The tide is turning against Heathrow expansion

Last week the British government decided to defer its decision on whether to expand London’s Heathrow airport. This has been roundly condemned by people the media calls “business”,  referring to self-appointed lobby groups of large companies. But what is all this about? Now it could be what the lobbyists claim, which is weak government pure and simple. Or it could be a straw in the wind for a much more interesting change in attitudes in the political economy.

The story so far. Heathrow has long been operating at near capacity. London’s second airport, Gatwick, is approaching capacity too. If you believe that air travel must increase for a healthy economy, then something must be done to expand capacity. In the long view this conventional wisdom is open to question: but as a good liberal I must accept that the freely made choices of my fellow citizens point to further growth in air travel. The politics, however, are toxic. Airports in the prosperous south east of England are not popular with those that live nearby, whatever benefits they bring. Since Heathrow is quite close to the London conurbation, that adds up to an awful lot of people. Many of these people live in marginal constituencies.

Nevertheless the Labour government prior to 2010 supported an extra runway at Heathrow. But both the Conservatives and the Liberal Democrats, spying opportunities in these south west London seats, were vehemently opposed. The Conservative leader, David Cameron, went as far as to say: “No ifs, no buts, there will be no third runway at Heathrow” (or something like it). When these two parties turned Labour out in 2010 and formed a coalition, the existing expansion plan was thrown out. Instead the government set up an Airports Commission to evaluate the alternatives, to conveniently report after the next General Election, in 2015. It duly reported in the summer, recommending a new runway at Heathrow, in a different place to the previous plan. By then the Conservatives had crushed the Lib Dems and were in government on their own. It would have been a good moment to show decisive leadership and accept the Commission’s results. They would have been able to steamroller opposition from their London MPs.

But Mr Cameron didn’t. He dithered. Why? There seem to be two nakedly political factors. The first is that Zac Goldsmith, the Tory MP for Richmond Park, had threatened to resign and cause a by election if the government supported Heathrow expansion. That ordinarily would be a little local difficulty – but he is the Conservatives’ candidate for London Mayor in 2016. A split would be messy. The second is that Mr Cameron’s “No ifs, no buts” promise is weighing on him. He fears a “Nick Clegg moment”, referring to the collapse in the Lib Dem’s leader’s public standing when he decided to reverse a pledge on student tuition fees after 2010. And Mr Cameron needs all his political capital to carry through his referendum on the European Union. Perhaps this is enough to explain last week’s announcement to defer the final decision until next summer, after further reviews of the implications for air pollution. By then the Mayoral election will have happened, and so might the EU referendum.

But there may be something deeper. It could be that the tide of conventional wisdom is moving against Heathrow expansion, recognising that the terms of reference of the Airports Commission were flawed. If that is the case then the delay is a process of gathering more evidence against Heathrow, so that a decision to expand Gatwick instead will be better proofed against judicial review.

Why might the tide be turning? Well, the case for Heathrow is based on 20th Century economics. The idea is that to make a big airport even bigger is more efficient that building up smaller airports. Time was when the concept of economies of scale was so baked into the conventional wisdom that this logic would not have to be seriously examined. But for airports it does have to be questioned. For a start, any air traveller knows that larger airports are less efficient for point to point travel. Every stage of the process takes longer than for a smaller airport. I remember vividly that taxiing to the terminal after landing at Schiphol airport took as long as the flight itself.

But there is a clear benefit of a running a large airport: that of making connections. This is referred to as being a “hub”. There are two aspects to this. The first is that hub airports can consolidate short distance flights into long distance ones, in a configuration that allows demand for long haul journeys to be met more efficiently. The second is that the presence of a lot of people waiting around in hub airports is an economic opportunity for the host country: it can sell them things. It is on the benefits of the hub operation that the Airports Commission’s recommendation is based: expanding Heathrow will generate bigger benefits to the British economy as a whole than would expanding Gatwick. This can be challenged, however.

The first point of challenge is on the efficiency of the hub model as the best way of managing long haul traffic – or of a hub based in London. One argument is that technology is moving against this. Smaller, efficient long haul aircraft are being developed that allow the alternative, point to point model to be more viable. The second is that the Arabian Gulf is emerging as an alternative airport hub location, and one which has a clear comparative advantage, if not an out and out absolute advantage. Pumping up a London hub is fighting the laws of global economics.

The second point of challenge is on the business of running a hub: the shops and restaurants. The London economy is already overheated, as shown by very high property prices. There really is no need for the extra income. If the hub was in the north of England, that might be a very different matter. The fact that the airport is so unpopular locally gives a clue to this.

