Why UK airport capacity matters

The impending threat of ‘capacity crunch’ has prompted the UK airport industry into action over its own future.

Much has been made during the past few years of the possibility for a ‘capacity crunch’ at major UK airports. The prospect of this and the consequent damage it would cause the UK economy was the driving force behind the December 2003 Government White Paper ‘The Future of Air Transport’ that called, inter alia, for new runways at Stansted, Birmingham and Edinburgh airports.

But how real is the possibility of ‘capacity crunch’ and what impact – if any – would this have on the wider European and World economy? Increasingly, the evidence is that aviation growth in the UK is being restricted by the lack of capacity in the south east of the country and that if this is not addressed the knock-on effect for the European economy will be significant.

In an article on European Airport Capacity in Aerlines Magazine 29, Eelman, Schumacher & Becker identified five main elements that restrict airport capacity: limited area, long project approval procedures, heated discussions with the community surrounding the airport, ongoing privatisation and lack of political backing. At many large UK airports, particularly those in the south east of England, several of these principles apply.

Politics delaying expansion?

In the UK the most significant of the five elements through the latter part of the 20th century has been the lack of political backing. The growth in commercial aviation has been such that almost every airport, from the small General Aviation aerodromes to London Heathrow, is finding itself under enormous pressure to expand. In the UK, where land is scarce and population density high, the political problems of aviation expansion are acute.

For this reason, politicians have resisted planning a comprehensive solution to the problem. For the 1980s and most of the 1990s, the government had many MPs in constituencies around the major airports in the south east region. Reluctant to cause problems for its own MPs, the planning of airports was left in the hands of an outdated and cumbersome judicial planning system, which could delay permission for large infrastructure schemes almost indefinitely. For example the process from application to government permission for Heathrow Terminal 5 lasted nearly nine years, during which time Heathrow’s principle continental rivals added runways and terminals almost at will.

However, during the late 1990s two things changed the face of UK aviation policy. Firstly, a new government was elected, more willing to balance local needs against those of the national interest. Secondly there was a massive explosion in growth caused by the arrival of the low-cost airlines, modelled on the success of American carriers such as Southwest. Carriers like Easyjet and Ryan Air revolutionised the UK air travel market and have proved resilient to the post 9/11 problems experienced by the legacy carriers.

These two factors encouraged the government to put in place an aviation strategy designed to plan for growth in the industry over the next 30 years. In 2003 the government published the ‘The Future of Air Transport’. The document was principally concerned with the provision of airport capacity to cope with 2-3 times the numbers of passengers travelling today. Unsurprisingly, it was controversial. Almost immediately it had become obvious that at least two new runways would be required in the south east region and that a need to increase capacity existed in the Midlands and Scotland. This resulted in intense lobbying by pro-and-anti-aviation groups who focussed respectively on the issues of economic benefit and possible environmental damage caused by aviation.

Public debate

UK aviation put aside its internal differences and created a body known as ‘Freedom to Fly’, in order to present a united front to both the government and the media. Environmental groups were also part of this debate and represented a spectrum of interests; from local anti-noise campaigners to the global NGO’s concerned with aviation’s contribution to global warming.

The eventual result was the decision to build a new runway at London Stansted by 2012, followed by another runway elsewhere in the south east region. This was widely regarded as a compromise. The preferred economic solution, a new runway at Heathrow, faces considerable environmental hurdles concerning NOx emissions. This issue needs to be resolved before a final decision on runways at Heathrow is taken. Alternatively a new second runway at London Gatwick may be developed, albeit that any construction prior to 2019 is constrained by a legal agreement. However, after 2019 it is expected that a new runway will be planned for either Heathrow or Gatwick.

There were several other high-profile decisions in the White Paper, including new runways at Birmingham and Edinburgh. However delivery of the document’s key objectives is far from assured. For instance the major Heathrow-based airlines are unhappy about the prospect of subsidising the development of Stansted, which is expected to remain predominantly a low-cost airlines base. Also the decisions still have to gain permission through local planning processes, which will see politicians subjected to extremely vocal and well-organised campaigns from local pressure groups. The very long timescale of the proposals could yield a change of government, or environmental events may alter the public’s perception of aviation. There are also continuing legislative pressures from the European Union. Finally, the possibility of terrorist attacks and fluctuating fuel prices may influence the investment environment.

