Tag Archives: Heathrow third runway

Airlines put Heathrow’s Third Runway in the Dragon’s Den

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And so to the final ‘dragon’ in my review of the arguments for and against Heathrow’s Third runway.

If we just looked at the airlines serving Heathrow, then support for a third runway would be overwhelmingly positive. But no frills airlines such as Easyjet and Ryanair, who are being asked to pay increased landing charges at Gatwick and Stansted in order to help fund Heathrow’s infrastructure improvements, are less keen. As I haven’t yet mentioned the alternative High Speed Rail, perhaps this is the place to consider what ‘rail based airlines’ might think.

Heathrow’s existing Tennants

British Airways are unsurprisingly the most vocal in favour of a third runway at Heathrow, as they already benefit from having a massive hub operation in Terminal 5, which they want to expand by having extra runway capacity. In terms of the environmental damage caused by airlines, BA boss Willie Walsh was in New York recently, arguing that airlines across the world could achieve a 50% reduction in CO2 emmissions by 2050 – but many environmentalists are cynical about the industry’s ability to meet such targets, and even those that believe they are achievable do not consider that a 50% reduction is enough. So how does this relate to Heathrow, which is after all, just one airport out of several thousands worldwide which operate passenger flights, albeit the busiest one in terms of international passengers? The current government have made reductions in CO2 emmissions part of the conditions which would have to be met in order for Heathrow to gain approval. Obviously, this is all immaterial if the Conservatives stick with their policy to block an additional runway at Heathrow, but as Willie Walsh argued on Questiontime back in January, politicians in opposition can always play a completely different role once the enter government. At last week’s CIMTIG meeting, BAA’s director for Runway 3 said that “Conservative policy is about going after easy votes. As a transport policy, it is indefensible.”

Virgin meanwhile are pinning their environmental credentials on a massive investment of ‘all Virgin profits for the next 10 years’ in alternative fuels. Clearly both of these airlines believe that the aviation industry can still grow and cut emmissions at the same time. BMI also support a third runway, although speculation is that they will have been snapped up by one of their larger rivals by the time it gets built!

Non Heathrow based airlines

Ryanair in particular have launched legal challenges against BAA over the fees they are charged at Stansted, and have repeatedly refused to pay passenger handling bills, as they claim they are being forced to payin advance for infrastructure which they will never actually use.

High Speed Rail as an Alternative

The Conservatives have said that they will spend £20 billion on a high speed rail line between London and Manchester, and that they will encourage more people to travel to Continental Europe by train, in order to reduce the demand for a third runway at Heathrow. However, as BAA management have pointed out, offering easier rail access to Heathrow will only end up making it far more attractive for customers from the North of England. Meanwhile, Eurostar already have a 75% market share for point to point travel between London and Paris and Brussels, so there is little that government policy could do to switch more people onto the trains, apart from ban these flights entirely – a move which would be very un-Conservative! Although there is potential to see Eurostar services extended to cities such as Cologne and Amsterdam, this is a commercial matter for Eurostar to decide, and there is very little that a UK government could do to influence this, when the track and station access needed to make this happen is in other EU countries.

Verdict: Just as it goes without saying that most of Heathrow’s neighbours will be against further expansion, it can also be taken for granted that the main airlines using Heathrow would want to see it expand. But this misses out on the wider picture, especially as it is the no-frills airlines who are investing most heavily in new aircraft and new routes. It is therefore not a foregone conclusion to assume that the airline industry as a whole would say ‘we’re in’.

Final score – some of the referee’s decisions may be controversial, but my verdict is 2-3 against.

Environmentalists put Heathrow’s third runway in Dragon’s Den

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Continuation from Heathrow’s Runway in Dragon’s Den | Neighbours | Passengers | Economy

I’m not going to look at the local environmental issues – these are covered under ‘Neighbours’. This section is about the contribution of Heathrow and the aviation industry in general to climate change.

So, the arguments against are well known and well practiced – aviation currently represents around 5% of the UK’s contribution to greenhouse gas emmissions, and this figure is set to keep rising as other industries clean up their act. There is a suggestion that if current trends continue, all other sectors would have to reduce their emmissions by 90%, rather than the previously suggested 80%, just to allow people to keep flying. The most efficient form of flying in terms of fuel usage per passenger kilometre travelled is to use no-frills airlines, as they offer the following environmental advantages:

  1. Point to point service meaning no wasteful connections.
  2. Younger business model almost certainly means newer fleet – especially in the case of Flybe, Easyjet and Ryanair.
  3. No frills airlines tend to operate routes with higher load factors, and are quicker to withdraw unprofitable routes.
  4. No frills airlines use less congested airports, cutting down on ground taxiing and pre-landing stacking.
  5. No frills airlines tend to ruthlessly cut costs – and lower costs usually go hand in hand with better environmental performance.

