At the Gatwick Diamond Economic Growth Forum today, Gatwick CEO Stewart Wingate laid out the case for Gatwick and showed the positive impact and benefits a second runway would bring to the area, the South East, and the UK as a whole.
The Airports Commission has provided very useful and extensive data to help inform the government, and in December 2015 the government concluded that expansion of capacity in the South East was necessary, and agreed with the Commission that three options were viable: two at Heathrow, and our own Gatwick scheme.
A final decision was delayed because further work was needed on air quality, carbon, surface access and local effects; looking for the best possible package of measures for local people. This was a real turning point for Gatwick, and placed us firmly back in the game. Since then the DfT has had regular meetings with the scheme promoters (Heathrow and Gatwick) to work on those issues.
The economic benefits of each option have also been reviewed, taking into account new analysis (and indeed new data on traffic) relevant to this decision; as well as new material from independent sources, such as the Competition and Markets Authority (CMA).
Recent data shows that air traffic is growing faster than the Airports Commission forecasts, and that capacity in the London system as a whole will max out in 2026 - four years ahead of the Commission’s predicted date - or even sooner. So a decision is even more urgently required.
This is a decision in which the whole country has an interest. There are considerable benefits to be had from the expansion of capacity; and there are also considerable financial costs, which will affect passengers and taxpayers. There are risks to delivery which must be assessed; and of course there are social and environmental costs.
It is the government’s job to balance these issues in the nation’s overall best interest, and to ensure, as far as possible, that the benefits of any decision are spread fairly across the country.
Gatwick’s scheme delivers a new full length runway, and a world class passenger terminal that will transform the airport into the foremost airport in Europe, with capacity for 90 million passengers a year.
The scheme provides all the connectivity and economic advantages the country needs at a price that will maintain the nation’s competitive offering, relative to our rivals in Europe. It’s at a price that will allow for the continued development of low cost international travel - a market which is driving growth in the aviation sector, and in which the UK is a clear international leader.
It offers the prospect of strengthening the important London – Brighton growth corridor opening up competition to allow a greater degree of route connectivity across the UK regions and nations, in which our larger cities can develop a flourishing network of direct international routes.
With the upgrading of rail links to the airport that are already underway, the airport is the most connected in Europe. Expanding Gatwick offers a significant shift in the modal share of passengers travelling by rail, a critical feature of an integrated transport policy, and a necessary development if we are to ease congestion on our roads.
The Airports Commission shows that expansion of either Gatwick or Heathrow offers almost identical benefits to the nation in terms of connections to both long and short haul destinations. Critically, recent data also suggests that the regional airports of the UK are making great progress in extending their own networks, particularly on long haul routes. In light of this, it is unsurprising that the Airports Commission’s analysis, properly interpreted, shows that expansion at either airport offers similar economic benefits to the country as a whole.
The introduction of competition has also allowed airports to flourish in Manchester, which is essential to the revitalisation of our Northern Powerhouse; and in Birmingham, the nation’s most important centre for exports; as well as in Scotland, which is developing a network of short and long haul connections that will be crucial to its future economic development.
In its recent assessment of the airport sector, the CMA concluded that the introduction of competition in 2010 had positive implications for growth, efficiency, service, choice, and passenger charges, as well as encouraging airports to improve their community and stakeholder engagement.
As well as fostering competition in the United Kingdom, we should ensure that we remain competitive in an increasing global economy. Therefore the cost of new capacity, and the type of capacity we build, are therefore important considerations.
We estimate that Gatwick’s scheme will cost £7.6bn. The airport has guaranteed that its passenger charges will not rise above £15, a level that will keep it in the lower half of comparable airports in Europe, which will encourage the growth and establishment of low cost operators at the airport. This is important, as data shows that it is low cost operators that are driving growth in the market, a trend that has been very evident in the past in Europe but is now increasingly evident on long haul routes as well.
