Airport over investment

[MAN777]

interesting item from bbc this morning

BBC NEWS | World | Asia-Pacific | South Korea's abandoned airports (http://news.bbc.co.uk/1/hi/world/asia-pacific/8055957.stm)

Are we in the UK starting to see a similar effect ?

Local politics and pride driving decisions rather than sound economics ?

[roverman]

There are some parallels with the UK, however the 'political' vs. 'market' logic failings are somewhat different to Korea. No doubt in Korea the airports have been publicly funded as populist political projects. In the UK almost all airport development is privately funded, or by commercially-minded public enterprises like Manchester Airports Group using self-generated cash rather than taxpayers money. The over-supply of airports in the UK has come about because of (a) over-optimistic traffic forecasting; (b) de-regulation of routes and fares; and (c) a complete lack of strategic control as to how the air travel needs of various geographic and economic markets are met. These are all evidenced in the 2003 White Paper on Airports policy. De-regulation of air transport has led to a free-for-all rush by the upper end of the market to Heathrow, while the lower end of the market duplicates supply and enters unsustainable commercial arrangements at small regionals. This leaves important airports like Manchester and Gatwick without the traffic that they invested for, and promotes a bloodbath at the small regionals where no-one is making any money and therefore has nothing to invest. These effects are not universal, but there is plenty of evidence of them when we see what's happened in the North and North-east in particular. The short-term benefits for consumer choice delivered by this lack of regulation will ultimately leave the UK without a balanced supply of quality air transport.

[JennyB]

Won't be Coventry, that's for sure

[Gorbachev's mate]

The clearest example of this in the UK is Stansted. Built for political reasons by a Government-owned monopoly, it was built in a random location chosen only because it was the site of a wartime airlield. It's recent commercial "success" was due to cross-subsidy alone, and airlines have either moved to better-located airports, or are stuck at Stansted due to insufficient capacity elsewhere.
It's a good job the UK Government didn't build offshore in the 70s!!