So how can Heathrow’s third runway possibly be justified in the face of such serious environmental concerns, and the lower environmental performance of traditional ‘legacy’ carriers?

Time to play devil’s advocate:

A new runway would reduce airfield congestion and stacking

More capacity means less congestion – this is a fair point, except that more capacity also means more flights to take up that capacity. And in Heathrow’s case, this would almost certainly mean going from being 99% full on two runways to 99% full on three runways. Result – some efficiency improvements might be created, but these would be counterbalanced by the increase in flights.

We still need hub and spoke networks

However much better the no-frills airlines might seem on paper, there will always be a need for some hub and spoke routes, and only Heathrow can serve these – not Gatwick or Stansted, even though those airports might have smaller noise footprints.

If Heathrow doesn’t expand, somewhere else will – and the UK loses out without any CO2 reduction

This is true to a point, but the passengers would still need to get to the other hub airports. Taking up slots with feeders into Frankfurt or Amsterdam will use up more runway space per passenger than operating direct flights to the destinations people want to go to (assuming long haul flights use larger aircraft), so whatever BAA claim, Heathrow will always cherry pick the most important and profitable destinations, rather than serve every route it can.

Expanding Heathrow means more direct flights, so less need for connections

With regards to flights into European hubs from other UK regional airports, passengers from cities such as Birmingham or Bristol are already more likely to transfer through Amsterdam or Paris, as they have feeder routes from most parts of the UK, whereas such a short route into Heathrow would not be viable. This is obviously more wasteful than a direct flight from Heathrow, so adding more capacity and building a high speed rail link into Heathrow would partially alleviate this problem.

Verdict: The environmental dragons would always be expected to shoot down any proposal for expansion at any airport. Although there are clearly some environmental benefits, these are often outweighed by other factors. For example, for every seat which an expanded Heathrow would enable to be filled on a point to point bases, how many other seats would just be filled by transfer passengers who might have gone elsewhere? Even if a clear distinction is made between the need to minimize the contribution made to climate change by aviation as a whole and the effects of one single airport, there is still an obvious correlation between more capacity and more flights. However much BAA try to massage the arguments, the concept of ‘sustainable aviation growth’ is always going to be an oxymoron.

Economic Arguments for Heathrow’s Third Runway in Dragon’s Den

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Continued from – Heathrow in Dragon’s Den | Neighbours | Passengers

According to the Institute of Directors (IOD), delaying further investment in Heathrow is costing UK PLC £1 billion each year in lost opportunity and congestion.  Heathrow employs 72,000 people, making it the largest single-site source of employment inthe UK. Yet a third runway is projected to cost a massive £8 billion. How will this investment be recouped? Clearly, BAA believe that they will get their investment back, and the IOD figure would suggest that UK PLC would see a return in just 8 years – not bad for such a huge piece of infrastructure. But what if the airline industry continues to see weak demand?

Heathrow’s attraction

In the current downturn, Heathrow has stayed steady whilst other UK airports have seen demand fall. Heathrow operates at 99% capacity, whereas its main three European rivals (Frankfurt, Amsterdam and Paris Charles De Gaulle) all operate at around 75% capacity. Neither Amsterdam nor Frankfurt has the population to support airports of such size in their own right – these two airports only thrive because of the huge volumes of transfer passengers they attract. Only London and Paris can claim to be true hub cities, where there is substantial latent demand together with the demand for inter-connecting flights, which makes more routes viable.

But does UK PLC really want all these transfer flights?

There is a legitimate argument to say that transfer flights are the most wasteful form of air travel, and that it would be better to encourage people to make such connections at airports like Paris, where there is a lower noise footprint. This is, of course, a blatant ‘not in my back yard’ argument, but in terms of economics, is it really worth building an extra runway just to encourage more transfer passengers? The argument behind such transfers is that they enable huge numbers of routes to be profitable, when they would not otherwise be viable. Typically, 25-40% of passengers on long haul flights to and from Heathrow are making transfers – without these passengers, there would be much fewer routes.

Of course, point to point flying is the most efficient way of getting from A to B, but there are always going to be journeys where the hub and spoke system will be needed – for example from Edinburgh to Entebbe or Oslo to Osaka. Is it really right that these passengers should be forced to be funnelled through Paris, Dubai or Amsterdam, just because Heathrow doesn’t have the capacity?

