to include in capital costs. This figure could even be a significant underestimate since there will be Berkeley Hanover Consulting 22 SERAS: Technical Report surrounding blight costs that are quite substantial. It is inconceivable that this land considered unfit for residential purposes could have an employment use, making it highly questionable whether the residentially sterilised land would have an alternative use.
4.20 BHC has therefore retained that discounted capital cost of purchases, which is a fraction over £1bn. However given the significant likelihood of urban blight in neighbouring areas, this figure is likely to be a conservative estimate.
Changes to the Pecking Order of Packages
4.21 Figure 4.3 below provides the net benefits with and without the adjustments. It is clear from the figure that some packages are affected more by the adjustments than others. Clearly all the Packages including a Heathrow extra runway are materially affected as both the noise and NO2 costs bear heavily upon them. However, LHR+1 & STN+2 and STN+3 are also hard hit by the removal of foreign passengers.
Package Net Benefits, Unadjusted v Adjusted
12,000 10,000 8,000 6,000
£m 4,000 2,000 0 -2,000 LHR+1 & LHR+1 & LHR+1 STN+1 STN+2 STN+3 CLIFFE STN+1 STN+2 Unadjusted 2,913 2,157 4,546 7,832 7,664 10,116 3,536 Adjusted -237 692 1,881 2,481 3,907 3,784 2,763 Figure 4.3 Comparison of Packages With and Without Adjustment to Net Benefits
4.22 While all the net benefits have been reduced by the adjustments, clearly the pecking order has now changed. Figure 4.4 below shows the new pecking order on the basis of the adjusted net benefits.
Berkeley Hanover Consulting 23 SERAS: Technical Report
Figure 4.4: Pecking Order of Packages after Adjustments
Net Benefits Relative to Cliffe, Adjusted
2,000 1,000 0 -1,000 £m -2,000 -3,000 -4,000 LHR+1 & LHR+1 & STN+3 Cliffe STN+2 STN+1 LHR+1 STN+2 STN+1 Package Differences 1,144 1,021 0 -283 -882 -2,072 -3,000
4.23 As before these are expressed relative to Cliffe's net benefits. Only two options are now superior - STN+3 and LHR+1 & STN+2.
Conclusions
4.24 The level of net economic benefits even after adjustment argues for larger rather than lesser capacity. UK passengers (citizens), as a whole, and UK airport producers derive material benefit. Whilst UK airport operators will doubtless voice their opinions in the Consultation, future UK passengers being denied lower cost travel will not have a direct voice. They cannot protest about a benefit they have not yet missed. It is for the Government to take on board their interests and give them their due weight.
4.25 Focusing on the higher capacities, the choice is between Cliffe, LHR+1 & STN+2 and STN+3. The adjustments to the net economic benefit measure have removed as much as £6.3bn from one package (LHR+1 & STN+2) and as little as £0.7bn from another (Cliffe). There is little to choose between LHR+1 & STN+2 and STN+3 on the basis of adjusted net economic benefits. Cliffe is about £1bn adrift. However, the Cliffe package approximately provides an extra 10mppa of capacity. The judgement therefore becomes what value should one place on the difference of the remaining impacts that are not already subsumed in these figures. This is discussed in the other chapters.
Berkeley Hanover Consulting 24 SERAS: Technical Report 5 INTEGRATION ISSUES
The Importance of Integration
5.1 Development of an airport can generate substantial employment, economic and planning impacts. It might change the local area and the way of life of its residents completely. A large airport can (and arguably should) attract numerous companies because of proximity to the airport and become the facilitator for an international commercial and industrial centre. The effects of integration can generate great benefits for the local area, as long as there are enough resources to utilise for the economic growth – the airport can create jobs, stimulate the local economy, attract high value-added companies, make the area more prestigious, encourage tourism etc. However, there can be negative impacts as well, such as pressure on local and regional infrastructure, high property prices, traffic and congestion, labour and skill shortages etc.
A Brief Review of the Integration Impacts at LHR, STN and Cliffe
Employment Impact
Table 5.1 Employment Impact of Airport Expansion in 2030 Jobs Per Number of Jobs Number of Jobs Package Difference Additional (1998) (2030) Mppa LHR Max Use 102,000 92,000 -10,000 N/A LHR+1 118,000 16,000 1,000 STN Max Use 10,000 18,000 8,000 N/A STN+3 93,000 83,000 783 Cliffe+4 - 79,000 79,000 720
5.2 According to Table 5.1 above, expansion at Cliffe or Stansted would create around 80,000 new jobs by 2030, with Cliffe having the lowest number of jobs per mppa of the expansion options thanks to the efficiency of a completely new airport. New jobs at Cliffe may be more beneficial to the area than at Heathrow and Stansted because of the higher local unemployment levels and also the local labour market may be better equipped to cope with this large growth. Even the relatively small number of extra jobs created at Heathrow may create high pressures on an already overheated labour market. The table below demonstrates the current situation in the labour markets around Heathrow, Cliffe and Stansted.
