Transport CommitteeWrittten evidence from Medway Council (AS 60)
Medway Council's principal interest in the current aviation debate centres around three proposals to build an airport in the Thames Estuary, proposals which follow a long line of similar proposals over the past sixty years to build an estuarine airport, all of which have been abandoned.
We believe that it is essential that the Government's aviation strategy must be based on practicality, affordability and common sense. We accept that to remain internationally competitive, the UK needs to increase aviation capacity now. Building an airport in the Thames estuary, however, would be a costly mistake—costly environmentally, costly for West London and costly for UK plc. Plans for an estuary airport have been made to look attractive by a number of well-designed presentations and smart sound bites, but behind the veneer is a proposal that is ill thought out, ill-conceived and unaffordable.
We welcome the opportunity to respond to the Transport Select Committee's inquiry into the Government's aviation strategy. There are a number of questions, which we do not feel in a position to contribute to and therefore have limited our response to the areas that we feel able and sensible to answer.
If you would like any further information please feel free to contact me on the contact details provided in our attached letter.
1. What should be the objectives of Government policy on aviation?
1.1 The Government's objectives for future aviation policy must combine the need for the UK to remain competitive within the global economy with ensuring that air travel remains accessible for general consumers. Above all the Government's strategy must be based on practicality, affordability and common sense.
1.2 The Government should reject ill-thought out and ill-conceived plans to "solve" Britain's capacity shortfall by building an airport in the Thames Estuary, a plan without any known financial backing, poor connectivity, a disastrous environmental impact and with little support from airlines.
1.3 The current debate on aviation policy focuses solely on business travel and international connectivity, (especially to the BRIC nations) and whilst the importance of connectivity to existing and emerging markets is essential to the UK economy, it is crucial that this debate is widened to ensure that consumers are not left behind.
1.4 For example, it is essential that regional airports are not ignored by the Davies Commission, owing to the more detailed discussions over hub capacity. Our regional airports have an enormous role to play in providing point to point services and a key objective of the Government's policy going forward must be to look at ways of supporting regional airports, potentially looking at measures to incentivise a broader spread of air travel, where practical throughout the UK. These measures could be as simple as improving rail and road connectivity and as challenging as reviewing air passenger duty (APD), to potentially introduce differing levels of APD.
1.5 It is also essential that aviation policy becomes a part of a much clearer and more integrated transport system, with an acceptance that rail and road policy is inextricably linked to aviation policy, for example, Gatwick and Stansted Airports are constrained by poor and inefficient rail links, whilst smaller regional airports like Manston in Kent could become an effective, although small point to point airport with some limited investment in rail infrastructure.
2. How should we make the best use of existing aviation capacity?
2.1 The Government must view the UK's airports as a group rather than a collection of single entities. London, for example, currently has six runways (located at five different airports), three of which are being underutilised. Before constructing any new airports or runways, these resources should be maximised.
2.2 It is impossible to deny that Heathrow, the UK's sole hub airport is currently approaching capacity and also impossible to deny that this is having a major impact on Heathrow's ability to accommodate flights to Brazil, India, Russia and in particular China.
2.3 However this is not the case for other airports throughout the UK, or indeed the capital's airports. Gatwick Airport is currently operating well below its capacity with Stansted operating with space for a further 17 million passenger per annum1. Luton Airport, which can be reached from London in a little over half an hour, has potential to accommodate an extra 11 million passenger per annum .It should also be noted that Gatwick Airport has recently attracted a number of airlines from the emerging nations that will be pivotal to the UK remaining internationally competitive, Hong Kong Airlines, Air China and Korean Air are amongst those major airlines to commit to Gatwick Airport, disproving the view that airlines will not fly into the UK outside of Heathrow.
2.4 However, any new strategy from the Government must view the aviation sector as part of an integrated transport strategy, ensuring that airports such as Gatwick and Stansted are not constrained by poor rail connectivity.
2.5 It is clear that the UK's existing airports and runways could and should be used more efficiently to meet the challenges we face. Whilst Gatwick and Stansted Airports have significant spare capacity they are constrained by poor rail connectivity. The Government should, as a matter of urgency, review the rail links between London and Stansted and London and Gatwick; for example it currently it takes 53 minutes to get to Stansted Airport from Liverpool Street Station. A more dedicated and high speed service between London and these two airports would dramatically increase their connectivity and passenger numbers. Improving connectivity, especially with Stansted due to be sold by BAA, would greatly increase Gatwick's and Stansted's ability to play their role in a thriving UK aviation industry.
