21 March 20112 The Need for New Airport Capacity for the South East Michele Dix Managing Director – TfL Planning
Contents 21 March 20113 1.Demand 2.The importance of aviation 3.Environmental impacts 4.Londons airports 5.The importance of a hub airport 6.The need to plan for growth 7.Future options
Londons primary airports Heathrow: 2 runways 66m pax Gatwick: 1 runway 31m pax Luton: 1 runway 8.5m pax Stansted: 1 runway 18.5m pax London City: 1 runway 3m pax + Supported by a number of smaller regional and non-commercial airports. Regional airports such as Birmingham and Southampton have a limited influence (demand figures, CAA, 2010)
The UK and Londons air markets In 2010 the UKs airports handled 211m passengers Londons five main airports handled 60% of this 75% of Londons demand is for leisure travel and 25% for business 25% of passengers across Heathrow, Gatwick and Stansted are making connections – they do not make a terminating journey at the airport 21 March 20115
Where are passengers travelling to and from? 21 March 20116 45% from GLA Demand relatively evenly spread but significant local catchments
16 October 20067 London airports passenger market (2009 CAA passenger data) Area of pie denotes demand
16 October 20068 Londons airports – annual demand/flights in comparison with other European cities
16 October 20069 Londons existing airports Daily Departures: Destinations served and flight frequency Area of circle denotes number of flights per day Number of destinations served 200 160 120 80 40 0
16 October 200610 Demand is growing… Demand for air travel is growing around the world It is closely correlated with wealth creation and Globalisation, so will continue to grow UK-wide Air Passenger Demand Forecasts: DfT, 2009
16 October 200611 But capacity isnt Historically Londons airport growth has been incremental – recent focus on terminals not runways Both are needed!
Growth is needed – Londons airports are full Runway capacity is the greatest capacity constraint Heathrow –worlds busiest international airport with 66m passenger in 2009 –runways operating at 99% of their capacity –In the past 20 years flight sector times from Schiphol have increased from 60 to 90 minutes Gatwick –worlds busiest single runway airport with 32m passengers in 2009 –Operating at 95% of its capacity Stansted, Luton and City have some spare capacity but this is minimal in the overall London context 21 March 201112
Does it matter? We are an island nation participating in a global economy Aviation generates substantial economic and quality of life benefits However - Aviation is responsible for huge environmental impacts It is therefore a wide-ranging, significant, and emotive issue 21 March 201113
Aviation benefits everyone 4 out of 5 trips to or from the UK are made by air In 2009 47% of the UKs population flew at least once £100bn of goods were exported or imported by air Aviation and its supply chain accounts for around 1.5% of UK GDP (£19bn) Londons primary airports account for 80,000 jobs and a further 70,000 in their supply chains Aviation is worth about £8bn a year to the UK Exchequer in tax receipts and duties 21 March 201114
Aviation can be a cornerstone of the Governments ambitions for Economic Growth As the world becomes more globalised, there is a need to connect to more cities in emerging markets such as Brazil, Russia, India and China Sectors vital to economic growth are aviation intensive: pharmaceuticals, high-quality and innovative manufacturing and scientific research as well as finance and business services Airports play vital roles in regional economies and so could lead a rebalancing of Londons economy towards the east The Government published an ambitious Tourism Strategy this month and airport capacity needs to grow to improve our position in an increasingly competitive market 21 March 201115
But what is the Government doing? In May 2010 the Coalition withdrew its support for Heathrows third runway and stated that it would not support future runway expansion at Heathrow, Stansted or Gatwick It set up the South East Airport Task Force to look at quality of service at the Londons big three – NOT CAPACITY FOCUSSED DfT embarking upon new aviation strategy A Sustainable Framework for Aviation Scoping study to be published March 2011 DfT currently reviewing demand figures, Commission on Climate Change (CCC) findings and Regulatory arrangements – to be reported in Summer 2011 Government wants to have a growth-led deficit reduction and rebalancing of economy 21 March 201116
Localised Environmental Impacts of Aviation While airports can have tremendous benefits, they can also have a detrimental impact on their local environment in terms of air quality and noise pollution Heathrows – located within densely populated area, and flight paths over London - is unsuitable for further expansion 21 March 201117 Improvements in technology could mitigate the effects of a new airport Crucially, any new airport capacity would be sited and designed so as to minimise the noise and air quality impacts
New aeroplane technology Aeroplanes are getting cleaner and quieter: –Engines are becoming more efficient –Aircraft bodies are becoming lighter through the use of lightweight composite materials –Progress has been made in aerodynamics allowing planes to take off using lower thrusts –Progress upon biofuels 21 March 201118