Table 5.2 Labour Market Comparison in Surrounding Areas Labour Force in Number of Unemployment Airport study area Unemployed (%)
505,000 12,000 2.3 Heathrow Cliffe 438,000 16,000 3.5 Stansted 137,000 2,130 1.6
5.3 Heathrow and Cliffe both have sizeable pools of labour in their Core Catchment
Berkeley Hanover Consulting 25 SERAS: Technical Report Areas (CCAs)25 whereas Stansted not only has a small labour force but a very low level of unemployment accompanying it. Cliffe has the highest rate of unemployment and it is important to take into consideration that unemployment in Heathrow largely consists of the long term unemployed with social problems, given that the area already has a very high labour demand. If this is taken into account, the unemployed in Cliffe area may be more conducive to entering the labour market than those at Heathrow, further increasing the relative number of workers potentially available at Cliffe over Heathrow.
5.4 Table 5.2 above demonstrates the average unemployment rate for all districts in Core Catchment Areas of each airport. However, these areas have some pockets of unemployment with a high proportion of low skilled workers (reaching 9.5% low skilled unemployment for some deprived districts around Cliffe). The following table presents the current situation in low skilled labour market in deprived districts.
Table 5.3: Potentially Available Low Skilled Labour in Deprived CCA Districts Total Commuting Airport Unemployed Potentially Out Available Heathrow 5,600 -9,800 5,600 Cliffe 7,300 16,400 23,700 Stansted 630 170 800
5.5 Currently there are around 24,000 more low skilled workers than low skilled jobs in the deprived districts close to Cliffe and hence the labour market is characterised by a high level of commuting out of the area coupled with high unemployment. Commuting out by low skilled workers is a fairly unusual phenomenon, making it easier for Cliffe to attract low skilled workers than other London airports. Utilisation of the low skilled labour force would give Cliffe a real advantage over Heathrow and Stansted, as there would be lower new housing demand and also a positive economic regeneration impact on a deprived area of the South East.
Housing Impact
5.6 There are already plans for significant house building in the Thames Gateway area, making Cliffe very flexible to further new development; whereas the Heathrow and Stansted localities are already under great pressure to meet future housing demand without any further large scale airport expansion. Cliffe is not included in the graph and table shown below because SERAS believes that all Cliffe housing demand can be met within RPG figures by 2030.
Figure 5.1: Housing Provision In Relation to RPGs 26
25CCA is a term used in SERAS to define neighbouring boroughs to airports with the most significant airport employment levels 26 Regional Planning Guidances are being updated currently. Berkeley Hanover Consulting 26 SERAS: Technical Report
250,000
200,000 2000 to 150,000 2015 100,000 2016 to 50,000 2030 0 RPG for LHR LHR+1 Total RPG for STN STN+3 Total Housing Housing
Berkeley Hanover Consulting 27 SERAS: Technical Report 5.7 The graph above represents the housing requirements for the local area of each airport. However, the construction of a new airport or runways would generate impacts on the air traffic build-up in other existing airports as they grow to maximum use. This, in turn, would affect the employment and housing requirements. The total housing impacts of the packages on all London airports are presented in the table below:
Table 5.4 Total Housing Impacts of Airport Options* Package Time Frame LHR LGW STN LTN Total 2000 to 2015 23,484 800 4,395 180 28,859 LHR+1 2016 to 2030 5,817 422 1,259 134 7,633 STN+1 2000 to 2015 0 809 22,380 669 23,858 STN+2 2016 to 2030 0 0 13,886 104 13,990 STN+3 2016 to 2030 0 500 17,789 80 18,369 *Cliffe was not assessed by SERAS, although we would expect it to have the least impact relative to the other packages
5.8 In terms of transport infrastructure, Cliffe is geographically close to London but it does not yet have the transport infrastructure that best capitalises on this. However, in the Draft London Plan there are plans for 3 new Thames crossings in the East London/Thames Gateway area and the high prospects of their being built would be further bolstered by a new airport at Cliffe. Cliffe would also further improve the cases of Cross Rail and a heavy freight rail crossing, also mentioned in the Draft London Plan. In addition, SERAS states that Cliffe would require a multi-modal crossing at East Tilbury, which is likely to be built in any case. A road crossing at Benfleet is also included in the surface access costs of Cliffe even though the SERAS main document does not see it as necessary for the airport to proceed27.
5.9 With these improvements among others, Cliffe would compete very favourably with Heathrow and Stansted as regards accessibility. As the Booz Allen Hamilton report argues, a comparison between Heathrow and Cliffe shows that: “access to Central London markets is equivalent, Heathrow has better access to the strong markets to the South and West, Cliffe has better access to the strengthening markets towards the East of London.”28 Cliffe is also likely to be more accessible than Stansted: “Cliffe is much better served by public transport from the vast majority of London and its surroundings than is Stansted. Current demand distribution suggests that poor public transport access may inhibit the ability of Stansted to capture markets”29.