2.6 Another area of the current aviation strategy that prevents existing airports from fulfilling their full potential is financial, with Air Passenger Duty a major financial constraint on all airports and regional airports in particular. We noted with interest and agreement the recent report by the All Party Aviation Group that suggested lower rates of air passenger duty for regional airports2. This move would not only allow larger regional airports like Manchester Airport, (currently paying £2 in tax for every £1 that the airport takes in revenue3) but also smaller regional airports like Southend and Manston to play a valuable role in providing point to point services in the South East, potentially freeing up space at Heathrow for flights to emerging nations, thus increasing Heathrow's hub capacity.
2.7 The Government must also look to work with the larger regional airports outside of the South East, such as Birmingham Airport and Manchester Airport to ensure that they can attract a wider range of flights, especially given the impact the High Speed 2 will have on connection times between Birmingham and London.
2.8 In addition, as outlined above, the consumer is often ignored in the current debate. Instead, the Government should put the consumer at the heart of considering how best to use the UK's existing airports. All too often the debate has been too London and South East centric, when the Government should consider the whole of the UK. For example, any discussion of hub capacity should consider the role that Heathrow plays in linking regional airports like Newcastle to the rest of the world and the continuing loss of revenue to competitors like Schiphol, Frankfurt and Charles De Gaulle. They must also consider where people live in relation to where they have to fly from. With an alarming number of air passengers travelling by car from the Midlands and North West to fly from Heathrow, the Government must consider the impact that this has on road and rail congestion and crucially the consumer experience.
3. What constraints are there on increasing UK aviation capacity?
3.1 Aside from the constraints listed above, additional but, in our view, necessary, constraints are presented on environmental grounds.
3.2 The Government should consider the impact of aviation on the local environment and our commitment to reduce carbon emissions and continue to work with airport operators and airlines to reduce and mitigate the environmental impact and crucially the noise impacts. They must also work with industry to ensure that they take advantage of technological innovations and design advancements to reduce emissions.
3.3 The environmental impact of aviation must be a key consideration in the Government's aviation strategy and should be a strong factor when considering the feasibility of proposals to build a new hub airport in the Thames estuary. We are of the view that these proposals are incompatible with the UK's environmental commitments on both national and international levels.
3.4 The mouth of the Thames estuary is a site listed under a myriad of international and national designations and special protection areas (Globally—The Ramsar Convention, at a European level—The Habitats Directive (Special Areas of Conservation) and Birds Directive) that the Government has committed to. Not only would each of the designations have to be broken in order for an airport in the Thames estuary to go ahead, the airport would also destroy the habitat for over 300,000 migrant birds that rely on the area for feeding and roosting during the winter. Many thousands more use the estuary as a stop-over as they fly south for the winter and before turning north again for the feeding grounds of the arctic.
3.5 Building an airport in the Thames estuary will not only have a negative environmental impact on the prospective site of a new airport, but more widely, would also destroy a significant amount of countryside across Kent. The infrastructure required to build an airport in the estuary would lead to the removal of or significant affect on whole communities (approximately 40,000 people) all of whom would require new homes in the Medway area. On top of this, the airport is likely to employ approximately 70,000 people bringing new families to the region. Birmingham Airport's Head of Government Relations, John Morris claims "you would need a city the size of Manchester to support it in an area that already requires five new reservoirs". Housing required at such a significant level is simply not available in Medway. Currently the average number of houses built per year is approximately 750 and there is no evidence or viable solution that has been put forward to suggest where these people are likely to be housed.
3.6 In addition to substantial new housing requirements, a new transport system including the construction of new road and railway infrastructure to connect the airport to central London and the rest of the UK, will bring further disruption and irreparable damage to the region at a significant additional cost to the estimated £80bn the construction of a new hub airport is likely to be.
3.7 Clearly, this additional infrastructure and an influx of people will place a strain on already scarce natural resources such as water. A recent report published by the Environment Agency ahead of a Kent County Council Water Summit has warned that "water resources in Kent are already finely balanced between meeting the needs of people and the environment4." The area is already particularly vulnerable to sea level rises and flooding. Therefore, it is important that the impact of an airport in the estuary should be investigated fully and must consider existing management policies.
