FLIGHT PATH TO GROWTH THE CASE FOR INCREASING LONDON S AIR CAPACITY

Transcription

1 FLIGHT PATH TO GROWTH THE CASE FOR INCREASING LONDON S AIR CAPACITY

2 THE PROBLEM WHY DO WE NEED TO FLY? The UK is the world s second-largest exporter of services and the sixth-largest exporter of goods. Our current trade patterns are dominated by traditional partners in the United States of America and European Union but global economic growth is increasingly being driven by emerging markets in countries such as China, India, Indonesia, Mexico and Brazil. There is a clear correlation between volumes of trade and air travel the number of business passengers at UK airports rises in line with total trade volume with the UK. Growth of UK trade and business passengers at UK airports: % Total UK trade Business passengers While the UK already has excellent air links to established economies such as New York, Paris and Frankfurt, in order to remain competitive, we must also expand our existing air routes to include direct links to emerging economies in South America and Asia. Demand for business flights is forecast to grow by 80% to The UK must ensure it is open for business and ready to fly. WHAT S THE PROBLEM? More than 200 million passengers pass through the UK s airports each year, a fourfold increase in the last 20 years. While the recession has dampened demand, growth is returning in 2011, passenger numbers rose by 4 per cent at Heathrow and 3 per cent at Gatwick. The Department for Transport forecasts that all major airports in the South East will be full by Percentage 20% 10% 0% -10% -20% -30% Heathrow is full now, running at 99% of its current permitted limit of 480,000 air traffic movements (ATMs) a year. While there is spare capacity at London s point-to-point airports, and Gatwick in particular has been successful at attracting new flights from Jakarta, Lagos and Seoul, they are forecast to be full in approximately the next 15 years. Financial year by quarter Source: ONS 1968 Roskill Commission 1974 Maplin Scheme abandoned 1974 Study for Hong Kong airport Charles de Gaulle airport opens with two pairs of parallel runways 1979 Gatwick second runway ruled out 1985 Aviation Policy White Paper 1984 Frankfurt opens third runway A timeline: 40 years of indecision about London while our rivals have expanded 1

3 Proportions of air passengers suppressed from travel by district, 2040, (central demand) Source: DfT s passenger allocation model Suppressed Demand 0.00 to 0.10% 0.10 to 0.25% 0.25 to 0.50% 0.50 to 1.00% 1990 RUCATSE study set up 1990s Marinair proposal 1991 Construction begins on Hong Kong airport 1995 RUCATSE rejected 1999 South East Regional Air 1997 service (SERAS) Fourth runway set up construction started at 2000 Frankfurt The Future airport of Aviation Hong Kong airport opens document 1.00 to 1.50% 1.50 to 2.00% 2.00 to 2.50% 2.50 to 3.00% 2002 Marinair rejected 2003 Cliffe proposal abandoned The Future of Air Transport White paper 3.00 to 3.50% 3.50% Madrid Barajas opens third and fourth runway 2008 Shivering Sands proposal 2003 New runway opened at Schiphol Moscow Domodedovo expansion announced 2

4 So, London is already at a competitive disadvantage. It has fewer weekly flights than its European rivals to half of the emerging market economies, and seven of the eight growth economies identified by the International Monetary Fund. Passengers passing through UK airports each year (millions): UK London Frankfurt and Paris alone boast over 2,200 more flights every year to mainland China than Heathrow, while there are 26 emerging market destinations with daily flights from other European hubs that are not served daily from Heathrow, including Manila, Lima, and Chennai. London s European rivals have risen to the challenge of adding capacity. Frankfurt Airport and Paris Charles de Gaulle Airport have four runways each while Amsterdam Schiphol Airport has six. Number of passengers (millions) Since 1992, Heathrow s capacity has grown 53 per cent, while Frankfurt Airport has grown 84 per cent, Paris Charles de Gaulle 142 per cent and Amsterdam Schiphol 160 per cent. Our lack of capacity threatens to hamper London s success as a global business centre and its ability to spearhead the UK s economic recovery. Years Source: CAA 40 years of indecision (timeline below) In 1968, the Roskill Commission was set up to find a site for a new 4 runway airport for London. Its eventual recommendation was Maplin Sands in Essex, but despite the Maplin Development Act receiving Royal Assent in October 1973, the scheme was abandoned in Since then has followed 40 years of indecision about how best to expand London s aviation capacity, including rejected studies on Runway Capacity to serve the South East (RUCATSE) and the Marinair proposal for a new hub airport in the Thames Estuary Labour support for third runway 2010 Coalition rules out expansion 2011 Lord Foster scheme Nov 2011 Frankfurt fourth runway opens 2012 Airports Commission set-up 2015 Airports Commission Report due Shanghai third terminal and two additional runways planned 2019 Gatwick can apply for 2nd runway 2029 All London s airports forecast to be full 2030 Hong Kong masterplan three-runway system by