Gatwick’s scheme is designed to allow airline operators the most efficient turn-around times possible, another factor which will make it appealing both to existing low cost operators and to new market entrants, from both developed and emerging economies.
These arguments are borne out by the very substantial commitments that Norwegian, one of the fastest growing low cost airlines in Europe, has made to place new long haul and short haul planes at the airport once capacity has been delivered.
Establishing new capacity at the appropriate cost is important for all of us here and for the nations and regions of the UK outside the South East. While many airports outside London have developed their own international networks, it is true that connections between those locations and London have been falling over recent years. Expansion at Gatwick will deliver more regional connections within the UK than other options.
It is always possible to think of new devices, subsidies and obligations that might temporarily address this issue but the most effective solution to the problem will always be to develop an infrastructure that allows for the right alignment of economics and our national objectives – and that is to ensure that we develop capacity a cost that allows airlines to operate routes between our major cities profitably over the long term.
Turning to the question of mitigation, the government committed to examining environmental and social costs and mitigation in more detail in December last year.
In the delivery of any major infrastructure project there will always be people who are disadvantaged, and in the case of airports the principle disadvantage is noise. In considering this issue, government policy is to ensure that, all other things being equal, the minimum number of people should be negatively affected; and those that are should be appropriately compensated.
Of course we know that we have an impact on local people and will do what we can to mitigate that, but on balance, Gatwick Airport, by reason of its location, affects far fewer people with its operations than Heathrow (Gatwick affects only 3% of the number of people affected by Heathrow), which puts us at an advantage in policy terms.
So this week, we have written to the Prime Minister pledging to cap the number of people most affected by noise. And we have reaffirmed our commitment to our noise insulation scheme and our offer to pay £1,000 a year to those who are most affected by noise following expansion; we think this is offer is unprecedented in the UK.
While there are inevitably local impacts, expansion will also bring significant local benefits, through employment growth; inward investment; transport connections; and opportunities for economic and social regeneration in areas of need across the region.
Turning to financial costs, where different options offer similar benefits, it is proper to look at the costs that will fall to the government. The Commission’s assessment is that Gatwick would not require any funding from government.
Gatwick’s scheme is straightforward to deliver. It requires the use of land previously set aside for airport expansion, relocation of relatively few businesses and the acquisition of relatively few houses.
Gatwick’s scheme is also straightforward from a construction perspective and offers no technical obstacles to delivery, in terms of the construction itself or in terms of planning. A second runway offers the opportunity to construct a new world class terminal within ten years of approval, with minimal infringement on existing road and railway connections to the airport.
Gatwick operates the most efficient single runway airport in the world and is already leading the way in the delivery of technical improvements at its existing terminals. Expansion at Gatwick offers the opportunity to develop this technology even further, putting Britain at the front of the automated passenger technology that will become the standard of the future.
As a result of its lower costs and simple construction, Gatwick’s scheme offers little financial risk. Its financing is manageable by the market, and adjustable over time, and so entails little risk of failure, with no consequent risk to the government of bankruptcy and unmet costs.
And expansion at Gatwick reinforces strategic resilience within the London airport system, important for all of us in terms of keeping the country moving.
Having assessed this decision in considerable detail across a range of issues, it is clear that Gatwick represents the best option for expansion of our airport capacity.
- It offers the UK the opportunity to develop all the connections that we need, and all the economic benefits that accrue from that, in a manner which also fosters the balanced development of the regions and nations of the UK.
- It’s privately funded and affordable: It can be delivered at a cost that will suit all airlines and their passengers, in an exciting and modern development that will reinforce competition, choice and resilience in the London system, and at no cost to the public purse.
- It offers all these benefits with the lowest environmental impact of any of the schemes identified by the Commission as viable - within air quality limits; with an industry-leading noise compensation scheme and a cap on the number of people affected by noise.
- It’s deliverable: It can be delivered soon, possibly in the parliament that follows this one, which will avoid us facing a capacity crunch that might otherwise arrive before the end of the next decade.