Is additional capacity compatible with climate change targets? 21 March 201119
Strategic Context – Expansion is both desirable and permissible Substantial growth in aviation is both desirable economically and permissible within environmental limits An airport handling 85mppa could be built in the South East Key findings: –Londons economy is reliant on its good international links and failure to safeguard and develop these could see London lose out 21 March 201120
Additional capacity in context 21 March 201121 Heathrow66m Gatwick Stansted Luton London City 31m 18.5m 8.5m 3m 85m Additional capacity Figures for 2010 (CAA)
16 October 200622 Is incremental expansion at Londons existing airports the best way to meet demand? There is spare capacity at some of Londons airports. –At Stansted and Luton it is at unattractive times of the day to the current operators –It is not enough to provide for an extra 85mppa Two new runways at existing airports could provide close to 85mppa –However, would require improved terminal and surface access capacity wherever it occurred –At Heathrow, a new runway would be detrimental to the quality of life of millions of people –Adding a new runway at Stansted or Gatwick (or both) would still be unable to facilitate full hub operations Incremental improvements are inefficient. Spreading costs and disbenefits across the South East without securing a world-class hub airport for London
HS2 Cost ~£30bn Delivery ~2026 (phase 1) Delivery ~2033 (phase 2) Capacity 18tph (~30,000 pph) Birmingham 46min Edinburgh 3hr 30 Glasgow 3hr 30 HS1 Continent within reach Paris 2h 15min Brussels 1h 45min Amsterdam ~4hr Frankfurt ~4h 30m BUT capacity constrained through the Tunnel Can High Speed Rail play a role? N. America S. America S. Europe / Africa HSRs ability to substitute for aviation demand is limited Majority of aviation trips not viable by other modes
Potential role of High Speed Rail is limited Excellent substitute for air travel for city centre to city centre travel where the journey time by rail is under 4 hours High speed rail could remove a number of domestic flights as well as some to near Continent cities such as Paris, Brussels and Frankfurt. this is likely to be only a maximum of 8-10% of total demand at Heathrow = large gap 21 March 201124
Challenges and opportunities for growth at Londons airports Airport Ownership and Governance Airport Planning System Regulatory Burden Raising Capital Surface Access Links 21 March 201125
16 October 200628 A Hub Airport Although point to point flying is of importance to passengers, frequency of flights is equally important, especially to business passengers. A hub airport can offer a wider range of destinations at higher frequencies than its catchment area would typically justify due to a interlining passengers Interlining passengers help fill up planes so enabling the airport to offer higher frequencies for certain routes and/or a wider set of routes, particular for long haul flights. A hub airport needs at least two runways (most new ones have at least 4 now) with good terminal facilities to allow incoming flights to readily connect with other flights (ie to accommodate interlining passengers).
Competing hubs are developing across Europe 16 October 200629 Charles de Gaulle 4 runways 58 mppa Madrid – Barajas 4 runways 48 mppa Frankfurt 4 runways by 2012 51 mppa Schiphol 5 runways 44 mppa Frankfurt Airport. Two terminals. 3 runways. A third terminal and fourth runway are under construction. A hub for Lufthansa for their extensive long-haul offer. Madrid Barajas. Terminal 4 and 2 new runways opened in 2006. Functions as a major hub for the Oneworld Alliance with flights to hundreds of destinations with a strong link to emerging markets in South America.
16 October 2006 30 Los Angeles Sydney 16 hours direct 14 hours direct The growth of Middle eastern airlines and additional airport capacity in places such as Dubai and Abu Dhabi are creating new global hubs midway between the Americas and Asia/Australia Competition is growing in the Middle East Dubai – new 5 runway airport under construction
London can have two hubs 16 October 200631 There is no independent evidence to say otherwise New York has two hub airports – JFK and Newark which compete with each other Heathrow would not have to close if a new airport were to be constructed. A new hub would cater for additional demand. –pressure on Heathrow could be relieved –Could enhance the long-term viability of Heathrow as an attractive gateway airport Each hub could serve competing airline alliances
What happens if we do nothing? 16 October 200632 If we fail to provide for growth via a hub airport, London and so the UK lose out Heathrow is losing traffic. It is coming under increasing competition from other hub airports Airlines and their support services are footloose. They have a choice London is at risk of continuing to lose traffic from key global aviation players. Carriers excluded from their first choice airport due to lack of capacity, will build their businesses elsewhere in Europe. Qantas has intimated that if capacity problems in London continue, it would relocate its European hub to Berlin This has no global environmental benefit, and diverts commerce away from the UK.