5 THE SOLUTIONS SHORT TERM OPTIONS Heathrow airport could have greater flexibility to use its runways more intensively. Over time, mixed mode operations could increase runway capacity by up to 10 per cent, providing both the opportunity for headroom to cut delays and more ATMs. Additional flights could be accompanied by stringent noise control measures, enforced by independent regulator to build trust. Greater competition in the London market could spur the use of capacity at point-topoint airports. Removing cumbersome price cap regulation from Gatwick and Stansted would give them greater flexibility to compete, providing a greater choice of services to passengers and airlines. MEDIUM TERM OPTIONS London needs new runway capacity as a matter of urgency to meet demand and cater for growth. A third runway at Heathrow could be delivered within 15 years and support a 50 per cent increase in flights. Further capacity in the form of another runway at one of London s existing point-topoint airports Gatwick or Stansted, would meet even the most stretching forecasts for demand to 2050, within the UK s carbon reduction commitments. A new hub airport, with at least four runways, offers the prospect of state-ofthe-art infrastructure in a location with world-class transport links. A number of sites have been proposed along the Thames Estuary; expanding Stansted has also been mooted. A new airport could be linked by high speed rail to London and, possibly, other destinations and integrated into the roads network by new roads. WHAT HAPPENS NEXT? The Government has appointed an independent Commission to identify and recommend options for maintaining the UK s status as an international hub for aviation. The Commission will provide an interim report by the end of 2013 recommending ways to improve use of existing runway capacity in the next five years. By the summer of 2015, it will publish its final recommendations for meeting the UK s long-term needs WHAT CRITERIA SHOULD THE AIRPORTS COMMISSION APPLY? Does any proposed option for additional capacity secure London s links with world markets? This should be a deciding factor in assessing all options. Can a proposed option deliver an increase in international flights quickly, ahead of any new runways? When can new runways be delivered and what impact will their timing have on international airlines view of the UK as a location before, during, and after? Can any required public sector funding be guaranteed across parliaments and economic cycles? What investment in surface access will be required? What are the risks involved? What weighting should be applied to the numerous social, environmental and economic factors, so that negative impact is appropriately measured against benefits? What mechanisms, such as independent noise regulation, can be put in place to enforce limits on these negative impacts? 4

6 Distribution of air passenger demand 2010 & 2040 unconstrained Source: DfT s passenger allocation model Passenger Demand 0-50,000 50, , , , , , , , , , , , ,000-1,000,000 1,000,000-1,500,000 1,500,000+ WHAT IS LONDON FIRST S VIEW? Action to overturn London and the UK s competitive disadvantage is needed now. The Airports Commission must offer short-term proposals for increasing long-haul flights serving London that can immediately be set in motion. In our view, the current cap on ATMs at Heathrow should be lifted with mixed mode runway use and credible measures to alleviate the effect of increased noise;, while at the same time Gatwick and Stansted should be deregulated to spur greater competition. In the longer term, London needs additional runways, to provide both capacity and further competition, as quickly as possible. All options have their strengths and weaknesses. Given the considerable planning challenges and public funding that would be required to provide surface links and compensate for the closure of Heathrow if a new airport were to be built, our analysis is that a third runway at Heathrow and a second runway at Gatwick are the most practicable means of meeting this objective. GLOSSARY What is a hub airport? A hub airport is used by an airline as a transfer point to get passengers to their eventual destination. Heathrow is the UK s international hub airport. What is mixed mode? Often, multi-runway airports will use separate runways for landing or takeoffs. Mixed mode allows dual use of runways for both landing and take-off. Transfer passengers may be pooled with point-to-point passengers at a hub airport to sustain flights that may not otherwise be viable, reducing costs for passengers. The benefit of having an international hub airport is that it provides a high frequency of flights on key routes, enabling Londoners to fly direct to a wide range of destinations without having to change planes. What is a point-to-point airport? A point-to-point airport from where airlines fly directly to a destination, rather than going through a central hub e.g. Gatwick Airport, Stansted Airport, Luton Airport, City Airport. Mixed mode can offer both greater headroom to cut delays and an increase in flights. In either case, changing flight patterns can change the distribution of noise experienced by local residents. What is an air traffic movement (ATM)? One total movement is a landing or take-off of an aircraft. What is a slot? Take-off and landing slots are rights allocated to airlines by an airport or government agency. They allow the owner to schedule flight arrivals and departures during a specific time period, and to choose the destination. Peak slots - early morning arrivals and midday departures - are in huge demand. Contact us London First, 3 Whitcomb Street, London WC2H 7HA T +44 (0) E [email protected] April Design David Carroll & Co