3.8 The World War II liberty ship, SS Richard Montgomery, which in 1944 sank 1km off the coast of Sheerness, poses a significant hazard in the mouth of the Thames estuary. The ship which is packed with approximately 1,500 tonnes of unexploded ammunitions would require, what was labelled in a report by New Scientist magazine in 2004 "one of the biggest non-nuclear blasts ever and would devastate the port of Sheerness5".
3.9 Engineers who have examined the ship suggest that if the wreck exploded it would likely create a metre high tidal wave. Furthermore, Government tests on the site as far back as 1970 suggested a blast would hurl a 1,000ft wide column of water, mud, metal and munitions almost 10,000ft into the air—risking the lives of wildlife and many people.
3.10 The Climate Change Act 2008 committed the Government to a legally binding, long-term framework to tackle carbon emissions. This means a reduction of at least 34% greenhouse gas emissions by 2020 and at least 80% by 2050. Any new airport at the suggested size and scale as the Thames estuary proposals is likely to have an affect on the UK's carbon emissions output. Figures from the Department for Transport (DfT) in their latest UK Aviation Forecast published in August 2011, outline that currently airports and the aviation sector CO2 output is 34 MtCO2 (approximately 5% of the UK's total carbon emissions) in 2010 and this is expected to rise to 48 MtCO2 by 2030. WWF have suggested that an airport in the Thames estuary is likely to create the single biggest source of CO2 in the UK, even bigger than Drax coal fired power station in Yorkshire.
3.11 The Government must make the environmental impact of aviation a key consideration when formulating any future strategy. Both airlines and airport operators have made significant progress on reducing the impact of environmental and noise considerations on existing airports, progress that should be applauded, progress that would be undone if an airport was constructed in the Thames Estuary.
4. Do we need a step-change in UK aviation capacity? Why?
(a) What should this step-change be? Should there be a new hub airport? Where?
4.1 We understand that an airport in the Thames Estuary will be discussed as an option; however we also believe that beneath the veneer of a well-designed proposal and some sharp sound bites, the proposal is simply not a viable solution.
4.2 We believe that there should be a step change in the Government's strategy, a change that ensures that aviation policy is based on three main conditions:
Practicality: Any airport whether hub or point to point, must be in a practical location, with good connectivity and links to the UK's major cities and crucially be in use before the UK falls further behind our competitors.
Affordability: Any airport whether hub or point to point, must not require significant public subsidy, should have clear funding and that regional airports should not be constrained by APD.
Common sense: Any airport whether hub or point to point, must be considered through the realm of possibility rather than fantasy. It is essential that common sense is applied to both environmental concerns and that the reality of the role of airline policy in an airports' viability is accepted.
4.3 We welcome the Davies Commission and believe that it should look to these three conditions when considering where to locate any new potential hub airport. Above being key to any new airport's viability, we feel that taking these conditions into account when looking at current proposals, highlights that building an airport in the Thames estuary would not be a sensible solution.
4.4 Practicality.
4.5 Britain faces a number of challenges in staying competitive in global aviation, most notably the present threat posed by Schiphol, Frankfurt and Charles De Gaulle Airports.
4.6 In the same period that Schiphol has increased from four to six runways, Frankfurt from three to four and Paris from two to four, no additional runways have been built in London. In this time, UK aviation has suffered from a lost decade in which expansion plans for Stansted and Heathrow were proposed and then dropped.
4.7 Commentators agree that as a result of our competitors' growth and a decade of inactivity, the threat posed by other European airports is clear, present and very real. It is this threat that is central to the current debate and to why proposals for an airport in the Thames Estuary are not the solution to helping the UK remain competitive.
4.8 To remain competitive, there is acceptance that the UK needs to increase capacity now and within the next five years, to take account of both the growth of our competitors and the "lost decade of inactivity". Recently Daniel Moylan, former Deputy Chair of TFL and adviser to Boris Johnson has claimed that an Estuary Airport could be built within four years, if there was "enough political will." These claims are idealistic at best and add little if anything of significance to the pressing debate.
4.9 Best estimates suggest that an Estuary Airport could be built within fifteen to twenty years, stretching a lost decade to thirty. In thirty years it is highly probable that our competitors will have moved ahead of Heathrow as the premier European hub, making the UK not only uncompetitive in aviation, but also with negative knock on affects for UK PLC, in terms of potential loss of revenue and investment and the loss of at least one hundred thousand jobs in West London owing to the likely closure or at least downgrading of Heathrow Airport.
