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U.K. Airport Study Favoring Heathrow Reopens Party Splits

Photographer: Simon Dawson/Bloomberg

Aircraft sit on the runway in this aerial view of Heathrow Airport in London. Close

Aircraft sit on the runway in this aerial view of Heathrow Airport in London.

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Photographer: Simon Dawson/Bloomberg

Aircraft sit on the runway in this aerial view of Heathrow Airport in London.

London’s Heathrow airport emerged as favorite to gain a new runway as a study of Britain’s flight-capacity shortage threatens to reignite a fight within leading political parties over noise at Europe’s busiest aviation hub.

Heathrow, which has two runways and is home to British Airways (IAG), was shortlisted alongside single-runway London Gatwick as suitable for expansion in an interim report from the state-appointed Airports Commission. Calls for a completely new hub in the Thames estuary or at Stansted airport weren’t endorsed.

“The capacity challenge is not yet critical but it will become so if no action is taken soon, and our analysis clearly supports the provision of one net additional runway by 2030,” Commission Chairman Howard Davies said in a statement. A second extra strip may also be needed by 2050, according to the panel.

Davies was appointed by Prime Minister David Cameron to help depoliticize U.K. aviation policy, and isn’t due to make final recommendations until after the 2015 general election. The panel’s early findings may reopen political wounds, with many of Cameron’s parliamentary colleagues opposed to growth at Heathrow and London Mayor Boris Johnson, also a Conservative and a key backer of the estuary proposals, seeking to close the hub.

Consensus Call

“I think the reality is that Sir Howard probably began with a shortlist that didn’t really include much except Heathrow,” Johnson told reporters in London. “If the great mass of the British establishment is basically still addicted to the idea of a third runway at Heathrow, let’s be clear about that, let’s have it out there, let’s have a proper debate.”

Willie Walsh, chief executive officer at BA parent International Consolidated Airlines Group SA, praised the commission’s “detailed analysis,” while adding that it “will be wasted without political consensus.” EasyJet (EZJ) Plc called on parties to agree to back the study whatever its conclusions.

Jean-Christophe Gray, a spokesman for Cameron, told reporters that the shortlisting of Heathrow and Gatwick is seen by the government as an “interim finding” and that the commission must be allowed to complete its work.

Britain needs a new runway to retain its status as a global travel crossroads, with extra capacity impossible to deliver via operational gains and without extra infrastructure, Davies said.

Heathrow Options

The commission favors two options at Heathrow, entailing either a new 3.5 kilometer (2.2 mile) airstrip to the northwest, as pitched by owner Heathrow Airport Ltd., or the extension of the existing northern runway to at least 6 kilometers.

The latter strategy would create a single strip able to operate as two runways -- one for landings and one for takeoffs -- as proposed by former Concorde pilot Jock Lowe and Mark Bostock, an ex-director at U.K. design firm Arup Group Ltd.

Davies said alternative Heathrow plans for a runway over a nearby reservoir were dropped after Thames Water Utilities Ltd. indicated it would struggle to find an alternative location.

The commission’s preferences were drawn from a pool of more than 50 proposals, ranging from runway extensions to the development of greenfield sites. Thames estuary options haven’t been shortlisted because there are “too many uncertainties and challenges,” it said, adding that a study of a new base on the Isle of Grain, Kent, will be undertaken in early 2014.

Bigger Bill

That plan’s likely cost is five times that of short-listed options at 112 billion pounds ($183 billion), the panel said.

Heathrow submitted three plans to the commission, able to deliver extra flights by 2025-29 at a cost of no more than 18 billion pounds. The proposals would allow the hub to handle as many as 130 million people a year, up from 80 million today.

Johnson, the London mayor, said today that construction of a third runway would inevitably lead to clamor for a fourth.

“I don’t think the answer is Heathrow,” he said at a in Westminster. “I don’t think it is politically deliverable. I don’t think it is going to happen.” Daniel Moylan, Johnson’s aviation adviser, told Bloomberg Television that work on the Kent option could yet lead to its inclusion.

Business Secretary Vince Cable, a Liberal Democrat in the ruling coalition, said on his website that he’s “strongly opposed” to the conclusions from Davies on Heathrow, and that his party is the only one full united against its expansion.

Elections

Conservative lawmaker Zac Goldsmith, who represents Richmond, one of the constituencies under the Heathrow flightpath, has previously threatened to quit if expansion of the hub is approved, forcing a special by-election vote.

“No serious political party can go into the next general election without a position on this,” Goldsmith said today. “It’s not a credible position for any party.”

Today’s findings should not be taken as a rubber-stamp for Heathrow expansion over all other options, Transport Secretary Patrick McLoughlin said in Parliament today. “Gatwick is an alternative, as at the moment is the Thames estuary as well.”

Chancellor of the Exchequer George Osborne may favor the expansion of Heathrow, which dates from 1946, the Financial Times said in Dec. 15.

Virgin Atlantic Airways Ltd. CEO Craig Kreeger said in a statement today that the U.K. economic competitiveness “requires a bigger hub, which is currently Heathrow.”

‘Two-Horse Race’

Gatwick, the world’s busiest single-runway airport, has identified three alternatives for expansion to the south by 2025. The site, which touts itself as a better alternative for discount carriers like EasyJet and Ryanair Holdings Plc (RYA), said in July that it could add a new strip for 5 billion pounds.

CEO Stewart Wingate told Bloomberg TV that Gatwick is in a “two-horse race” with Heathrow and deserves to be favored because it can deliver a new runway faster and at less cost. He said its rival can remain remain a hub even with two runways.

Davies said it’s not clear whether in the long run London would be better served by “one huge hub” or a “constellation of airports” each offering different service levels and prices. The sole-hub approach could be “quite risky,” he added.

Ryanair CEO Michael O’Leary said by e-mail that the panel should back new runways at London’s top three airports and let them decide whether to go ahead, subject to planning approval.

“The U.K. government doesn’t determine where new hotels or new tourism facilities are developed,” the executive said. “This repeated political interference in much needed runway expansion in the southeast continues to result in under-capacity, excessive pricing and a bad deal for passengers.”

Stansted Cost Barrier

The commission said turning Stansted airport northeast of the capital into an international hub could cost almost as much as building an entirely new facility in the Thames estuary, though a second runway at the base could be viable after 2040.

Today the airport, Ryanair’s biggest base in London, operates at about 50 percent capacity and serves 17.5 million people. Owner Manchester Airports Group is spending 40 million pounds to upgrade lounges and draw long-haul carriers to an asset that it bought in February.

“Stansted has a critical role to play in supporting the country’s economic growth” MAG Chief Executive Officer Charlie Cornish said in a statement today. “At the right time we will bring forward proposals for a second runway.”

All the shortlisted options would require some public money, at least for ground transport-related work, Davies said.

The 62-year-old economist, a former deputy governor of the Bank of England and director of the London School of Economics, also said capacity could be given a boost through operational efficiencies, transport improvements and smoothing of Heathrow morning schedules. It added that an Independent Noise Authority should be established to advise on the impact of projects.

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

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