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5 February 2015

“Our argument is about competition”

Lower fares, certainty of delivery and reduced environmental impact – Stewart Wingate makes the case for a second runway at Gatwick.

By Stewart Wingate

Q. The Howard Davies-led Airports Commission will make its recommendation in the summer, postelection. Do you expect the incoming government to act on it immediately?

A. We’ve been listening carefully to what the main political parties have been saying and none of them has rushed to a position that says, “Whatever Davies says, we’ll endorse.” From our point of view, we’d like them to make that decision as urgently as possible so we can get on with the task.

Q. But this time next year, could we still be waiting for a decision from the government?

A. I would hope not but it’s not entirely out of the question.

Q. Why should Howard Davies and his team recommend a second runway at Gatwick?

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A. We’ve centred our arguments around competition. The reason Gatwick was sold in 2009 was to break up the monopoly ownership of BAA [the British Airports Authority]. What we’re proposing is a better solution for the travelling public – whether for business or leisure. And expanding Gatwick is quicker to do. It can be done five years faster than Heathrow, if Heathrow can be done at all. The runway will be built on safeguarded land that was set aside for this purpose ten years ago. We’re building in a relatively straightforward manner on a largely greenfield site. We do not require any public subsidy, whereas Heathrow is looking for a £5.7bn subsidy. And we not only cater for the legacy airlines (the likes of British Airways, Emirates, Turkish Airlines and Virgin), we are the biggest centre in Europe for low-cost airlines (the likes of easyJet and Norwegian). That means if we expand at Gatwick, not only will legacy airlines continue to grow and flourish, particularly on long-haul routes, but we can also see very competitive air fares come into the European market. And, we should note, those low-cost airlines are starting to fly further afield. All of this, of course, can be delivered with a significantly lighter environmental impact than would be the case if Heathrow were expanded. Because we are to the south of London rather than to the west, we haven’t got the planes flying right over the top of one of the most densely populated areas in the world.

Q. Where’s the evidence that greater competition means lower prices?

A. Let’s take Moscow as an example. Russia is one of the Bric economies that we need to get to and from. EasyJet flies to Moscow from Gatwick and you can pick up a return fare for £150. Before, your only choice was to fly from Heathrow and typically the return economy fare would have been about £500.

Q. Would you accept that any runway expansion will have a detrimental impact on the environment?

A. There’s no question that there will be environmental impacts, because building any runway is going to result in over 200,000 additional air transport movements a year in the fullness of time. Heathrow seems to paint a picture that “more planes equal less noise”. It’s simply not true. It defies common sense. The population size of the people impacted by noise at Gatwick will increase to about 37,000 from around 10,000 today. But the population size that will be impacted at Heathrow will be 837,000 people. And, of those, 380,000 people will be newly affected by noise. There’s no question that people’s lives will be impacted, but it’s a question of the scale. At Gatwick we can mitigate and compensate those affected by the noise of the runways. For example, we have Europe’s leading noise insulation scheme. But we’ve also announced that we will directly compensate those who live within the 57-decibel noise contour by contributing £1,000 per annum towards their council tax bills if the second runway comes to Gatwick.

Q. You’ve argued that the idea of a British hub belongs to the past. Why?

A. The importance of Heathrow as a hub has been grossly exaggerated. You have to identify what the future trends of aviation are going to be. And there are three. First, the European market will increasingly be served by the low-cost carriers for both business and leisure travel. Today, one in five of our easyJet and Norwegian passengers travels on business. And you are seeing this trend continue, with the likes of Air France-KLM creating their own low-cost carrier, Transavia; Lufthansa with Germanwings; and Vueling within the IAG group. Second, in the long-haul market we are seeing the emergence of the next generation of aircraft: the likes of the Boeing 787 Dreamliner and Airbus A350. These are typically targeted at pointto- point. But that works only if the airlines place their bets on these types of aircraft. And if we look at the forward order books, we see that globally there are about 1,800 787s on order, whereas there are only 200 A380s – the big hubbing aircraft – on order. Finally, what’s happening in the Middle East should not be underestimated. In the next five years they will triple their airport capacity and double their aircraft fleet sizes. The advantages the Middle East hubs have are that they operate 24/7, in a way Heathrow could never do; they have airport charges as low as $5; and geographically they are in the right place to collect European travellers and take them on to the south-east Asian markets.

Q. Nevertheless, Gatwick doesn’t offer flights to China, Brazil and India, three key business destinations.

A. With the opportunities offered when the Dreamliners come into service, there is no question that Gatwick will connect to the likes of China, Brazil and India. It’s something we absolutely expect to see. But it’s not about what Gatwick does today versus what Heathrow does today, because Heathrow already has two runways so, quite naturally, you would expect it to serve those markets.

Q. What about the argument that Gatwick doesn’t carry freight and Heathrow does?

A. That’s an example of the monopoly that Heathrow currently has on long-haul. It’s just another way of expressing it. Across London and the south-east, 80 per cent of long-haul is out of Heathrow. By disrupting the market and bringing in more long-haul to Gatwick, not only would you get price discipline for passengers but you’d bring competition to the cargo market, too.

Q. Economically, what can Gatwick, an airport in the south-east of England, promise to the rest of the UK?

A. We can promise the certainty of the runway being built. There’s absolutely no certainty of a third runway being delivered at Heathrow. We’ve identified £50bn of direct economic benefit associated with Gatwick and a further £40bn of catalytic benefits, creating some 120,000 jobs. Q. The Liberal Democrats are likely to go into the forthcoming election promising no net new runways and could well be part of a coalition government again. Where does that leave deliverability? A. From the various conversations I’ve had with Lib Dem MPs, there seems to be blanket opposition to a third runway at Heathrow.

Q. But also opposition to a second runway at Gatwick.

A. The sense I have is that the leadership of the Lib Dems is starting to move [its position] and understand that if we are to get the economic benefits, then we do need to consider building an extra runway. If you look at the vote [at last October’s party conference], around 40 per cent voted for Gatwick’s case and 60 per cent against. It means we’ve got some way to go, but certainly what the leadership has done is put out clear indicators that its preference is for a Gatwick solution.

Q. What is your message to that 60 per cent of Lib Dems, to persuade them that they should be voting with the 40 per cent?

A. If we are to realise the new capacity, there will be environmental impacts, but the environmental impacts at Gatwick are at such a small level compared to Heathrow that it means we can put in place more comprehensive forms of mitigation and compensation.

Stewart Wingate is CEO of Gatwick Airport

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