Cliffe and Regeneration in Thames Gateway
5.10 The Thames Gateway area is “…a corridor of land extending from Docklands in East London through to Tilbury in South Essex and the Isle of Sheppey in North Kent”30, with a population of around 2 million people. There is an average rate of unemployment in the area of around 10%. The area is described as a: “massively under-utilised resource in the capital-region’s economy and faces the challenge of developing sites and infrastructure to enhance the depth and quality of its
27 The Future Developments of Air Transport in the UK: South East, DfT, (2002), pp84-85 28 Booz Allen Hamilton, New South East England Airport – Airline Development Strategy (2001), p.29 29 Booz Allen Hamilton, New South East England Airport – Airline Development Strategy (2001), p.29 30 SERAS Regional Impact Appraisal, Arup Economics & Planning,(2001), p.7 Berkeley Hanover Consulting 28 SERAS: Technical Report business and employment base.”31 A major international airport can certainly act as a facilitator for this. The area is described by the Regional Planning Guidance (RPG9a) as a regional and national priority for regeneration.
5.11 Thames Gateway has one of the largest concentrations of manufacturing industry in the South East but this sector has witnessed a significant decline and may not be helped by an airport that would increase land values in the area. A Thames Gateway airport and the associated transport infrastructure would be a powerful incentive for high value-added businesses to locate in the area though. As a York Consulting report mentions: “Evidence from the US suggests that high tech companies are drawn to international airports because their employees travel by air 60-400% more frequently than the general workforce.”32 This well documented trend is most noticeable around major international airports such as Heathrow.
5.12 On the service sector side, the area is the home to some back-office functions of firms in the financial services sector, although this is in decline, as new back-office areas such as call-centres have not been introduced to the area to any great extent. Importantly, with the growth of Canary Wharf, the Inner Thames Gateway is now becoming a major site of international investment banking. A spillover effect into the neighbouring areas with new housing and investment has occurred and with improved transport links this spillover effect is likely to move further eastward. In addition, the type of firms operating in Canary Wharf tend to be high users of business air travel and an airport at Cliffe would be a further benefit to the Docklands area as it would offer a greater choice of destinations than London City Airport and most importantly, long haul routes. Cliffe could help cement the standing of the Docklands and also help spread its success further into the Thames Gateway area.
5.13 With over 400,000 more workers – see Table 5.5 below - than jobs in the relevant Thames Gateway area there is clearly the possibility of a significant reduction in commuting outflows and unemployment through an airport at Cliffe. Most of the direct and indirect jobs associated with airports tend to be at the low skill and low paid end of the spectrum and with the high unemployment and low wage structure of the area there is a good skills match with a new airport, with the potential for a large fall in local unemployment. However, in addition to this, a major international airport such as Cliffe would also attract high paid jobs through catalytic employment as firms cluster around the area and this could help change perceptions, even if the direct airport employment itself does not.
Table 5.5 Labour Market Figures for Thames Gateway Area33 Labour Total Balance Area Force (A) Employed (B) (B-A) Kent TG 273,000 184,000 -89,000 Essex TG 322,000 208,000 -114,000 Outer London 475,000 267,000 -208,000 TG Total 1,070,000 659,000 -411,000
31 TGLP, Strategic Plans of Action, (2001), p.5 32 York Consulting, Employment and Economic Impacts of the Expansion of Stansted Airport, (2002), para 6.15 33 DTLR, Implications of Thames Gateway Airport, Arup Economics & Planning,(2001), p.45 Berkeley Hanover Consulting 29 SERAS: Technical Report Issues of East West Planning
5.14 Of particular interest from an airport development point of view is Cliffe’s development potential given its close location to London, which is already expanding eastward and at an increasing rate as shown by the Draft London Plan. While there are plans for massive house building in the east, Wandsworth Council argue that “the plan misses a golden opportunity to promote an alternative eastern site for a new airport”34 and that “this is essential to redress the current east-west imbalance in jobs and commerce”35.
5.15 According to the London Plan, by 2016 there is an intention to provide 142,000 new homes in East London and 255,000 jobs. East London is expected to provide 31% of the total new housing allocation for London to 2016, as shown below.
Figure 5.2 The Draft Plan for London, Minimum Homes and Jobs Targets for 201636
300,000
250,000
200,000
150,000 Housing 100,000 Jobs
50,000
0 Central East West North South
5.16 As the European Commission and Local Government funded London Study points out: “the Outer East (including the Lea Valley and Thames Gateway) is the main area of competitive weakness, where more jobs are in non-marketed activities and fewer businesses serve national or international markets. Secondly and in contrast, the Central Area and Heathrow economy to the west are the main zones of competitive and adaptive strength.”37 The London Study describes the West London economy as the Heathrow economy, such is the all important lynchpin effect of Heathrow and if the Thames Gateway economy became the Cliffe economy then its competitive strength could possibly rise too like West London’s.
