In the run up to the publication of its interim recommendations at the end of the year, the Airports Commission has put together a series of discussion papers around the issues central to the decision-making process. Meanwhile, the House of Commons transport select committee contributed its own thoughts on the matter in a weighty 124-page tome. Here we pull together some of the more telling data, analysis and insights from this body of work.
Airports in the UK currently serve 221 million passengers a year. Forecasting future growth is always an inexact science but based on the Department for Transport numbers there will need to be capacity to accommodate 320 million passengers per annum in 2030 and 480 million by 2050. These numbers are the “central” forecasts based on unconstrained capacity. In other words, they are constructed on the assumption that additional runways will be built to accommodate additional flights. And as the term “central” implies these figures represent a middle ground in forecasting. On the extremes, 2050 demand might be as low as 350 million passengers or as high as 660 million.
If, on the other hand, there is no extra capacity in the airport system then the constrained capacity across airports around the capital will be 315 million by 2030 and 445 million by 2050. That leaves a shortfall of 35 million passengers by 2050 if the numbers play out as predicted.
The trouble with forecasts
Forecasts should be treated with caution. For example, there could well be unforeseen trends that will dramatically alter how patterns of domestic and international demand change over time. These might be changes in the economic fortunes of countries around the world or they could be policy-driven changes such as an increase in levies aimed at reducing carbon emissions.
Equally, improvements in alternative modes of transport – such as faster, cheaper continental train journeys – may impact demand in air travel, although these are likely to have relatively minor impact and/or be localised.
Finally, it is worth noting that forecasts prepared a decade ago as part of the 2003 Future of Air Transport white paper proved to overestimate demand. The post-2008 global downturn, unforeseen in 2003, played a key role in ensuring those forecasts were not met.
What drives demand?
DfT has identified a series of “drivers” that influence aviation demand. Broadly, these split into two categories: general economic performance and the price of travel. In the former category (and in order of importance) there are the following factors:
• UK consumer expenditure
• UK GDP
• Foreign trade
In the latter category, and again in order of importance, there are:
• Oil prices
• Airline costs
• Carbon prices
• Load factors
• Exchange rates
Potential impact of lost capacity
The Department for Transport has also attempted to model the impact of constrained capacity (that is, no new runways) on the number of routes airports will be able to serve in 2050. Accordingly, Heathrow will lose 72 potential routes; Gatwick 23 and Stansted 11 routes. However, when you take in to account the London airport market as a whole and the fact that different airports will be able to serve different destinations, the net loss of routes falls to 26.
Meanwhile, regional airports will gain routes in significant numbers. Birmingham will add an additional 15 routes, Manchester another 22 and East Midlands Airport
another 40 routes. This reflects today’s
underutilised capacity at these airports.
Impact on national and local economy
The air transport sector has a turnover of £28bn a year while generating a further £9.8bn in terms of economic output, based on 2011 figures. The sector directly employs 120,000 people with a secondary market benefiting from airports employing many thousands more.
Meanwhile, the UK’s aerospace industry – the second biggest in the world – employs 100,000 and generates £23bn in turnover. Secondary markets through which airports play a positive economic role:
• Trade in services
• Trade in goods
• Business investment and innovation
To take tourism as just one example, the UK was visited by 31 million people in 2011 and most arrived by air. Between them they spent £18bn. Key to the discussion about aviation capacity is whether (and if so, to what extent) limited connectivity will impact these economic benefits.
Aircraft noise levels are expressed as dB LAeq. In simple terms that’s the average sound level in decibels across an airport’s operating day, 16 hours between 7am and 11pm. As far as the UK government is concerned the cut off is 56 dB eq above which noise levels become unacceptable.
For its part Heathrow says that as a result of improvements in technology resulting in quieter aircraft the number of people falling into the 57 dB Laeq catchment has dropped from two million in 1980 to just over 250,00 today.
Nevertheless, a study undertaken by the Airports Commission illustrates the wide variation in noise impact from airport to airport. By the first of its two measures, the commission showed that Heathrow serves 281 passengers for every person affected by noise at 57 dB LAeq (or above) compared to 12,467 passengers per person affected around Stansted and 9,233 around Gatwick. By its second measure, Stansted carries out 108.8 air transport movements per person affected compared to 1.8 at Heathrow.
Based on a traditional measure of population affected Heathrow (by far the busiest airport) affects 258,500 people, Gatwick 3,700 and Stansted 1,900.
In 2010, London’s five key airports (Heathrow, Gatwick, Stansted, Luton, and London City) accounted for a total of 24.7 million tonnes (MT) of CO2. Of that number, Heathrow contributed 18.8 MT and Gatwick 3.9 MT. While the London number is predicted to rise to 31.4 MT in 2030 it will fall away again to 25.7 MT by 2050. Similarly, while London airports accounted for 75 per cent of UK departure CO2 in 2010, it will fall to 55 per cent by 2050.
There are two factors at play here. One is the assumption that London will be hit by a capacity shortfall. Should the go-ahead for additional runways across London be given (and delivered on) before 2050 expect these numbers to rise. Second, airlines operating out of London airports will increasingly use a new generation of fuel efficient aircraft.
In its 2009 forecasts the committee on climate change (CCC) estimated that of the total greenhouse gas emissions allowed for the UK to meet its 80 per cent reduction targets by 2050, aviation would account for 35 per cent. Given total air passenger forecasts have fallen since 2009, it is reasonable to assume that percentage has fallen also.
At first glance the numbers look impressive. Ninety per cent of the UK’s population live within two hours of an airport that has international connections and, combined, London’s five key airports serves 131 million passengers a year, more than any other city in the world. Moreover, the UK serves 186 destinations every day (albeit down from pre-recession peak of 220 in 2007).
However, while there are areas of the world where connectivity from the UK is strong (there are 35,000 flights from the UK to the United States every year, compared to 13,000 from Paris), there are other regions where provision is light.
Paris serves 52 African destinations compared to London’s 32; Frankfurt serves 42 Asian destinations to London’s 33; while Madrid-Barajas airport serves 25 destinations across Latin America and the Caribbean compared to 17 out of Heathrow. In part these figures reflect historical and cultural ties, and the location of the airports. If London looks west than Germany looks east; while France and Spain’s strengths are a nod to their imperial pasts.
International transfer passengers account for 9 per cent of total terminal passengers, while a similar number of passengers at UK airports make their transfer abroad. To underscore this point, Manchester and Birmingham airports, combined, have more than 5,000 flights in and out of Amsterdam Schiphol airport, 4,000 to Charles de Gaulle in Paris, 3,500 to Frankfurt and 1,500 to Dubai.
The commission has plotted the current number of flights to the ten destinations forecasts to enjoy the greatest real terms increases in GDP over the next five years. While Gatwick and Heathrow combined serve 35,800 and 30,000 flights to the United States and Germany respectively, they only serve 1,800 to China, 900 to South Korea and none to Indonesia. In response, Heathrow can point to the fact that it increased the number of services to Bric nations faster than any other European airport between 1990 and 2010, while Gatwick points out that out of the eight world “growth markets” as identified by Goldman Sachs, it will be serving half by the end of 2013.
The Aviation Commission discussion papers are available to read in full at tinyurl.com/discussionpapers