ON THE SOAPBOX – Sir Howard Davies – Chairman of the Airports Commission

The Airport Commission, chaired by economist Sir Howard Davies, has been much in the news over the last few months and will eventually submit its report to Downing Street at some point after the 2015 General Election.

Sir Howard has been most open in speaking to both the media and other interested parties.  Since BTN is an electronic publication it seemed to us an interview by email would be both original and enterprising.  We have limited the number of questions.

Sir Howard:

 1) Whilst IATA can provide a broad industry view, it's not in a position to speak on any individual airline's behalf. Will the Commission therefore send a questionnaire to all scheduled airlines at Heathrow (LHR) and Gatwick (LGW) and ask them:

(a) As an investor in LHR and/or LGW, and to meet their customer/operating needs, which airport do they favour for expansion?

(b) If LHR was the favoured option, would LHR airlines foresee themselves

   i) expanding their own services, potentially with flights to new destinations, or
   ii) if a LGW airline, foresee relocating from LGW to LHR, or
   iii) retaining the status quo?

(c) If LGW was the favoured option, would LGW airlines foresee themselves

   i)  expanding their own services, potentially with flights to new destinations, or
   ii)  if an LHR airline, foresee relocating from LHR to LGW, or
   iii) retaining the status quo?

2) As bilateral agreements underpin air links between nations, and airlines wait years to get slots at LHR (eg Avianca), will the Commission request feedback/concerns from the UK Diplomatic Community (ie foreign embassies and High Commissions) about their perceived lack of trading capacity, including freight. And along the same lines, can the Commission ask IATA to request member airlines who currently do not/cannot get into Heathrow, but could under a bilateral, to do so. Non IATA members should also be brought into the fold.

It is important for the Commission to have a strong understanding of how airlines operate. We need to look at history to understand how the sector has developed, as well as considering what its priorities are today and – hardest of all – how it may respond to a changing environment in future. That is why we engaged with a wide range of airlines, including low-cost and legacy carriers, and airline alliances, in the course of the work leading up to our interim report. We intend to continue that engagement over the coming year to inform our final report, both through umbrella groups such as IATA and through discussions with individual airlines.

Might the Commission review its prognosis that only one new runway is required in SE England by 2030, and another not before 2050, a finding that does not enjoy common acclaim amongst those in the industry. Even if that prognosis may not change before a recommendation is made to government, will the Commission recommend regular and formal reviews of the situation? You state a new runway is needed by 2030 but at the same time acknowledge that both Gatwick and Heathrow are full. What is the rationale?

The London and SE airports system has responded dynamically to increasing demand for aviation and will continue to do so. Although Heathrow’s runways are full, it continues to accommodate growing numbers of passengers. Other airports are attracting new carriers and services, including new long haul routes at Gatwick. Competition within the sector is likely to continue to drive innovation and growth. Therefore, we do not believe that capacity to expand within the system is exhausted. However, our forecasts indicate that the limits of what can be achieved may be reached over the coming decade and a half, at which point some runway capacity will be required.

This assessment is broadly in line with the submissions made to us by the owners of the UK’s major airports – and reflects the fact that in a largely privatised and competitive airports sector, investors will not pay for expensive new capacity unless they are confident it will be well-used.

The Commission’s assessment of need was arrived at after a thorough process which took into account a range of forecasts and potential scenarios for the future development of the aviation industries. This included considering various models for airline growth, a range of scenarios for global economic and technological developments and some plausible options around global action to control carbon emissions from aviation.

Of course, no forecasts are perfect, which is why we have indicated that we do not think it would be appropriate at this stage to reach a view on the potential location, or exact timing, of any second additional runway. There is too much uncertainty regarding the long-term development of the industry and the global economy. Instead, we have said that we will suggest to Government in our final report when and how this question should be reviewed.

If the Commission were to recommend LHR for the first additional runway, a situation that would not enjoy all political consent, would a completely new hub airport elsewhere still be a consideration?

Our Interim Report ruled out most of the options for building a completely new airport, but identified the need for further work to understand whether a new airport in the inner Thames Estuary might be viable. Our intention, in the second half of this year, is to reach a conclusion that will allow us either to identify a credible proposal for a new airport in the inner Thames Estuary, or to demonstrate clearly why the concept is not feasible. But ultimately it will be for the Government to decide what decisions it wishes to take once the Commission has provided its final report next year.

When do you think the earliest date a new runway can be operational?

Our initial estimates – based on the submissions we received last year – is that a second runway at Gatwick would be possible by 2025. Heathrow Airport Ltd’s proposed north west runway would be possible by 2026. For Heathrow Hub’s runway extension, we think the safety case might take longer to develop as this is a previously untried operational concept, so we assumed a date of opening of 2028. However, we will be doing more work to examine all three options ahead of our final report and it is possible that all three of those dates could change.

There are no airline/airport experts acting as advisors to the Commission although the railway industry is represented. Why is this?

We have benefited from a wide range of discussions with both airports and airlines (as with other stakeholders) over the course of our work, and this has given us a wide perspective on the operations of the aviation industry, and the issues and challenges facing it. The industry accommodates a wide range of perspectives and views, and it was crucially important to us to have a sense of the breadth of opinion on these key issues. We intend to continue with this engagement and dialogue in the next phase of our work.

Other than the two selected, 55 other ideas/schemes were turned down including Stansted. How is it that only the Mayor’s project has been highlighted for further review?

Our reasons for rejecting schemes varied considerably. In some cases, we rejected proposals because they were very similar to other proposals which either contained more detail or were simply a better way of providing new capacity at a particular site. This was the case with some of the proposals we considered around Heathrow, for example. In other cases, proposals would not have provided any new capacity at all, once their implications on the wider airport system were taken into account.

A number of locations for new hub airports with four or more runways were proposed to us, including sites in Oxfordshire, at Stansted and in the inner and outer Thames Estuary. In all cases bar the inner Estuary, we found that there were significant challenges, which did not appear to be outweighed by the potential benefits offered. The position in relation to an inner Estuary airport however was more nuanced. The challenges remain, but the potential benefits, especially in relation to noise and regeneration, appear stronger than for other new hub sites. We have therefore stated that we will carry out additional analysis of these options, looking not just at the proposal from the Mayor but also those from private sector promoters, to properly understand some of the implications of a new hub airport at those sites.

AND FINALLY: Would you have taken the task on if you had really appreciated its complexity?

No comment (though I think it is easier than assembling a competitive England team for the World Cup).

 

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