British business bosses are totally fed up, and it is not hard to see why.
They have spent years lobbying for the expansion of London’s main airports, whose full-to-bursting capacity is reportedly having an adverse impact on the UK economy. Then came another wait as the independent Airport Commission spent 2½ years and £20 million ($40.32 million) to produce a report last July recommending that a third runway be built at London’s Heathrow airport, only to have the UK government announce in December that it would delay its final decision on the expansion until summer this year.
And many are now up in arms over the possibility of even further delays to this decision. Earlier this month, Treasury Committee chair Andrew Tyrie called for more rigour in the economic case for Heathrow’s expansion, describing the Airport Commission’s report as “opaque” in some important areas such as the impact on fares and passenger demand.
Back in December, frustrated business groups accused the government of “dithering” and described Prime Minister David Cameron’s indecision as “gutless”. Over 50 top business leaders — including media group WPP’s CEO Sir Martin Sorrell and Aberdeen Asset Management CEO Martin Gilbert — wrote an open letter urging the government to “get a grip” on coming to a final decision on the new runway by end-May.
Business leaders see the airport runway expansion as critical to growing the UK economy, and argue that further delays on the decision would cost billions in lost trade and investment, damage the UK’s economic competitiveness and send the wrong message to global investors. The Confederation of British Industry (CBI) said last July that, with its current airport capacity, the UK already stands to lose up to £31 billion worth of trade with BRIC (Brazil, Russia, India and China) countries alone by 2030, when the proposed airport expansion is targeted to be completed. Further delays in getting a new runway operating beyond 2030 could cost another £5.3 billion annually in lost trade, the CBI adds.
Although the government had cited the need for further environmental impact assessments as the reason for delaying its final decision, many believe that it is motivated more by short-term political interests – primarily that the Conservative government wants to avoid losing Zac Goldsmith, its candidate for London’s mayoral elections in May. A strong opponent of Heathrow’s expansion, Goldsmith has vowed to resign and trigger a by-election should the government proceed with the Airports Commission’s recommendation.
The proposal to add a third runway at Heathrow airport has been highly controversial, owing to concerns over its impact on air quality and noise pollution, particularly for Londoners living on its flight paths. The issue has divided politicians and led to demonstrations; last July saw climate change activists stage a liein protest on one of Heathrow’s two runways, causing 25 flight cancellations. Shadow chancellor John Mc- Donnell, whose Hayes and Harlington constituency is where Heathrow is, has been a particularly vociferous opponent and was once suspended from Parliament for five days for disrupting Commons proceedings over a debate on Heathrow’s expansion.
For years, the debate about airport capacity expansion has been between Heathrow and its southern counterpart Gatwick, although other ideas have been mooted including the socalled “Boris Island”, a brand-new airport on the Thames Estuary proposed by London mayor Boris Johnson. The proposal to build a second runway at Gatwick is seen as a less controversial option to Heathrow, as it purportedly will have a lower environmental impact. Its £7.8 billion cost is also less than half the investment needed for Heathrow’s expansion, Gatwick Airport CEO Stewart Wingate argued in City A.M. recently.
Airports Commission’s chair Sir Howard Davies has noted, however, that while Gatwick is well placed to cater for growth in intra-European leisure flying, it may not be able to meet the urgent demand for capacity to long-haul destinations in new markets. Thus, the Commission named Heathrow as the best option, as London’s largest airport could provide that capacity easily and quickly as well as offer significantly greater benefits for business passengers, freight operators and the broader economy, he adds in the Commission’s final report.
This may be a moot point, however, if Heathrow’s third runway proposal cannot overcome further legal and political obstacles. As it is, fed-up business leaders are already calling on the government to “get on with it” and expand Gatwick instead if Heathrow proves too contentious.
Whatever the final decision is, the UK cannot afford to stay in a holding pattern much longer if it wants to remain competitive in the international arena. Already, Heathrow has ceded its title of the world’s busiest international airport to Dubai, which saw more than 78 million passengers in 2015 compared with Heathrow’s 75 million, Airports Council International (ACI)’s latest statistics show.
And while London remains the busiest airport hub in Europe, in a couple of years’ time it could well be taken over by Istanbul. With its 62 million passengers, the Turkish city’s Ataturk airport currently ranks as the world’s third-busiest airport with a 9.1% growth in passenger numbers last year compared with Heathrow’s 2.2%, the ACI notes. More interestingly, Attaturk, which is said to also be running close to full capacity, is due to be replaced by the Istanbul New Airport which will potentially be the world’s largest airport with a projected capacity of 200 million. It will be ready for its first flight in 2018, The Economist reports.
It has apparently been over 60 years since the last full-length runway in South East England was completed, in Heathrow. If more capacity isn’t added soon, UK could well find itself being left behind in the game.
Lim Yin Foong was founding editor of Personal Money, a Malaysian personal finance magazine published by The Edge Communications. She is currently based in the UK.
This article appeared in the Corporate of Issue 715 (Feb 15) of The Edge Singapore.