4.10 It is widely accepted that international tourists and businesses alike prefer (hub) airports to be located close to city centres so as to minimise their travel and transit time as far as possible.
4.11 The Mayor of London, in his recent speech on aviation has admitted that "surface access connections to [a new] airport are a fundamental part of its success" and that any new hub should therefore offer a journey time to central London "of ideally half an hour and no more than 45 minutes".
4.12 Locating a new hub airport on the Hoo Peninsula or the Isle of Grain in the Thames Estuary, as recent research by Tim Leunig shows, would fail to meet any of these requirements as its "wrong location" means it would be "slow and expensive to get to6".
4.13 As Leunig highlights, an estuary airport would be accessible by public transport only from a relatively limited number of places. Indeed, current proposals of a 30-minute high speed service from St Pancras every 10 minutes, a 50-minute traditional service on existing tracks from other London stations every 30 minutes and tentative suggestions to build a £20bn semi-orbital railway running across the top of London down to Maidenhead do not offer a convincing solution to the core consideration of accessibility of any new hub airport, both in terms of costs and feasibility. In addition to the relative inconvenience of a limited number of (public transport) services, an additional consideration to take into account is the likely cost of rail fares to the new airport, currently estimated at more than £70 per ticket. Private journeys by car or cab, moreover, would also have serious implications for the already congested road network in the estuarine area.
4.14 The mouth of the Thames estuary is important to the UK's energy supply, the proposed airport's proximity to Thamesport, one of the UK's busiest container ports. Adjacent is the important point which unloads one fifth of the UK's liquid natural gas supplies and poses an inherent risk to a multi-runway airport with low flying aircraft in close proximity. We believe that the risks this presents should be assessed by an independent expert led inquiry before any decision on the construction of a new airport in the area are made.
4.15 The area is also home to the EON grain power station, a major investment that would be forced to close down by the construction of an Estuary Airport. Speaking at the opening of the site, the Energy Secretary Edward Davey MP stated that he believed that "airport strategy needs to take into account gas, so it will.7"
4.16 Affordability.
4.17 A number of commentators have repeated figures of an estimated £20bn for the proposed Foster & Partners' multi-runway Thames Hub airport on the Isle of Grain and an additional £30bn for the required infrastructure. Financial analysts, however, have questioned the accuracy of these estimates, particularly in light of the projected £9bn cost for only one new runway at Heathrow Airport.
4.18 A recent research study by Parsons Brinckerhoff Ltd summarises the cost assumptions as ranging between £40 billion and £70 billion for a Thames estuary airport, associated infrastructure and the building of a "multitude of new railways lines" connecting the airport to London, but warns that "even the £70 billion being discussed is a conservative estimate".
4.19 Parsons Brinckerhoff Ltd point to historical evidence that "large UK infrastructure projects, much less technically complex than this, have suffered considerable cost overruns"—the Channel Tunnel, originally planned at £4.7bn, ultimately costing £9.5bn is only one example of that.
4.20 In addition, it is estimated that the planning for a Thames estuary airport would span a period of at least ten years. From a base figure of the estimated £20 billion cost, adding 3% construction cost inflation for that period would result in £600 million annually increasing the cost of the airport to £26bn even before construction has started.
4.21 Analysts have further warned that current cost estimates fail to factor in the current amount of BAA's £12.5bn debt levels which are a result of the expansion at Heathrow Airport. Should Heathrow close, responsibility for that debt will have to be assumed. Mike Redican of Deutsche Bank warns that it is likely that "the Government will have to fork out an awful lot of money to BAA and others as a closure cost of Heathrow".
4.22 There seems to be widespread consensus that a large part of the required funding would have to be met by public—taxpayer—funding, particularly with a view to the connecting infrastructure investment necessary to support an estuarine airport.
4.23 In addition, while it is assumed that private investors will meet the cost of building a new airport in the Thames estuary, analysts have warned that private bond markets prefer safe and secure risks, guaranteed by public investment. Sovereign wealth funds dislike volatile yields and tend to invest in existing infrastructure and Chinese investment is likely to be forthcoming only if construction contracts can be secured for Chinese companies as a result. In addition, recently proposed, more detailed funding models have been denounced by aviation industry representatives.
