The false arguments for airport expansion
A shorter version of this article was published in the Financial Times.
Should a third runway be built at Heathrow? This collision between the needs of the economy and the environment focuses one of the most contentious decisions facing Parliament for a decade as the Government prepares to issue its White Paper on air transport policy to 2030. It will require wholly new thinking if this decision is not to go badly wrong.
For BAA the case for a go-ahead is clear. The number of airline passengers using British airports will triple by 2030, and quintuple in the South East. It will give a huge boost to the economy. And we should not deny new, lower-income passengers the right of access to air travel if they wish. But all these premises are seriously flawed.
The demand projections are based on the assumption that air fares will continue to fall by 1% in real terms per year. They also assume that aviation will continue to benefit from substantial tax breaks. They ignore any proposals that there should be a significant switch to high-speed, long-distance rail. And they are built on the presumption that the airlines continue to avoid their full external social and environmental costs. All four of these bases should be challenged and altered.
Contrary to every other form of transport, the airline industry is exempt from fuel tax. It aviation fuel were taxed at the same rate as the private motorist's fuel, it would raise £6.3 billion in the current financial year. In addition, the aviation industry is allowed to pay no VAT on the purchase of planes or on airline tickets. This subsidy is worth some £4 billion a year.
The costs of the external environmental impacts from flying are difficult to quantify and open to considerable variations in estimate. But the recent Treasury paper 'Aviation and the Environment' produced a conservative costing of the contribution of air transport to greenhouse gases, local air pollution and noise from landing and take-off at £1.6 billion a year, tripling to £4.8 billion by 2030. However, the European Environment Agency estimated the costs of air transport for the UK at £3.4 billion already by 1995, since when they will have risen substantially, perhaps to as much as £6 billion a year.
Altogether this involves a total subsidy of some £12-16 billion a year - far more favourable treatment from the Exchequer than any other industry. But the economic case is even weaker. In effect, taxpayers are subsidising the aviation industry to fly tourists out of the UK to the net disadvantage of the balance of payments. One recent estimate in 2001 showed that there was a deficit of £14 billion a year in aviation-related tourism - in other words that was the additional amount that Britons spent abroad over and above what visitors spend here, with a negative knock-on effect on jobs in the UK.
The third premise is that putting any restraint on airport expansion would infringe the basic right of lower-income passengers to enjoy, perhaps for the first time, the privilege of air travel. Again, the facts suggest a very different picture. A Civil Aviation Authority survey in 2001 showed that, in an average year, less than half the population flies, and they are overwhelmingly high income earners, and only 11% come from social classes D-E. The poorest tenth hardly ever fly. Even on the budget airlines it is the top three social classes who use more than three-quarters of all flights and four times as many flights a year than those from the bottom three classes.
If assisting lower-income people with their transport costs was the main criterion, the Exchequer subsidy would go in a very different direction from air travel. Between 1984-99 the Office of National Statistics shows that bus fares - much more relevant for those on lower incomes - rose 42% and rail fares 35%, while air fares over the past 10 years have fallen 42%.
The arguments for 'predict and provide' airport expansion therefore do not stand up to scrutiny. On the other side, the environmental and social costs of air travel continue to be largely ignored or given very low priority. If the aviation industry as a major source of environmental pollution were properly taken into account, the equation would look wholly different.
International aviation from UK airports contributes at present about 5% of total UK CO2 emissions. However, other aircraft emissions - nitrogen oxides, oxides of sulphur, hydrocarbons, particles and water vapour, when released at high altitudes, together produce an even greater climate change effect than CO2 alone (known as radiative forcing) - some 2-4 times greater. As a result, international aviation is responsible for the equivalent of about 11% of total domestic CO2 emissions from all sources.
Worse, aviation is the fastest growing contributor to climate change. Indeed, if aviation emissions continued to grow at the present rate, while at the same time the UK was put on track to achieve the Energy White Paper target of a 60% reduction in total CO2 emissions by 2050, then by 2030 international flights from the UK would be responsible for no less than half of all emissions. That is simply not sustainable.
This does not just apply of course to the UK alone. Paradoxically, aviation has hitherto been excluded from the Kyoto Protocol. The perverse result is that by 2012 the benefits of some 30-50% of greenhouse gas reductions elsewhere could be wiped out by the growth in aviation.
In addition, noise pollution, already severe, would significantly increase. No other rich-world city has to tolerate what London does, with aircraft flying low over a large segment of south and west London every 30 seconds at peak times, disrupting conversation by day and sleep at night. Research recently commissioned by CPRE has shown that, if airport expansion continues unchecked, over 600,000 people are likely to be seriously disrupted by noise by 2030. Up to three new holding 'stacks' would be required, together with an entirely new flight path along the east coast of England. The number of planes using flight paths could rise to over 60 an hour in many areas. Roy Vandermeer, the inspector who approved the fifth terminal at Heathrow in 2000, nevertheless concluded that a third runway would have "such severe and widespread impacts on the environment as to be totally unacceptable."
So what should be done? Initially an emissions charge could be levied at EU level to cover the cost of environmental externalities and bring about a sizeable 10-15% reduction in CO2 and NOx emissions. In the medium term aviation should be brought within the Kyoto Protocol and an international emissions trading regime set up with global emissions capped at a level which reflects the environmental tolerance limits.
If quality of life for long-suffering residents around major airports is to be protected, then air and noise pollution capacity limits need to be agreed for these airports, supervised by the Environmental Agency with particular emphasis on restricting or preferably ending night flights. Incentives are needed to high-tech industries to develop more sophisticated video-conferencing so that unnecessary meetings can be replaced. And if Germany intends to switch all internal flights to rail in the next decade, surely the UK should ambitiously examine the potential to substitute long-distance electric rail for internal UK air travel. Above all, if existing subsidies were phased out over time, the need for new airports or runways would be much reduced.