Verdict: UK PLC clearly sees the advantages of Heathrow’s third runway and says ‘I’m in’. Score so far: 2-1 in favour.

Continue to: Environment | Airlines

Passengers put Heathrow in Dragon’s Den

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Continuation from: Heathrow in the Dragon’s Den | Neighbours

The recent deregulation of flights to the USA has shown very clearly that passengers vote with their feet, and choose Heathrow over Gatwick every time. Why else would Continental Airlines shell out £100m for two slot pairs at Heathrow in order to operate flights to New York, when they already have access at Gatwick? Despite the current economic woes, Heathrow has remained resilient as passenger numbers at almost all other UK airports have plummeted.

Do passengers like the Heathrow (or is that Hellthrow?) experience? Well, according to BAA’s own surveys, the user experience is slowly improving. Within two years, over half of Heathrow passengers will be using facilities that are less than 4 years old. Heathrow is already ‘moving up the table’ in terms of passenger surveys, and management claim they are hot on the heels of Amsterdam.

So would a third runway enable freer flowing traffic, or would it just snarl things up even more? Management claim that the new runway would preserve important feeder routes, and stop the airport ‘robbing destinations to pay for frequency’. Since 1990, Heathrow has gone from serving over 220 destinations to around just 180 today. This argument over hubbing is very persuasive. Most other arguments are essentially linear – i.e. more flights means more pollution and more contribution to the economy. The power of a hub increases dramatically due to the fact that doubling the number of routes means four times as many opportunities for connections.

Consider:

1 route = o connections.

2 routes = 1 connection pair (A to B via LHR).

3 routes = 3 pairs (A to B, A to C, B to C)

10 routes = 45 pairs – and so on.

This presents a very compelling argument on behalf of passengers. The key question to ask is what effect extra airfield capacity would have on the terminals. It is only natural to assume that BAA would want to build a sixth terminal in order to recoup their investment. Details of this are patchy at present – but anything which needs new terminal space to move outside the area in between the existing two runways is going to get very messy, considering how current rail infrastructure has to split to serve the central area (T1,2,3), T4 and T5.

Defending such claims, Heathrow’s Runway 3 Director argued that new capacity would make it easier to group flights according to airline alliances. Terminal 5 was already putting most BA flights under one roof, whereas Star Alliance would be hosted in the central area. This still doesn’t help passengers much who are connecting between different airline networks, or who might be using Sky Team airlines, who don’t offer feeder flights from within the UK and Ireland. However, these are in the minority, compared to BA or Star passengers.

Verdict – the most likely to say ‘we’re in’

As BMI scrap flights, is Heathrow’s loss just Amsterdam’s gain?

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If ever there was a clear-cut argument in favour of Heathrow third runway, then it would be the fact that BMI have just scrapped their flights from Leeds Bradford and Durham Tees Valley to Heathrow. Anyone looking to transfer onto other flights will now have no option but to travel to Amsterdam with KLM instead, as neither of these airports offer hub feeder flights from any other airline.  

Proponents of Heathrow’s third runway argue that the extra capacity that would be created could be used to keep open domestic routes like these two, and also to connect other British cities with Heathrow which have lost their links due to the high taxes imposed on UK domestic flights. Obvious cities which might otherwise support flights into Heathrow would include Liverpool and Inverness in the north and Plymouth and Newquay in the southwest. Meanwhile, opponents argue that people should travel to Heathrow by rail, and that the overall number of flights should be reduced anyway, thus reducing the prospect of these routes from ever becoming viable again. 

Right now, the facts would appear to speak for themselves when it comes to connecting flights, but what about people who just want point-to-point travel between British regional cities and London? We would expect some passengers from Leeds Bradford and Durham to transfer to flights from Manchester and Newcastle respectively, but a far more significant number will travel by train. Both airports also talked about finding replacement airlines to open up new routes into London, but we heard the same rhetoric when VLM scrapped their Liverpool to London City flights. Perhaps Flybe could come onto the scene at Leeds Bradford, where they already have a presence, but I don’t see them operating Gatwick to Durham Tees Valley flights alongside their existing Gatwick to Newcastle route. 

When it comes to the economic arguments about losing jobs to Amsterdam, there is nothing new here. For many years, KLM have offered more feeder flights from UK regional airports than any other airline, and they are set to increase this further still when they open up their new Liverpool to Amsterdam flights at the end of this month. Naturally, this isn’t good news for the UK economy, but we shouldn’t forget that Heathrow’s third runway would come with considerable economic and environmental costs as well. Nor should we forget that the ‘hub and spoke’ model is an inefficient way of operating flights, even if there is always going to be a need for it on some routes.