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Bristol Airport – Response to Consultation

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Bristol Airport – Response to Consultation BRISTOL AIRPORT – RESPONSE TO CONSULTATION Findings of independent analysis commissioned by the Parish Councils’ Airport Association New Economics Foundation Bristol Airport – Response to Consultation Bristol Airport – Response to Consultation Findings of independent analysis commissioned by the Parish Councils’ Airport Association Published January 2021 Authors: Dr Alex Chapman and Marc Postle Client: Parish Councils’ Airport Association The consultancy of the New Economics Foundation, NEF Consulting helps put new economics into practice with people and the planet at the heart of decision-making. The New Economics Foundation is the UK’s leading think tank promoting social, economic, and environmental justice to transform the economy so that it works for people and the planet. NEF Consulting Limited New Economics Foundation 10 Salamanca Place, LondonThe SE1 consultancy 7HB of the New Economics Foundation, NEF Consulting www.nefconsulting.com helps put new economics into practice with people and the planet at the Tel: 020 7820 6300 heart of decision-making. The New Economics Foundation is the UK’s leading think tank promoting social, economic, and environmental justice to transform the economy so that it works for people and the planet. The consultancy of the New Economics Foundation, NEF Consulting helps put new economics into practice with people and the planet at the heart of decision-making. 2 The New Economics Foundation is the UK’s leading think tank promoting social, economic, and environmental justice to transform the economy so that it works for people and the planet. Bristol Airport – Response to Consultation EXECUTIVE SUMMARY NEF Consulting were commissioned by the Paris Councils’ Airport Association (PCAA) to conduct a review and supplementary analysis on the economic and monetised impacts of the proposed expansion of Bristol Airport being considered at appeal stage. Substantive Defects . Bristol Airport represents core national travel infrastructure, and The Appellant provides evidence that its expansion will impact on consumer and business behaviour at airports around the UK, not just in the South West and South Wales region. The airport’s expansion will also have impacts on the national aviation carbon budget, and its relative distribution across regions. A national appraisal study area should have been included. The Appellant has responded to NEF’s previous critique by providing new disaggregated displacement estimates. However, The Appellant has failed to apply their disaggregated displacement estimates to their net GVA / GDP estimates. Applying these with known factors for the airports from which traffic could be displaced results in reductions in estimated employment benefits at the South West & South Wales level of about 25%, from 4,000 additional jobs to 3,056. At the UK level, using this information results in an additional GVA estimate of just £100 million, and just 162 additional jobs. With more conservative assumptions on airport job intensity these figures turn negative at the national level. Having established in their own analysis that 38% of the additional passengers who would use the expanded airport are newly created and not displaced from other airports, The Appellant fails to make any calculation of the likely transfer of consumer spending overseas which would result from the new international tourism facilitated. This means that the economic impact of the airport’s primary function, i.e. facilitating UK residents on international tourism, remains unquantified despite likely being highly negative and material to the regional GDP contribution analysis of the scheme. The inclusion of Low Carbon costs and low weighting given to High Carbon Costs in the Demand Modelling is likely to bias benefits upwards and costs downwards - this has implications for every part of the assessment that relies on these traffic forecasts. While this is a substantive defect, the impact is of such a cross-cutting nature that no attempt can be made by NEF to quantify it. The Appellant recognises that business use of internet communication has increased “massively” during the Covid-19 pandemic, but then makes the unsubstantiated claim that business behaviour will return to the pre-pandemic normal before the time period of the assessment conducted, despite other evidence to the contrary. As a minimum, sensitivity analysis is required to consider the impacts of lower future business use of air travel, and/or lower marginal productivity gains to use of air travel. Implicit in The Appellant’s submission is an assumption that the job intensity (i.e. the number of jobs per passenger) will remain the same in the ‘with’ and ‘without’ development scenarios. Given that a core impact of airport expansion is to facilitate greater returns to scale, and that such a premise is baked into The Appellant’s later work 3 Bristol Airport – Response to Consultation on the scheme’s socioeconomic cost-benefit profile, this assumption seems overly optimistic and overstates the scheme’s job creation potential. The scheme benefits, as set out in the GDP/GVA analysis are highly dependent on its proposed creation of business productivity benefits, jobs, and new inbound tourism. Its apparent merit to the public is also highly influenced by assumptions relating to carbon cost and outbound tourism costs. Given the high levels of uncertainty underpinning these parameters, particularly resulting from the Covid-19 pandemic and the expected government policy changes on aviation carbon emissions, best practice in the Green Book and TAG guidance would suggest a sensitivity analysis should be conducted. No such analysis is provided beyond The Appellant’s consideration of different rates of demand growth - which are of little material significance when it comes to measuring the relative merits and risks of the scheme. The socioeconomic cost-benefit analysis conducted by The Appellant is fundamentally flawed and not fit for use in decision making without significant revision. The high social benefit-cost ratio (BCR) The Appellant reports relies on not including the costs to airlines, tax costs to passengers, and mis-specifying CO2 emission costs. Air fare and tax changes are likely to be near zero-sum, depending on market elasticities and constraints. Including the reciprocal effects in the social welfare calculation changes the net value from NPV £863 million and BCR 3.66 to the more modest £189 million and BCR of 1.21. By including carbon emissions in the manner that they have, Bristol Airport Limited (BAL) have provided a misleading result which they can accurately claim includes substantial double-counting. Re-calculating the values to focus only on what is not already included in air fares and to present sensitivities for non-CO2 impacts and High Carbon Values, as required by the relevant guidance, results in a net benefits of £122 million and BCR of 1.13 (non-CO2) or -£54 million and BCR of 0.95 (non-CO2 and High Carbon costs). The economic analysis includes other defects of a less substantive nature that together may result in a material impact, including the lack of inclusion of other environmental costs (air quality and noise pollution), the dismissal of potentially negative outbound tourism effects, ambiguity over the study period applied, and incorrect discount rates. 4 Bristol Airport – Response to Consultation What should be provided to the Inspector . Revised demand modelling that treats carbon pricing in line with current guidance and legislation. Use of disaggregated displacement in GVA / Employment calculations . Appropriate inclusion of reciprocal effects of air fare and tax changes in socioeconomic cost benefit analysis, at a conservative 1:1 unless BAL can demonstrate otherwise. Presentation of non-CO2 effects, in line with guidance. A high carbon cost scenario that is fully specified, in line with guidance. Fully monetised Air Quality and Noise impacts . Estimates of overseas transfers of spending resulting from increased rates of international tourism facilitated by the airport expansion . Re-calculated job creation estimates considering returns to scale resulting from expansion and appropriate rates of industry job intensity decline . Sensitivity scenarios assessing highly uncertain parameters, particularly future use and marginal utility of business air travel 5 Bristol Airport – Response to Consultation CONTENTS Executive Summary .............................................................................................................. 3 Substantive Defects ........................................................................................................... 3 What should be provided to the Inspector .......................................................................... 5 Contents ............................................................................................................................... 6 Introduction ........................................................................................................................... 7 About us ............................................................................................................................ 7 Context ................................................................................................................................. 8 Climate Change ................................................................................................................. 8 Covid-19 ...........................................................................................................................
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