The executive summary of the Davies Commission interim report sets out the background to the conclusions it has reached so far.
It points out that most major UK airports are – unusually in international terms – in private ownership. This means that airport planning must also take proper account of commercial considerations. Airports will not choose to finance and build additional capacity unless they are confident it will be heavily utilised.
While the UK has debated airport policy the world has changed. Globalisation and technological innovation are driving an increase in cross-border flows of goods, services and people. The global economy’s centre of gravity is shifting from west to east. Lifestyles have also changed, with many people taking advantage of European integration to live and work outside their country of origin.
Consolidation of hubs
Aviation has had to adapt to these changes and a number of trends have emerged, the report concludes. First there has been consolidation and network integration focused on major aviation hubs.
In the most liberalised markets such as the United States and, increasingly, Europe, significant market share has been captured by very large carriers, often formed through mergers. Three major global ‘alliances’ between airlines have emerged – Star Alliance, SkyTeam, and oneworld. These alliances have developed global route networks focused on major aviation hubs in the United States, Europe and, more recently, the Middle East and Asia.
The East rises
The report also notes the emergence of new competitors and new business models, especially in the low-cost and point-to-point markets. The position of the major American and European carriers is being challenged by rapidly growing Middle Eastern and Asian airlines and by competition from low-cost carriers. The low cost sector has grown rapidly since the early 1990s, and is continuing to expand into new markets such as business travel and long-haul services, the report points out.
These trends are not mutually exclusive. For example, some low-cost airlines are entering alliances and some network airlines have set up low-cost subsidiaries. New aircraft, such as the Airbus 350 and Boeing 787, could further blur the boundaries as they make new types of routes and services viable. The Middle Eastern carriers are establishing significant new hubs in the Gulf.
The green issue
As well as adapting to these new commercial realities, the industry also has to address its environmental impacts. International negotiations on a framework to control aviation greenhouse gas emissions are ongoing, but significant challenges remain and the ultimate form of such a scheme remains unclear.
In this context, the future of the industry remains difficult to predict. Some argue that airline alliances, and the hub-and-spoke networks that they operate, will remain central to the way the industry works. Others maintain that a wider range of airports will start to operate some form of hub, even where they lack a major network carrier, by enabling passengers to ‘self-connect’ or by hosting new partnerships between low-cost carriers and other airlines. A third view is that new aircraft with longer ranges will make more long-haul destinations viable as point-to-point routes resulting in a decline in the importance of hubs.
These changes have had important impacts on the UK aviation sector. The consolidation around major hubs has entrenched the dominance of the London aviation market and particularly the UK’s largest airport, Heathrow, which acts as a hub for British Airways, the country’s sole network carrier. Meanwhile, a variety of carriers operate successful and dynamic point-to-point networks at many of the UK’s other airports, including its second largest, Gatwick, which has also attracted new longhaul services.
Delay and unreliability
Passengers at Heathrow suffer from a high level of delay and unreliability, as a result of capacity constraints limiting the airport’s day-to-day efficiency and its ability to respond to one-off events. These issues do not only affect passengers; they also limit the airport’s ability to offer predictable patterns of respite from noise for local communities. As other airports reach capacity, similar impacts can be foreseen.
In terms of connectivity, Heathrow continues to have a dominant position amongst European hubs on routes to North America and other established aviation markets. However, it has not been able to build on this and establish a similar position of strength in routes to emerging economies. And the number of domestic routes to the airport is declining, restricting access from other UK regions to Heathrow’s network of international services.
The current approach of forcing ever greater volumes of traffic through the existing infrastructure, if continued, would therefore have increasingly detrimental effects on the national economy, businesses, and air passengers.
The Commission’s analysis suggests that the costs of failing to address these issues could amount, over a sixty-year time period, to:£18-20 billion of costs to users and providers of airport infrastructure and £30-45 billion of costs to the wider economy.
Intervening to redistribute this excess demand away from airports in London and the South East does not appear to be a credible option.
