London Mayor Slams EU Aid-Cap Threat to New London Airport

London Mayor Boris Johnson said European Union proposals barring the use of state aid for the construction of airports serving more than 5 million people a year would undermine plans to grow the U.K.’s aviation capacity.

Government subsidies for large airport projects, currently assessed on a case-by-case basis, would be outlawed starting in early 2014, whether for new infrastructure or upgrades of existing facilities, according to the draft EU blueprint.

“There are unintended and potentially catastrophic consequences,” Johnson said in a Sept. 20 letter to EU Competition Commissioner Joaquin Almunia. In “tying the hands” of member states, the measures would limit London’s ability to expand vital links to emerging markets in Asia and South America, he said in the document obtained by Bloomberg News.

Johnson is at the forefront of a U.K. debate over airport capacity in southeast England that pits the existing Heathrow hub against his own proposals which include building an entirely new base far to the east. The EU rules would limit London to expanding terminal capacity at existing bases with less ambitious plans that could be more easily financed, he said.

Consultation

Almunia’s spokesman Antoine Colombani said the European Commission has taken no decision on the matter and that the EU’s regulatory arm will now start to analyze feedback received during a consultation period that ended yesterday.

“We will of course carefully assess all the arguments raised, including in Mr. Johnson’s letter,” he said.

The Commission said on publishing draft guidelines in July that airports with annual passenger numbers above 5 million are “usually profitable and are able to cover all of their costs.”

Transport for London, the body that implement’s the mayor’s transport strategy, said in a submission accompanying his letter that while incremental investment can usually be privately financed, the delivery of larger one-off developments in the order of tens of billions of pounds would still require aid.

Such projects would include the expansion or replacement of a major international airport, according to the document.

Johnson has said Heathrow, Europe’s busiest hub, should be replaced by one of two undeveloped sites in the Thames estuary or by an expanded Stansted airport, 35 miles north of London.

The proposals, along with those of Heathrow, Gatwick, Stansted and other airports and stakeholders, were submitted to the state-appointed Davies Commission on U.K. airport capacity earlier this year, with a final recommendation due in 2015.

‘Damage’

“If the changes that the EC are proposing were adopted, they would seriously damage the ability of the commission to consider all options on a level playing field,” Johnson said.

TfL said in its submission that a new hub as envisaged by Johnson requires an estimated 20 billion pounds ($32 billion) of investment. Heathrow has also described as “challenging” the likelihood of raising private funds for a more modest proposal for new runways costing from 14 billion pounds, it added.

A four-runway hub could quadruple the number of cities in China and South America served from London and add 50 percent more in the U.S., while restoring routes to U.K. locations now served only from Amsterdam Schiphol, Johnson said in July.

A lack of airport infrastructure across Europe could cap the number of flights to 14 million annually by 2035, 2 million fewer than demand forecasts suggest will be needed, Tfl said.

To contact the reporters on this story: Gaspard Sebag in Brussels at gsebag@bloomberg.net; Kari Lundgren in London at klundgren2@bloomberg.net

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

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