Intelligent Nation©: If No 3rd runway then what?

March 4th, 2020

A judicial review has found that the UK government did not follow its own policy in relation to environmental factors in making the decision to allow development of a 3rd runway at Heathrow. This decision has generated both much celebration by the opponents and much wringing of hands and prognostications of the end of the economy, aviation and civilisation by the proponents. I may be exaggerating a little but, what is good for the goose….

So, if there is not to be a 3rd runway at Heathrow then what are the possible alternatives? What are the consequences?

Clearly, the current configuration and operating model of the airport will impose an absolute limit to growth in numbers of flights (and therefore passenger numbers and freight tonnage) assuming that aircraft capacities are relatively stable. That then creates a limit to potential revenue and profitability unless the price of a landing slot is increased, but according to the New Economics Foundation, Heathrow is already the most expensive airport for airlines to use. So, in considering the case for Heathrow in isolation we might feel inclined towards sympathy for the owners as without expansion their business must confront a number of significant challenges!

However if we consider the argument from a national rather than a local perspective, the loss of opportunity for Heathrow can be seen as creation of an opportunity for a number of alternatives.

While without the 3rd runway some share of passengers will clearly be lost to airports in other countries many will not and those other countries are under similar pressures to Heathrow to address the carbon challenge. The 35%, 26million or thereabouts, of passengers annually who currently use Heathrow as the hub in their ‘hub and spoke’ journey could fly direct to their destination. Each passenger would probably save time and emissions, which are greatest on take off and landing and disproportionate as a share of the total on short haul flights, would be reduced. Other passengers might terminate their flight at Heathrow and complete their journey by train (although inevitably some would go by road).

New Economic Foundation suggests that expanding Heathrow would have a centralising effect on both money and emissions saying:

“Even without any more measures to further curb aviation emissions, we find that expansion at Heathrow would effectively transfer £3.3bn worth of emissions out of other regions and nations of the UK and into London between 2030 and 2050.”

They go on to remark that, drawing on DfT data, a 3rd runway would displace a lifetime value of £43bn in GDP and 27000 jobs from the regions to London and the South East, hardly a major contribution to a policy of levelling up!

The loss to Heathrow might be mitigated at national scale by utilisation of existing capacity at other airports thereby reducing the generation of ‘new’ emissions arising from the planned Heathrow build programme and increasing the exploitation of the sunk carbon cost of existing facilities. A transfer of some transit passengers from Heathrow to rail services would certainly assist the realisation of the business case for rail investments such as HS2 (and enhance the case for a new ‘spur’ railway into Heathrow – smaller and less disruptive overall than the 3rd runway plan).

With a reduced number of domestic short haul flights following the reduction in transiting passengers, Heathrow would retain capacity for handling freight and could expand that element of its business at least for long haul shipments. Other airports might take advantage of the shift to more direct flights to build their own volume of freight activity. Such a shift could enhance economic resilience for those smaller airports as well as spreading the benefits of investment across the UK.

There would be a challenge for airlines. Business models based on the hub and spoke approach have surely increased average passenger loadings, something which must be good for both per capita emissions and per capita costs (perhaps lowering fares). Similarly, reducing their number of out-stations, staffing hubs and engineering centres will have reduced the airline operating costs. However, while these are perhaps good for the airlines and reducing fares, they do not improve overall system efficiency if, as appears to be the case, they displace total system costs by increasing overall passenger journey times and carbon emissions for passengers and freight.

Einstein is reported to have said that we cannot solve a problem with the same thinking that created it. In making decisions about infrastructure we need to change our thinking. We need to systemically consider the customer, carbon and cash benefits and risks to the nation as a whole not limit our thinking to the local interest of any one provider or beneficiary whether private or state.

The need in an Intelligent Nation© (Beckford, 2020) is not to mourn what is lost from any decision but to recognise and pursue the opportunity generated by it.

Reference

Beckford, J., (2020) Intelligent Nation: How to Organise a Country, Routledge, London (Forthcoming)

New Economics Foundation, Baggage Claim, February 2020