34 Wandsworth Council, A Bigger London or a Better London? (2002) p.6 35 Wandsworth Council, A Bigger London or a Better London? (2002) p.12 36 The Draft Plan for London, GLA, (2002), p.7 37 The London Study, (2000) p.20 Berkeley Hanover Consulting 30 SERAS: Technical Report 5.17 Furthermore, an important point connected with the previous (Economic Benefits) chapter should also be noted: different pressures on the labour markets in East and West London can affect the producer benefits of running an airport. Labour in East London is typically cheaper than West London and hence Cliffe may have lower labour costs than Heathrow, making Cliffe more attractive than if labour costs are assumed to be the same regardless of location.
Some Concerns with SERAS Impact Analysis
5.18 The main concerns can be summarised as follows:
· Induced employment (which can be up to 30% of total direct and indirect employment) is not included in the forecasts. · There have been no attempts to quantify attracted employment and this category is again excluded from final employment forecasts. In effect, these two exclusions could mean an underestimate of airport-related and investment-related employment by some 30-40% · Because of underestimated employment, housing demand is also underestimated to a similar degree.
Recalculating the Impacts
Table 5.6 Recalculated Employment in 2030 SERAS BHC Package Increase estimates estimates LHR + 1 118,000 159,300 41,300 STN + 3 92,000 124,200 32,200 Cliffe+4 82,000 110,700 28,700
Table 5.7 Recalculated SERAS Housing Above RPG 2000 to 2015 In Core Areas SERAS BHC Package 2000 to 2015 2000 to 2015 Increase estimates estimates LHR+1 23,484 31,703 8,219 STN+3 22,380 30,213 7,833 Cliffe+4 3,977 5,369 1,392
Table 5.8 Recalculated SERAS Housing Above RPG 2016 to 2030 In Core Areas SERAS BHC Package 2016 to 2030 2016 to 2030 Increase estimates estimates LHR+1 5,817 7,853 2,036 STN+3 17,789 24,015 6,226 Cliffe+4 0 0 0
5.19 Recalculating the impacts with the new figures is important as the effect of these extra workers and housing is not uniform across the different airport options. An area such as Heathrow that is already under a great deal of pressure resource-wise will
Berkeley Hanover Consulting 31 SERAS: Technical Report find it much harder to cope than a relatively underdeveloped area such as Cliffe. Similarly, the extra urbanisation impacts on Stansted, a fairly rural area, will be felt even more keenly than the Thames Gateway, an area that is already planning for large growth.
5.20 We are concerned that the serious underestimates for employment/housing by SERAS partially obfuscates the enormity of the integration problems that would be encountered by expansion at Heathrow and Stansted. The absorptive capacity of Thames Gateway (and the surrounding area) and the availability of untapped resources provide an ability to optimise the integration benefits of Cliffe to an extent that would not be possible at either Heathrow or Stansted. If catalytic and induced employment is not assessed then some of the key economic benefits to the UK are not accounted for. Those effects can be accommodated at Cliffe but to do so at Heathrow could create even more conflict with policy.
Berkeley Hanover Consulting 32 SERAS: Technical Report Conclusions
5.21 SERAS makes the argument in favour of Cliffe that “a new airport on the scale envisaged in this location clearly has the potential to make a significant contribution to social objectives in these deprived districts.”38 Cliffe and also very importantly, the associated transport improvements it would bring, could indeed help to regenerate the Thames Gateway area. Cliffe could be a major catalyst to existing plans by providing much needed employment as well as stimulating the eastward expansion of London. Heathrow expansion does not appear to be as complementary to existing growth plans, as SERAS states that for employment: “large scale growth at Heathrow could therefore have the effect of compromising the underlying strategy contained in regional guidance”39 and for housing: “the ability to accommodate housing growth created by expansion at Heathrow is questionable.”40 Heathrow does not have the spare labour market and housing capacity and Stansted does not have plans able to cope with the massive urbanisation impacts growth would entail. Out of the SERAS packages, Cliffe appears to be the best option as it is the only option that is sited in an area in need of and with plans for, substantial regeneration.
5.22 The growth of Heathrow would fail to achieve any significant integration benefits - indeed further growth at Heathrow is likely to result in the growing problems of economic displacement already being experienced in the local impact area. Significant expansion at Stansted could not be accommodated within the existing resources of the area and would inevitably lead to major urbanisation consequences. The development of Cliffe would not only be complementary to the regeneration policies of the area but also be achievable without any significant alteration in land use planning objectives of the local and regional planning authorities.