And on top of these direct challenges there is a strategic tide. Politicians and economists are worried that economic growth in developed countries like Britain is bypassing most people, and ending up in the pockets of large multinationals and a tiny elitesof people that run them and provide supporting services such as tax avoidance advice and banking. The penny is dropping that this may largely be down to the excessive market power of large businesses, extracting monopolistic profits. And yet the Heathrow business case seems to be a paean to this form of monopolistic capitalism. And those business lobbyists provide an unwitting confirmation of this.

Before the Commission reported, it was arguments such as these that induced me to predict that Gatwick would win over Heathrow. The Airports Commission was a blow; but I am holding to my prediction yet.



Heathrow is a big test for David Cameron’s leadership

The election is done with, so now it is safe for the Airport Commission to report on options for expanding airport capacity in England’s South East. They have duly proposed that another runway be built at Heathrow airport.

Personally I was a bit surprised. I had expected the Commission to recommend expanding Gatwick. An article in the FT a while back led me to think that its Chair, Howard Davies, favoured the expansion of point to point services, which allow greater levels of competition, over the conventional arguments for the economies of hub airports, which favour big operators. But if he felt that way he was overwhelmed by conventional economic arguments that pointed to expanding the biggest airport, while skating lightly over the pollution and noise arguments that arise from this airport’s proximity to the main London conurbation.

I am emotionally very anti Heathrow airport. Living under its flightpath I find the noise of planes coming into land irksome, especially when they thunder over before 6am. I hate the way it ruins such beautiful places as Kew Gardens. I hate it as a passenger, as it is hard to get to by public transport or car, and when you arrive it is just too big. Every step in your journey before take-off or after touchdown takes longer than it should, and the whole enterprise is managed with the lack of imagination we expect from major corporate operators who know that you have no choice. Gatwick is a delight by comparison, especially since it was put under independent management. And I resent the history broken promises from the airport’s operators after each previous bid to expand. Which in turn undermines many of the promised safeguards proposed by the Commission. Heathrow’s lobbyists know how to dismantle such promises one at a time; their victory in this battle would give them immense sway.

But I have to admit that I’m not on top of the business arguments in favour of Heathrow’s expansion. And I have to question how much we can keep shooting ourselves in the foot, in conventional economic terms, while trying to maintain the tax base to support the level of public services and benefits as the population ages. Through gritted teeth I will admit that there may be case to be made for expanding this horrid airport.

But our Prime Minister, David Cameron, and his Chancellor George Osborne, should entertain none of these doubts. They have a conventional economic liberal approach to the economy. The Commission’s logic should make perfect sense to them, and it is exactly the sort of opportunity to invest for growth that the country badly needs in their world-view. It means the country is “open for business” in a commonly-used phrase. As such it is much more solidly based than the distinctly shaky HS2, the proposed high speed rail line from London to Birmingham and beyond. The only thing against it is the politics.

A number of their Conservative colleagues are passionately opposed to Heathrow expansion. These include the current London Mayor, Boris Johnson, and the prospective mayor Zac Goldsmith, who has threatened a by-election. These opponents all have seats in the west and southwest of London, where the party did well in May’s General Election. And in 2009 Mr Cameron himself said, “Ni ifs, no buts, no third runway.” But, as the FT’s columnist Janan Ganesh points out, Mr Cameron’s honeymoon is going to end soon anyway. Why not end it in a manner of his choosing, and on an issue that he feels is right? The quote was before a different election, and against a different proposal; and anyway he will be stepping down before the next election. The Lib Dems, who will oppose, have been reduced to a tiny rump in parliament; the Greens only have one MP. MPs from the the SNP, Plaid Cymru, and the Northern Irish parties are unlikely to show much interest either way. Massive lobbying by Heathrow’s backers will ensure that most of the Tory party stays true, and that any Labour opposition will be divided – indeed their first official response has been to support Heathrow expansion. This is something he can push through. If he acts decisively the whole thing will be a fait-accompli by the time of the General Election in 2020. Even in southwest London it will surely be trumped by other issues by then.

Will he have the nerve? Opponents of Heathrow expansion will hope he doesn’t.

It’s going to be Gatwick

On Monday the Airports Commission, chaired by Lord Howard Davies, produced its interim report. The Commission was set up to make recommendations on the expansion of airports in and around London, which has become a politically vexed question. To most people, this complex question is viewed through a single dimension, such as whether or not Heathrow will be expanded. As a result, most of the commentary has been very shallow. To me its conclusion is obvious: it will recommend building another runway at Gatwick airport, and all the other airport expansion ideas will be put on ice for 20 years or so. And yet I haven’t seen a single commentator suggest this.

