Breaking News

Japan Industrial Production Falls 3.3% in June, More Than Estimated
Tweet TWEET

London Gatwick Pitches Second Runway at Less Than $8 Billion

London Gatwick airport told a U.K. government commission into future flight capacity that it could add a second runway for as little as 5 billion pounds ($7.7 billion), eliminating the need for a single U.K. hub.

Gatwick, the world’s busiest single-runway airport, has identified three alternatives for building a new landing strip to the south of the existing one by 2025, it said today.

The Gatwick plan is one of a number vying for support as London’s existing Heathrow hub nears capacity. Boris Johnson, the city’s mayor, favors development of Stansted airport to the north or a completely new base in the Thames estuary costing 65 billion pounds, while Heathrow itself has proposed adding a third runway by 2025-29 for as much as 18 billion pounds.

“The focus in the U.K. shouldn’t be on big ticket projects, it’s about deliverable and affordable projects,” Gatwick Chief Financial Officer Nick Dunn said in a telephone interview. “We can deliver sooner than other options and we can deliver the sort of connectivity the U.K. needs.”

Gatwick’s submission last week to the state-appointed Davies Commission details options including a runway close to the existing one that would lift capacity to 60 million flyers a year, and a more widely spaced one that would allow 90 million people to be handled annually, it said in a statement.

Noise Impact

Costs could range to as high as 9 billion pounds, with an opening date of 2025, Dunn said. Noise caused by a two-runway Gatwick would affect a maximum of about 11,000 people, compared with 3,500 today, and about 5 percent fewer than the population that Heathrow currently impacts, he said.

Acquired by Global Infrastructure Partners Ltd. in 2009 after U.K. regulators ordered a breakup of Heathrow owner BAA Ltd., Gatwick favors a “constellation” of airports ringing London rather than one hub maximizing inter-continental connections. Transfer passengers represent only 13 percent of the total across London landing strips, it told the commission.

Major airlines with their own hubs in Asia and the Gulf, as well as discount carriers like EasyJet Plc (EZJ), Gatwick’s biggest customer, also require only point-to-point operations, making them natural clients for the airport, Dunn said.

Demand-Led

“If you are Air China (753) or an Indian airline or any of the airlines operating out of the Middle East, you’re looking to develop your hub operations to deliver passengers in and out of what is a major world city,” the executive said.

EasyJet Chief Executive Carolyn McCall said this month in a submission to the government inquiry that the hub-and-spoke model is outdated and that future aviation capacity should be determined “by consumer demand not central planning.”

Commission Chairman Howard Davies said in November he’d examine all options for securing additional runway capacity in southeast England, including the upgrading of Heathrow, which Mayor Johnson has said should be demolished because of the noise from planes which approach its runways over western London.

Heathrow Airport Ltd. submitted three alternative plans to the commission, all capable of delivering extra flights by 2025-29 at a cost of between 14 billion and 18 billion pounds. The proposals would boost the number of people using the hub to between 123 million and 130 million from 80 million today.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.