38 SERAS Social Impacts Appraisal, Arup Economics & Planning, (2001), p.26 39 SERAS Stage Two Findings, Halcrow, (2002), p.204 40 SERAS Stage Two Findings, Halcrow, (2002), p.205 Berkeley Hanover Consulting 33 SERAS: Technical Report 6 FINAL COMMENTS
How Accurate are the Comparative Assessments between Packages?
6.1 In making a comparison between the different Packages, it should be borne in mind that the proposed combinations are very different. The capacities of the airports, timing of construction of new runways, capital costs, required transport infrastructure, traffic build-up and other technical characteristics vary greatly, thus some comparisons might not be directly valid.
6.2 The impacts of the airports and new runways also differ significantly. Another reason for this is that the surrounding areas themselves are very different. For instance, the total labour force of the Stansted area numbers around 137,000 whilst at Heathrow and Cliffe there are labour forces of around 450,000 to 500,000. This and other significant differences (labour costs, out commuting, skills base etc.) make comparing the economic impacts somewhat complex. For example, the Heathrow area already has a great deal of pressure on its resources and even if a new runway is economically beneficial (and BHC calculations in Chapter 4 show that it is not), the further pressure on resources would certainly crowd out (i.e. cause a displacement of) other economic activity. In comparison, with an under-utilised area of the South East such as the Thames Gateway, a new airport could act as a facilitator for growth, bringing extra foreign and domestic investment into the regional economy aside from the substantial direct impact. The future plans for the respective areas are also very different and make the comparisons difficult. Whilst there are extensive growth plans for the Thames Gateway, the increase of housing provision is much more restrictive in the areas surrounding Heathrow and Stansted.
6.3 With these existing pressures and future plans in mind, a straightforward assessment of impacts becomes more problematic at times. SERAS calculates that Stansted with 3 new runways and Cliffe may both create around 80,000 new jobs but if much of this is met by in commuters who eventually settle in Stansted, rather than existing local residents as is more likely in Cliffe’s case, then the urbanisation impacts would be much stronger in Stansted than in Cliffe, even if the number of jobs created is similar. This shows that comparing options using just the figures in SERAS can be misleading as these figures must be placed into the context of differing areas with differing abilities to meet and cope with airport expansion options.
6.4 The same can be said about environmental impacts – for example, a large airport at Cliffe might generate significant levels of noise and emissions, but because of the location of the airport very few or no local residents would be affected. On the other hand, the densely populated Heathrow catchment area will be severely affected by noise and emissions even with a much lower capacity increase.
Is Cliffe a Better Long Term Solution for the South East and the UK?
6.5 It is important to note that none of the options studied fully meets the Government forecasts for the expected growth in demand in air travel. By 2030, the Government predicts there will be a total UK demand of 501 mppa. The package with Cliffe however, comes closest to meeting this expected demand with a total UK figure of 478 mppa in 2030. The package with LHR+1 would only have a total UK figure of 436 mppa by 2030. Therefore, whilst restricted growth in the South East would mean some greater expansion in the rest of the UK, there would still be a significant loss of passengers to the UK as a whole as the regions would not be able to absorb all of the Berkeley Hanover Consulting 34 SERAS: Technical Report excess demand. 6.6 Furthermore, as a Booz Allen Hamilton41 report for SERAS argues, there is a strong case for a twin hub airport system in the South East, retaining and enhancing London’s standing as a major competitor in the global aviation market. Also, connections from the UK regions via a London hub to international destinations would be improved with the creation of a new hub, with more destinations and a greater frequency of flights. With more passengers at the combined London airports in 2000 (116 mppa) than any other city in the world, the report argues that there does “appear to be a sufficient base level of point-to-point traffic generated in London to support two major alliance hubs – one of the principal reasons for this not having happened being the constraints under which Heathrow is operating.”42 One extra, short runway at Heathrow would do little to change these constraints and hence the only way to accommodate two major alliance hubs is in fact a separate, second hub airport.
6.7 In this case, it is a straight contest between Stansted and Cliffe to be the second hub. The Booz Allen Hamilton report suggests that Cliffe should be the ‘winner’ given that Cliffe has an equivalent travelling time to Central London compared with Heathrow while Stansted does not and that Stansted’s reputation as a base for low cost carriers may make it more difficult to persuade a sizeable alliance to move to the airport.
The Consequences of Incrementalism
6.8 With the huge environmental concerns any airport expansion generates, small capacity increases, such as 1 new runway at Stansted, may seem an attractive option. Yet, this is a short-term solution useful for at most the next 10 years. Beyond that, demand will continue to grow and once again there will be pressure to expand at an existing London airport and we will be back to the demand for more incremental growth - a scenario repeated at Heathrow over the last 2 decades. A longer term view would result in the construction of large-scale extra capacity at a new, less intrusive site that can cope with growth rather than constantly having to react to demand on an incremental basis for more expansion in the next 30 years. Indeed, if we look beyond 2030, it is inevitable that the concept of a new airport in the SE would have to be revisited sooner or later.