The Commission has looked at options for imposing a congestion charge on the UK’s busiest airports to incentivise airlines and their passengers to use other airports, including regional airports that are not yet fully utilised. Most of the new services developed at less-congested airports under this policy would simply duplicate services already available at Heathrow, such as flights between London and New York.
In addition, there is little scope for Government intervention to force airlines and passengers to use less busy airports, and past measures of this kind have rarely, if ever, achieved their objectives.
A new runway by 2030
The Commission has therefore concluded that there is a clear case for one net additional runway in London and the South East, to come into operation by 2030.
In terms of the nature of the capacity that is needed, the Commission does not believe there is a binary choice between providing additional hub capacity or additional point-to-point capacity. Instead, the optimal approach is to continue to invest in an airport system that caters for a range of airline business models. This is particularly important in a competitive airports system, like London, where airlines can choose how to use the available capacity, and the market can be expected to respond dynamically to the provision of new infrastructure.
The Commission’s forecasts also indicate that there is likely to be a demand case for a second additional runway in operation by 2050 or, in some scenarios, earlier. The Commission will carry out further analysis on this issue in the second phase of its work programme, including looking at the implications for any future capacity expansion of each of the new runway options shortlisted for detailed consideration.
Two sites to be asessed
The options for new runway infrastructure were assessed and two potential sites were selected for further analysis and assessment:
a. Gatwick Airport: At this site the Commission’s analysis will be based on a new runway over 3,000m in length spaced sufficiently south of existing runway to permit fully independent operation.
b. Heathrow Airport: At this site the Commission’s analysis will consider two potential runway options: A new 3,500m runway constructed to the northwest of the existing airport, as proposed by Heathrow Airport Ltd, and spaced sufficiently to permit fully independent operation.
An extension of the existing northern runway to the west, as proposed by Heathrow Hub Ltd, lengthening it to at least 6,000m and enabling it to be operated as two separate runways: one for departures and one for arrivals.
The Thames Estuary airport options were not at this stage shortlisted. While the potential they offered to reduce aviation noise impacts in the South East of England and to support economic development on the eastern side of London was attractive, they presented many challenges and uncertainties.
They would be extremely expensive, with the cost of an Isle of Grain airport (the most viable of those presented) around five times that of the three short-listed options at up to £112 billion. They would present major environmental issues, especially around impacts on protected sites.
The Commission intends to carry out additional analysis in respect of the Isle of Grain option in the first half of 2014. On this basis, it will reach a view before the end of the year as to whether such an option would offer a credible proposal for consideration alongside the short-listed options. If so, it will be subject to a similar appraisal and consultation process as for those options, although not necessarily to the same timetable.
Stansted airport options have not been short-listed. Its volumes have fallen in recent years, and there is considerable spare capacity, unlike at Gatwick. In addition, a large hub airport would be close to the cost of the Estuary, highly disruptive to airspace and would not present the same regeneration opportunities. Stansted may however be a plausible option for any second additional runway in the 2040s.
The Commission has concluded that before new capacity becomes operational, better use can be made of existing airport infrastructure. It is therefore recommending a range of measures including the following:
An ‘Optimisation Strategy’ to improve the operational efficiency of UK airports and airspace, including…
Airport collaborative decision making. A system which provides access to accurate and timely flight information for all those involved in processing aircraft to increase the predictability and speed of the aircraft turnaround process;
Airspace changes supporting performance based navigation. Matching airspace structures with modern aircraft’s ability to follow more accurate tracks allowing the possibility of designing closer spaced departure routes or alternating multiple arrival and departure routes for respite;
Enhanced en-route traffic management. Driving greater schedule adherence time based separation. Enabling air traffic control to apply the same time spacing between aircraft irrespective of wind conditions, increasing the operational resilience of the airport in high wind conditions.
Other recommended measures include:
1. A package of surface transport improvements to make airports with spare capacity more attractive to airlines and passengers, including:the enhancement of Gatwick Airport Station;
2. Further work to develop a strategy for enhancing Gatwick’s road and rail access;
3. Work on developing proposals to improve the rail link between London and Stansted;
4. Work to provide rail access into Heathrow from the South; and,
5. The provision of smart ticketing facilities at airport stations.