National policy fails general aviation

Even if the White Paper is implemented fully and on schedule, it does not address all of the capacity needs of the UK aviation industry. Although problems at the major hub airports can make for headline news, the facts are that every airport in the country is affected by capacity pressures. The needs of General Aviation in particular have been ignored. This is because local airports are not considered to be a concern of the English national government. Yet the need for a comprehensive understanding of the importance of General Aviation to the wider UK aviation sector has never been greater.

Consequences of inaction over capacity constraints at smaller airports could include a decrease in private business aviation activity at a time when demand is rising and a possible decline in pilot training. Another factor is the recently proposed changes to the charging structure for air navigation services, which will mean that small airports will pay more, giving them further incentive to expand and grow in order to stay in business.

The other significant element that has impacted on airport growth and which is linked with the cautious political approach, is the relationship between airports and their local communities. It is important to note that this is not as strained as the national media sometimes report. Some of the most significant opposition is around Heathrow, with vociferous groups at Gatwick, Stansted, Birmingham and Manchester. There are also the national environmental NGOs who attack aviation on climate change grounds.

The industry responds

In response to this, at the direct request of Tony Blair, the UK aviation sector has drawn up a sustainability strategy, designed to show how growth in aviation fits into the UK’s sustainability strategy as a whole. The Aviation industry increasingly recognises the importance of reducing or offsetting emissions and contributing to social, environmental and economic cohesion. Continuing reductions in noise are also being sought wherever possible. The sustainable aviation strategy builds on the work of the major airports, which already have far-reaching sustainability strategies and is designed to show the local community how an airport can be part of a responsible and sustainable economy.

However, aviation is somewhat unique in the sheer scale and complexity of the international links in the industry. Even vehicle manufactures can be more easily regulated. Nevertheless, as a key European aviation player, where the UK leads, others may follow. The promotion of aviation into the EU ETS has been encouraged by the British government, with the active support of UK aviation companies. The ongoing work on a single European sky will encompass heavy British involvement.

Many of these decisions related to capacity are ultimately driven by the need to make the case for more runways and terminals more palatable to the environmental NGOs and to people living near to airports. The need for more capacity is the catalyst for all of this work, as the government’s own policy tacitly acknowledges.

Nevertheless, UK airports are facing an unprecedented campaign to prevent further expansion and the industry needs to fight its corner with more vigour if it is to get the support from the government that is arguably needed for the country’s economic and social cohesions to be preserved.

International consequences

What are the consequences for the world’s economy if the UK fails to provide adequate capacity? Surely the restriction of growth in the UK is at worst an irrelevance – and at best an opportunity – for Britain’s continental rivals?

It is true that Frankfurt and Paris have closed the gap on Heathrow, although taken as a whole, London’s combined airport capacity far exceeds other European capitals. Nevertheless, there is evidence that Heathrow’s capacity crunch has already begun to restrict the total number of routes on offer. In addition, Paris and Frankfurt are potentially better placed to offer connections to the expanding Far East markets and Russia.

However the UK domestic market provides an important export market for the Eurozone economy. Furthermore the share of exports carried by air is increasing and growth in the air-intensive service sector is becoming more significant. The City of London is also expected to retain its role as one of the world’s three main financial centres, which has great significance for air travel.

The spending power of the British tourist should not be underestimated either. The UK runs an annual £17bn tourism deficit. Last year aircraft from Britain took more than 33,000 people to Spain, 18,000 to the USA and 10,000 to France. If capacity problems force airfares up, these numbers could decline, with consequences for the tourist economies in those countries. All of these factors make the availability of airport capacity an issue of vital importance.

The UK retains enormous strengths in aviation, as a result of its geographical position, managerial and technical capabilities and the presence of world-leading companies, many created out of loss-making state-owned industries. But the most important factor in ensuring the continued success of the British aviation sector is the provision of facilities from which aircraft can fly. It is in the economic interests of everyone worldwide that those facilities are provided swiftly and efficiently to ensure that the UK can provide the lift to the wider European economy that is needed.

Keith Jowett

Keith Jowett is the Chief Executive of the Airport Operators Association, the trade body which represents the UK airports sector.