Summing Up
6.9 There are very substantial environmental grounds to completely discount Heathrow from further consideration in the SERAS process. However, by allowing for these costs – if the Government found them acceptable – and the other adjustments we have suggested to economic benefits; the gap in terms of economic benefits between the higher capacity Packages is considerably reduced from over £4bn to some £1bn.
6.10 A review of the Integration impacts clearly shows the major benefit of Cliffe for the SE as opposed to Heathrow and Stansted. The Government will need to weigh very carefully these non-economic issues alongside the much smaller differences in economic benefits than shown in SERAS.
6.11 We concur with the Booz Allen Hamilton report findings that the ability to fund Cliffe, whilst undoubtedly a significant task, is achievable and Cliffe is clearly preferable to
41 Booz Allen Hamilton, New South East England Airport – Airline Development Strategy, (2001) 42 Booz Allen Hamilton, New South East England Airport – Airline Development Strategy, p.30 (2001) Berkeley Hanover Consulting 35 SERAS: Technical Report Stansted as the next hub in the SE.
Berkeley Hanover Consulting 36 SERAS: Technical Report APPENDIX A – AIRLINE ALLIANCES
oneworld · Air Lingus · American Airlines · British Airways · Cathay Pacific · Finnair · Iberia · LanChile · Qantas
Star · Air Canada · Air New Zealand · ANA · Austrian Airlines · BMI British Midland · Lauda · Lufthansa · Mexicana · SAS Scandinavian Airlines · Singapore Airlines · Thai Airlines · Tyrolean · United Airlines · Varig Airlines
Skyteam · AirMexico · Air France · AlItalia · CSA Czech Airlines · Delta · Korean Airlines
Wings · Continental Airlines · KLM · Northwest Airlines
Berkeley Hanover Consulting 37 SERAS: Technical Report
Berkeley Hanover Consulting 38 SERAS: Technical Report
APPENDIX B – SERAS PACKAGES
Information on Packages Used in BHC Technical Report
Additional DfT Estimate Package No. Option No. Description Capacity of UK Mppa by (Mppa) 2030 2 - Max. Use - 428 5B E4 LHR+1 27 436 7 5 STN+1 47 450 10 11 STN+2 67 472 12 E4 and 5 LHR+1 STN+1 74 470 14 7 STN+3 94 476 16 E4 and 11 LHR+1 STN+2 94 474 21 A2(4) Cliffe+4 113 478
Berkeley Hanover Consulting 39 Appendix D
Implications for Individual Airports based on the mid-point growth forecasts under the RASCO Reference Case (RRC)
THE SOUTH WEST
Bournemouth Airport - Under the RRC the forecast for Bournemouth is for traffic to grow from 0.3 mppa in 2000 to 4.4 mppa in 2030. - To cater for this demand the airport will need terminal expansion, increased aprons and stands and car parking facilities. It will also need improved road and public transport access.
Bristol Airport - Under the RRC the forecast for Bristol airport is for traffic to grow from 2.1 mppa in 2000 to 8.6 mppa in 2030. Under this scenario, the airport will need extension of the runway, an improved taxiway system and an additional terminal with additional aprons and stands. - The airport is only considered suitable for expansion with improvements to the surface access provision.
Exeter Airport - Under the RRC the forecast for Exeter airport is for traffic to grow from 0.3 mppa in 2000 to 2 mppa in 2030. This will require terminal expansion.
Newquay Airport - Under the RRC the forecast for Newquay airport is for traffic to grow from 0.1 mppa in 2000 to 0.4 mppa in 2030. However it is likely that the forecasts are an underestimate now that the airport has a low-cost carrier operating from it and the latest forecasts indicate 2.0mppa by 2030. - The airport will need additional terminal capacity to cope with larger aircraft. An important issue for Newquay airport is the interaction between the civil aviation and military operations at the airport. The Ministry of Defence is due to publish a review on the airport. It is essential that the future operation of the airport is made clear.
Plymouth Airport - Under the RRC the forecast for Plymouth airport is for traffic to grow from 0.1 mppa in 2000 to 0.5 mppa in 2030. - The airport has sufficient infrastructure to meet this demand but an extension of the runway and terminal capacity would be needed to cater for larger aircraft.