4.24 Proposals to raise in excess of £15bn from landing charges at Heathrow between 2018 and 2028 and the redevelopment of the airport thereafter and offering a controlling equity stake to the Ferrovial-led consortium owner of Heathrow were described as "crazy" by International Airlines Group (IAG) Chief Executive, Willie Walsh. BAA Chief Executive, Colin Matthews, moreover, made clear that BAA's parent had no interest in the idea of relinquishing the airport in exchange for a controlling stake in a new hub, stating that "to take an interest you have to think it is going to happen, and we don't think it is going to happen".
4.25 The high capital requirements mean that the financial viability for the project would be threatened if demand proved to be weaker than forecast, or if airlines and passengers simply did not use the airport. Evidence suggests that 90% of airlines that are currently using Heathrow are opposed to an estuary airport and will be reluctant to fly there, arguing in part that they will want to retain their existing investment in Heathrow. This is added to forecasting showing that the financial viability of a new estuarine airport would likely depend on government intervention to try to ensure early take up of new capacity by passengers and airlines.
4.26 Another aspect of this debate, as of yet not given enough consideration is the future of Heathrow, with most agreeing that the construction of a Thames Estuary airport would lead to the closure of Heathrow. Heathrow International provides a total of 114,000 jobs in the local area: one in five people across 29 local authorities in West London rely on the operation of Heathrow for their source of income, either through direct or indirect employment within the Airport boundary
4.27 The closure of Heathrow as a result of the construction of a new Thames estuary hub airport could mean that some boroughs will have more than a fifth of their population suddenly without a job. This must be taken into consideration by the Government.
4.28 Common sense.
4.29 The proposals to build an airport in the Thames Estuary are simply not sensible. To remain competitive globally we need an airport that can be built in a timeframe that will allow us to remain competitive with our European rivals, that does not have a disastrous environmental impact, that will not require significant taxpayer subsidy and will attract airlines.
4.30 The proposals to build an Estuary Airport fail on each and every one of these criteria and are not a viable solution to the UK's future aviation needs.
5.1 Conclusion.
5.2 To remain competitive in global aviation, it is essential that action is taken both to increase capacity at UK airports and to ensure that measures are taken to ensure that existing airports operate to their full potential. We can increase capacity by twenty million through improving our rail infrastructure, a move that would free up valuable space at Heathrow for flights to emerging markets.
5.3 Heathrow is an internationally respected and regarded airport, and to potentially close an asset of this kind owing to the creation of Estuary Airport (with the resulting loss of over 100,000 jobs in West London) would likely be viewed negatively by airlines, many of whom may move flights to key emerging markets to our competitors. It is essential that in looking to maintain our competiveness that we ensure that Heathrow retains its hub status, but that we use economic incentives such as varying APD at regional airports to ensure that they can attract point to point flights, freeing up spare capacity at Heathrow as part of a more integrated transport strategy.
5.4 The Government strategy must also place an emphasis on the environmental impact of aviation and should commit to work with all interested parties to ensure that aviation's impact is minimised.
5.5 Proposals to build an airport in the Thames Estuary are simply not a viable solution, both for reasons of time and cost. An airport in the Thames Estuary would be the wrong airport, in the wrong place and crucially at the wrong time.
19 October 2012
1 Kent County Council, Bold Steps for Aviation. Discussion Document. May 2012. Available online at: https://shareweb.kent.gov.uk/Documents/News/Bold%20Steps%20for%20Aviation%20May%202012.pdf
2 All Party Parliamentary Aviation report into Aviation Policy and Air Passenger Duty, August 2012 - http://www.epolitix.com/fileadmin/epolitix/APPG_AviationReport.pdf
3 http://menmedia.co.uk/manchestereveningnews/news/business/s/1587542_mag-hails-tax-victory
4 Environment Agency (2012) "The state of water in Kent" https://shareweb.kent.gov.uk/Documents/environment-and-planning/environment-and-climate-change/water%20summit/state-of-water.pdf
5 New Scientist (2004) "The Doomsday Wreck" http://www.newscientist.com/article/mg18324615.100-the-doomsday-wreck.html
6 Bigger and Quieter: The right answer for aviation - http://www.policyexchange.org.uk/publications/item/bigger-and-quieter-the-right-answer-for-aviation?category_id=24
7 http://www.businessgreen.com/bg/news/2214802/stateoftheart-gas-plant-hailed-as-key-to-government-energy-policy