The Commission concluded that it would not be a good idea for us to make do with existing runways, though it denied taking a “predict and provide” approach. Various alternatives, including improving rail travel, or using airports elsewhere in Britain, were dismissed. In addition to a number of shorter-term measures, such as improving rail connectivity, it offered three credible options for adding a runway. Two were based at Heathrow, and one at Gatwick. A further, and much more radical, proposal to build a brand new airport on the Isle of Grain in Kent (“Boris Island” after its most prominent advocate, London’s Mayor Boris Johnson), was not ruled out, but, they said, it needed more analysis. This new airport would imply the closure of Heathrow Airport and, incidentally, London City airport.

So far as Heathrow advocates were concerned, this looked like a major victory, and most of the press seems to agree. The idea of building a third runway at Heathrow had been approved by the last Labour government, but both the Conservatives and the Liberal Democrats campaigned vigorously against it in West London. So when these two parties formed a coalition in 2010, they quickly ruled it out, with Labour toeing the line also, after doing badly in the west London area in the election. But the Heathrow advocates did not give up. They launched a sustained campaign that convinced many non-London MPs and journalists, so that it became almost conventional wisdom to suggest that the government’s policy of Heathrow was the height of folly. They secured the sacking of Putney’s MP Justine Greening as Minister of Transport, who had been vocally anti-Heathrow, as Putney is one of the areas badly affected by aircraft noise, from planes coming in to land (which are a constant background noise as I write this in nearby Battersea). They secured the set-up of the Airport commission, and now Heathrow is prominent amongst the potential solutions. This is remarkable progress indeed.

The Heathrow advocates have indeed secured an important victory over some of their opponents: and in particular those that suggested that London does not need a new runway at all, an important part of the anti-Heathrow coalition. They look to be ahead of the Boris Island advocates too; and indeed the obstacles to this radical plan look formidable. But almost unnoticed, the idea of a second runway at Gatwick is sneaking up on the inside.

Two important developments are bringing Gatwick into the picture. Firstly it has been taken away from the ownership of BAA, who also own Heathrow, and who are leading the Heathrow advocacy campaign, on competition grounds. BAA have never regarded Gatwick as their main priority, and would not advocate its expansion at Heathrow’s expense. The new owners. however, have given this airport new energy (it is already much improved). Secondly is the march of time. Gatwick is legally prevented from building a new runway before 2019; previously this had looked to be too far away into the future, but now it does not.

If that has put the option on the map, the Interim Report makes three major points in its favour. First is the most obvious. Many fewer people live nearby, and the airport’s expansion would blight many fewer lives. Second is quite a subtle one. It is that expanding Gatwick does not preclude any other options later. Expanding Heathrow would kill the Boris Island idea. Boris Island would kill Heathrow. I hadn’t appreciated this until I saw a table in the report explaining the impacts of the various proposals on each other; Gatwick’s was the only option with a complete set of green ticks. Expanding Gatwick postpones the existential battle between Heathrow and Boris Island, rather than killing one or other off forever.

But the third point is the most important one. The Commission has not bought the central argument of the Heathrow advocates, which is that the bigger the airport is, the more competitive it becomes. This idea is usually supported by graphs showing Heathrow in a life or death struggle for leadership with Charles de Gaulle near Paris, and Amsterdam’s Schipol. The emerging mega-airport in Dubai is spoken of in admiring terms, and the word “hub” is used with abandon. The Commission has spotted two weaknesses in this line of argument. First is that it is by no means clear that the hub model of airline travel (where passengers fly to a hub in a smaller plan and change up to a bigger one there) is actually the way of the future. The most successful airlines use a point to point model, and airliner technology is changing to make this easier. Second, there is no reason that the hubs for the world’s three main airline alliances need to be at the same airport, and that putting an extra runway into Gatwick would allow this airport to be a hub for one of these alliances, or even allow passenger to change planes in a do-it-yourself hub.

A further point is that the public transport links to Gatwick from central London are already good, and are likely to improve. They certainly compete with Heathrow’s, even though that airport is closer to the centre. Notwithstanding all the noise we get from planes landing at Heathrow, it is in fact much easier for us to get to Gatwick by train, for example – though by car would be different.

What tips the balance of the competing claims is the politics. Outsiders to west London don’t seem to understand how large the issue looms here. We (I’m no neutral in this) aren’t just fed up with the noise, being woken up at 5am on Sunday morning, and having visits to Richmond Park, Kew Gardens and countless other  outdoor venues blighted. We are fed up with the constant pressure on us exerted by BAA and its allies, trying to deny what we feel, and trying to push expansion past us a one small slice at a time. There is no trust. Feelings run deep, and their are a host of marginal constituencies for all three of the main political parties. Gatwick no doubt has its own political ramifications, but it has none of the same scale of toxicity. Gatwick is a get out of jail free card.

So, you read it here first. The next new runway for London’s airports, and the only one for the next 20 years or more, will be at Gatwick airport. Hooray!