THE NORTH OF ENGLAND
Air Transport in the UK 62 SASIG: November 2002 Manchester Airport - Under the RRC, Manchester is forecast to grow from 18.35 mppa in 2000 to 60 mppa in 2030. - The existing infrastructure at the airport could provide capacity for 50 mppa or 340,000 atms. To meet the RRC forecast of 60 mppa for 2030 additional terminal capacity would be required and increased mixed-mode. These would bring substantial environmental impacts and therefore SASIG supports an environmental capacity limit of 50 mppa at the airport. Additional facilities to allow for 60 mppa should only be provided if technological and operational measures would ensure no worsening of the noise climate. - SASIG considers that the future of Manchester Airport should be as a two-runway airport. The impact of a third runway on the environment and local community is so severe that we would like to see it ruled out. The excess demand at Manchester, which cannot be met due to the constraints, would then be spread across the other airports in the region. Therefore the other airports in the North of England can achieve a higher growth potential.
Liverpool John Lennon Airport - Under the RRC, Liverpool Airport would grow from 1.98 mppa in 2000 to 8.6 mppa in 2030. The airport has adequate runway capacity for the forecasted traffic. - Beyond 2010 to 2015 there may be a need for remodelling of the apron and taxiway layouts to reach maximum capacity.
Newcastle Airport - Under the RRC, the forecast for Newcastle Airport is for growth from 3.15 mppa in 2000 to 9.0 mppa in 2030. - The airport may require a runway extension to improve the Public Safety Zone. It will need apron and taxiway remodelling and improvements to road and public transport access. There will be pressure for terminal development at the airport at around 2015.
Teesside - Under the RRC, the airport is forecast to grow from 0.6 mppa in 2000 to 3.0 mppa in 2030. - The airport will require the extension of terminal capacity in 2005, with apron and stand provision. - Extension of the runway and a parallel taxiway may be needed in the later forecast years. - Increased congestion and demand for more parking means that it is essential that public transport access to the airport is increased.
Leeds Bradford - Under the RRC, the airport is forecast to grow from 1.58 mppa in 2000 to 6.7 mppa in 2030. - To meet the future demand there will be a need for terminal expansion with the extension of apron and stand areas.
Air Transport in the UK 63 SASIG: November 2002 - It is essential that the issue of poor public transport access to the airport is addressed.
Humberside - Under the RRC, the airport is forecast to grow from 0.45 mppa in 2000 to 1.6 mppa in 2030. - To meet the demand forecasted, the airport will need new terminal facilities with additional stands by 2015. By 2030 the airport may need a full-length parallel taxiway and additional exit and entry points.
Doncaster Finningley - SASIG was dismayed that the option of an airport at Finningley had not been fully evaluated in the consultation documents although understands the difficulties due to the pending decision on the Planning Inquiry. - If planning approval is given, its traffic could reach 5 mppa by 2030. The airport would add to airport competition in Yorkshire and Humber and the North Midlands sub-region. Finningley could “mop up” the excess demand once other airports such as Manchester, reach their environmental capacity limits.
THE MIDLANDS
Birmingham Airport - Birmingham’s single runway is not capable of handling the forecast traffic through to 2030 under the RRC (33 mppa). Its runway capacity is likely to be reached in the mid 2020s. - SASIG supports the expansion of Birmingham International Airport provided there are extensive mitigation measures including improvements to transport access and measures to reduce the impact of noise on property and people. Providing the local authorities in the area are content with the concept of a new runway at Birmingham, SASIG accepts the suggested growth to around 33 mppa. - A third passenger terminal and associated stand facilities will be needed at Birmingham airport after 2010 and further expansion of these facilities will be needed at periodic times between 2015 and 2030.
East Midlands - Under the RRC, East Midlands is forecast to grow to 12.5 mppa. - SASIG does not support a second runway at East Midlands airport due to the environmental impacts, particularly the noise and air quality impacts of such an option. - There is demand for night flights at East Midlands for freight operations, but SASIG considers that the demand for freight operations could be met at the new airport at Cliffe (or more suitable new airport site) in the South East which would allow 24-hour operation with minimum disturbance to residents. - New terminal facilities and stands will be required at East Midlands airport.
New Airport Site - SASIG does not support a new airport site in the Midlands as it would only be viable if no new runways are provided in the South East. SASIG’s solution for the
Air Transport in the UK 64 SASIG: November 2002 South East is a new airport with room for considerable expansion and therefore there would be no need for a new airport in the Midlands.
THE SOUTH EAST
Cliffe - The option put forward for consultation is for a large airport with two pairs of parallel runways and a fifth cross-wind runway to reduce night-time noise. - The advantage of the site at Cliffe is the availability of land, potentially good links to London and other areas and that the airport development would support the regeneration policies for the Thames Gateway. - SASIG acknowledges that the Government would need to provide incentives to ensure that airlines moved their operations to the new site. - SASIG also acknowledges that the new site, as proposed at Cliffe would have a large ecological impact in terms of land take and impacts on birds. However these impacts need to be weighed against the noise and air quality impacts on people should further runways be built at Heathrow and Stansted. SASIG suggests that to mitigate against the ecological impact funding should be provided to create an alternative habitat. - A new airport in North Kent would remove the need for additional runways at the existing London airports, which are now considered below.
