Tim Alderslade is Chief Executive of Airlines UK. This is a sponsored post on behalf of Airlines UK.
The Government has taken the welcome step of declaring its support for a third runway at Heathrow. The case for airport expansion in the South East grows stronger by the day, with Brexit on the horizon and the UK needing to demonstrate that it is open for business and looking to develop and strengthen trading links to emerging, developing and established markets.
Heathrow launched a 10-week planning consultation last week that will provide an opportunity for feedback on its expansion plans. As airlines we support a third runway but not at any cost. Heathrow is the most expensive global hub airport worldwide so it’s critical that new capacity is affordable to enable the UK to compete on the global stage, post-Brexit. The original £17 billion price tag has been reduced to £14 billion but this is still an eye-watering amount of money. The proposed scheme from Heathrow comes with substantial delivery and cost risk and therefore requires rigorous analysis and challenge as it will be paid for – not by the airport – but by the airlines’ customers in the form of airport charges.
Heathrow’s passenger charges have trebled over the past decade. If this were public money the scrutiny from politicians and the media would be far greater but airlines are reliant on the industry regulator – the Civil Aviation Authority (CAA) – to ensure that the airport cannot use its position as a monopoly provider to increase charges even further.
The Transport Secretary deserves a lot of credit for championing our sector and providing Government support for much-needed expansion, and for his statement in Parliament last year and subsequently that passenger charges at an expanded Heathrow need to be kept as low as possible. Airlines believe that charges must be kept level or lower in real terms if the airport is to have a future. Failure to achieve this settlement will result in the UK becoming even more uncompetitive in the global aviation market – especially when compared with other European and Middle East hub airports. They have used decades of procrastination from successive UK governments on the principle of expansion at Heathrow to steal a march on the UK with regards to their international connectivity, in particular to the fast-growing economies of Asia and South America.
One way to reduce the cost of expansion would be to introduce competition into the process. The recent revision to the Government’s draft National Policy Statement made clear that Ministers do not “identify any statutory undertaker as the appropriate person…to carry out the preferred scheme.” This is welcome, but they should now go further and consider whether alternative providers to Heathrow can develop parts or all of the scheme – at a lower cost.
The case for keeping costs under control is about more than just managing the construction process, though – it goes to the heart of the argument in favour of extra capacity. Prohibitive charges would make new routes unviable. Heathrow made a recent announcement about reducing charges for services to other UK airports, however these will need to come down much further if such services are to be viable for airlines to operate. Crucially, this must happen whilst ensuring that charges for long-haul passengers are not ramped up at the same time.
Airlines agree with the Government that there is an urgent need for an additional runway in the South East, with that need best met by Heathrow, otherwise the London airport system will be under huge pressure and by 2050 demand will substantially exceed total capacity. We are looking forward to seeing further details from Heathrow and airlines remain committed to working with the airport and the CAA to bring down the cost of the scheme even further – but ultimately our support for the project will remain conditional upon charges not increasing.
This is the only way – we believe – to realise the many advantages that we all want to see delivered, from an increase in connections to domestic airports through to strengthened trading links with new markets.