Heathrow: the Government’s economic case does not add up

January 18th, 2009

The social and environmental arguments against a third runway – the huge worsening in air pollution, noise, climate change emissions, and quality of life for 2 million long-suffering people in west London – are overwhelming. Acutely aware of this, the Government offered 3 sweeteners to soften the pill. The third runway would initially operate at only half capacity when opened; aircraft using the third runway would meet strict greenhouse gas emissions standards; and CO2 emissions from UK aviation in 2050 would be limited to 2005 levels. These ‘concessions’ are scarcely worth the paper they’re written on. A promise to limit the runway to half its potential (for more than a very short time) is hardly credible when Governments of both parties have 4 times in the last 30 years given firm pledges there will be no further expansion and a cap on flight numbers, and have each time quickly broken them. The promise to limit additional capacity on a new ‘green slot’ principle to the most modern aircraft is too open-ended to impose any serious constraints on noise, air pollution, or emissions. And the commitment to reduce aviation emissions in 2050 to their 2005 level (37.5 million tonnes) artfully conceals the fact that that level of emissions will be 30% of total UK emissions in 2050 if the Government achieves its promised total 80% cut by that date. But what is so bad about the Government’s insistence on still giving the go-ahead is that its economic case doesn’t stack up either.


The Government’s economic case is that the third runway is essential for the business economy and for Britain’s future competitiveness. It is nothing of the kind.
The aviation industry actually ranks as only the 26th largest industry in the UK and just half the size of the computer industry. Far from being key to the balance of payments, as the airline industry constantly argues, it actually creates a deficit of about £17bn a year – the excess that British tourists spend abroad over what foreign visitors spend here. In addition, the UK airline industry gets a subsidy of some £10bn a year from VAT-free tickets and plances, and tax-free fuel – taxpayers’ money that could be better spent on sustainable transport systems, particularly sisstitutes for domestic short-haul flights. The respected consultants CE Delft have argued that the official figures greatly overestimate boththe number of jobs that the runway would generate and the value brought to Britain by extra business travellers.
In a video-conferencing age business flights that are essential to the British economy are comparatively few. No less that 87% of UK international passengers are in the leisure and tourism category, and even at Heathrow only a third of users say they are travelling on business (and even much of that is probably a perk, a conference, or a holiday on expenses). Nor is the hub argument so beloved of the industry any more persuasive. Indeed Bob Ayling himself, the former BA chief executive, recently stated that transfers spend little or nothing in London and offer no external benefits except to airline profits. The biggest growth in air travel has actually been in non-hub cheap flights.

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