Gatwick - SASIG notes the Government in upholding the legal agreement at Gatwick and therefore ruling out the option of another runway at Gatwick from being included in the White Paper. - SASIG expects to see Gatwick continue to develop as a 2 terminal, 1 runway airport.
Heathrow - SASIG is disappointed to see the option of a new short runway at Heathrow included as one of the options for the South East, particularly since BAA asked for it to be ruled out during the Terminal 5 Inquiry. - SASIG considers that the environmental impacts of a third runway at Heathrow, in particular the numbers of people affected by noise and air quality impacts, are too high and that a new runway at Heathrow should not be included in the White Paper. SASIG maintains that it is essential that the cap on the total number of flights of 480,000 given with the decision on Terminal 5 should be upheld.
Stansted - The local authority has just agreed that Stansted airport should be given permission to expand to 25 mppa. - SASIG considers that Stansted’s location, with its impacts on the nearby population and limited public transport access to London, makes it unsuitable as an option for future runways in the South East. - SASIG supports the continued operation and development of Stansted as a one runway airport. The Government has indicated that the maximum capacity of the airport with one runway might be 35 mppa.
Air Transport in the UK 65 SASIG: November 2002
Luton - SASIG supports the continued development of Luton airport as a 1-runway airport.
Alconbury. - SASIG does not support the suggested option at Alconbury. The key strategic issue is that it seems only viable if there is constraint on other South East options. This does not fit with SASIG’s vision of a new airport in the South East.
Options for Other South East Airports
London City - SASIG supports the continued development of London City to 5 mppa, provided the issue of interference of air traffic control between London City and the new airport at Cliffe (or elsewhere), can be resolved.
Southampton - SASIG supports the development of Southampton Airport up to 3 mppa, which is the forecasted demand up to 2030 in the RRC. There are concerns that the constraints and impacts identified in the consultation documents will prevent this growth being achieved.
Norwich - SASIG supports the continued growth of Norwich airport to 0.7 mppa, which is the forecasted demand for 2030 in the RRC. If demand is sufficient, this figure could be exceeded.
Second tier airports - SASIG accepts that these play an important local and/or business role, subject to any constraints imposed by local agreements.
Air Transport in the UK 66 SASIG: November 2002 Appendix D SOUTH EAST OPTIONS
Airport Pax (mppa) ATMs Noise 2030 Land Propert Heritag Ecology Water Air Quality 2015 Jobs (000s) Houses Road/& Comments 2030 Take y Take e Risk 2015 Rail ha
2000 2015 2030 Pop Area PM10 NO2 1998 2015 2030 ha Heathrow 64 89 89 480,000 278,000 130 Nil Nil Nil Nil Nil Nil 14,000 102 98 92 Nil ? 2R Heathrow 64 116 116/ 655,000 332,000 153 230 260 ? 10 Nil High Nil 35,000 102 147 117 40,000 Lots +3000 houses 3R 128 affected Gatwick 32 37 41 257,000 6,000 63 Nil Nil Nil Nil Nil Nil 600 43 38 34 Nil Some Max use 1R Stansted 12 23 26/35 231,000 6,000 50 Nil Nil Nil Nil Nil Nil Nil 10 20 18 ? Some 1R Stansted 12 64 74/82 492,000 14,000 127 700 100 31 Nil Nil Nil 20 10 60 56 18,000 Lots 2R Stansted 12 64 98/ 624,000 24,000 191 1200 200 53 Small Nil Nil ? 10 60 74 ? More 3R 102 Stansted 12 64 122/ 746,000 28,000 228 1200 200 68 Small Nil Nil 300 10 60 93 ? Even 4R 129 more Luton 6 8 10 100,000 5,000 15 Nil Nil Nil Nil Nil Nil Nil 9 ? ? ? ? Luton 6 17 29/31 221,000 19,000 33 100 10 Nil Nil ? Nil 50 9 17 21 2600 Adequat Accords with South e regional policy Luton 6 17 29/31 221,000 14,000 47 100 10 3 Nil ? Nil Nil 9 17 21 2600 Adequat Accords with Relign e regional policy Cliffe 2R Nil 58/77 436,000 4,000 57 2,000 1,100 9 £200m High Nil Nil 53 Small Lots Accords with regional policy Cliffe 4R Nil 58/77 110/ 712,000 14,000 111 2,000 1,100 9 £200m High Nil Nil 79 Small Lots Accords with 113 regional policy Cliffe 5R 2,200 10 London 1.6 4.3/ 5.1/ City 2.0 4.8 Norwich 0.4 0.7/ 4.4/ 0.5 0.7 Southend 0.9 2.8/ 7.1/ 1.6 2.0 Alconbury 5.0/ 12 Nil Some 1.0
Air Transport in the UK 67 SASIG: November 2002 Air Transport in the UK 68 SASIG: November 2002