HEATHROW

[Fairdealfrank]

What eggc said. If LHR gets R3 I expect Easy would maintain LGW as their biggest base, but would establish a smaller base at LHR cherry-picking some of the more profitable routes from there.

It’s actually quite a big base, take a look at page 15 of the U2 submission to the Commission.

http://corporate.easyjet.com/~/media...on-jan2015.pdf

And I've always thought R3 at LHR is a double edged sword for BA. Yes they would get a share of the resulting extra slots for expansion. But the value of their existing slots would be diminished, while their existing competition like Emirates and others would also get more slots, as would a number of possible new and lower cost entrants. Would IAG still control over 50% of slots at a three runway LHR ? The last thing they probably want is a flock of orange tails diluting their yields at LHR, not to mention maybe red noses and others

To an extant maybe, but BA only got over 50% of all slots when BD was shut down. For decades BA had around 40%, considerably less than competitor carriers (AF, KL, LH, etc.) at their hubs.

BA needs a third rwy. Apart from an ability to expand when and if it needs to, congestion, delays, queues to takeoff, queues to land, queues to get onto the stand (because the previous aircraft hasn’t yet left because of the take off queue) at LHR isn’t doing BA any favours.

Having its aircraft stuck on the ground longer than its competitor airlines (or stacking in the air and going nowhere) must be a serious impediment. Sure, BA doesn’t necessarily want a flock of orange, but will adapt to it. The status quo is untenable.

Certainly with their various other airline acquisitions IAG seem to be setting themselves up in case of a no decision on R3 at LHR. Looking at the history of the last 50 years its still entirely possible the next lot of pollies will decide to ignore Davies and do neither LHR or LGW ! That would be a shame.

A tragedy in the case of LHR, but, agreed, it probably is the most likely outcome.

Personally I think this would be a risky strategy for BA, as we might expect the competition authorities to step in if BA sought to exploit its dominant position. Actually I think BA is already skating on thin ice, as some of its recent actions might already be attributed to having an over-strong market position.

For example?

I have no issue with more runways as long as its paid for by private industry !
If Heathrow is such a cash cow, which it clearly is, why on earth is there a need to ask UK taxpayers to stump what amounts to a third of the cost ?

Who says that taxpayers are stumping up a third?

If this is the case, could one possible explanation be because it's in the national interest?

[Shed-on-a-Pole]

SHHHHH ... Don't Mention The Price!!!

It is perhaps inevitable that contributors on a forum provided for aviation professionals will debate the LHR/LGW runway options from a purely operational perspective. However, there is another major angle to consider.

The last full-length runway constructed in the UK was 05R/23L at MAN/EGCC. This is 3050M in length, offering comprehensive long-haul capability. Opened in 2001, it was delivered for a price-tag of £172M. Run that through an inflation calculator and we get a price of £253M in "today's money".

So, if a long-haul capable runway can be built for £253M in Manchester, how much should we expect to pay for an equivalent project in London? Well, obviously, land acquisition costs are higher and there will be more CPO's required than was the case at MAN (although theirs were smart 'Cheshire belt' properties). So what do we think for London? 4x the MAN figure? 5x the MAN figure? Even as much as 10x the MAN figure? Well, let's do some maths!

The LHR NW option is projected to cost ... wait for it ... £18,600M. However, one analyst anticipates an overrun of a further £4,000M. So, the lower figure is 73.5x the cost of EGCC 05R/23L adjusted to today's prices. Add in the anticipated overrun and we get 89.3x the cost! The numbers for the LHR Northern extension option ('double length' runway) are £13,500M [53.4x EGCC price-tag before overrun, 69.2x EGCC allowing for overrun].

Now I know that London can be pricey, but seriously ... upto EIGHTY-NINE TIMES the price of delivering a directly comparable facility at Manchester? Surely that is outrageous? Even ten times the price would be outrageous! Arguably Britain's greatest engineering achievement to date - the Channel Tunnel - was delivered for £4,650M in 1994. That is £8,270M adjusted to today's money via the inflation calculator. How can a single additional runway at LHR possibly amount to more than twice the cost of constructing the Channel Tunnel at today's prices? This is simply mindblowing!

Moving on to LGW. Their option is costed at £7,800M with an anticipated budget overrun of a further £2,000M. These numbers are 30.83x and 38.73x the equivalent MAN runway price-tag adjusted to today's prices. Even for Gatwick, these statistics are staggering. North-South price differentials aren't THAT big!

These monstrous price tags demand further investigation. I'm sure most of us on PPRuNe agree that London's airports infrastructure would benefit from additional slot capacity, but there comes a price-point at which we must ask whether this scale of cost is truly justified measured against the net incremental benefit provided by the additional runway.

Of particular concern to those of us outside the SE is the amount of public (taxpayer) money required for the respective projects. The numbers cited are £6,000M for LHR and just short of £1,000M for LGW. Even at LGW - by far the cheapest option - the public element of funding is just shy of 4x the entire cost of delivering EGCC 05R/23L (which was privately funded, BTW).

Now the wider issue here is that state funds earmarked for infrastructure investment can only be allocated once. And London has enjoyed a veritable feast of enormous infrastructure innovations one after another spanning the last 30 years. Crossrail 2 is next up for funding ... projected cost £27,500M. This follows on from the Channel Tunnel, HS1, Crossrail, Thameslink re-invention, underground extensions, DLR, terminus station rebuilds, London City Airport, 'reborn' Stansted with Norman Foster terminal, Gatwick North Terminal, LHR T2 & T5, Olympic village, the M25 and assorted other new roads / motorway upgrades etc etc. So as you can imagine, those 70% of us Brits who don't reside in the SE wish you well with all your recently-added super-infrastructure. But we kind of feel that it is time for a bit of state largesse to head in our direction for a change. It is not an unreasonable idea. The non-SE 70% are taxed at exactly the same rates as Londoners.

So ... LHR/LGW new runways. If you can fund them entirely privately, good luck to you. Go right ahead. But if you need another £6,000M from the public kitty I have to oppose this. Bear in mind that the largest state-funded standalone project so far approved in Northern England is the 'Northern Hub' rail upgrade programme. This project is costed at around £750M, and is in reality a series of loosely-related upgrades across the northern network to prevent the system from grinding to a halt. Cynics say it is really the minimum requirement to prevent complete collapse of the service, packaged as a single grand innovation! And the 'Northern Hub' proposals were subjected to all manner of scrutiny and cutbacks to secure even that level of funding. It all came across as rather grudging considering that Crossrail alone has cost around 20x this amount. Even the London - East Anglia railway is getting a £4 Billion upgrade.

The North has not yet had a single standalone publicly-funded infrastructure project approved at a price tag exceeding ONE billion (£1,000M), and to the best of my knowledge neither has any other region of the UK outside the SE. Thus, any suggestion that LHR should get £6,000M of public funding ... or even a 'rounding error' of a cool ONE BILLION for LGW ... is somewhat offensive to us regionals. And don't forget that the remainder of the price-tag will likely also be underwritten by taxpayers nationally.

Six Billion from public funds. That is money which can't then be spent in the regions. Where we still patiently await our very first one-billion-pound publicly-funded infrastructure investment. THIS is our objection. The super-funding which London has enjoyed is sucking the lifeblood out of provincial Britain. How do we persuade CEO's to locate their new facilities next to our decrepit 'Pacer Halt' when London is offering state-of-the-art parkway stations aligned along Crossrail, Thameslink, and HS1? And unrivalled global air links. There is a compelling need for a more equitable distribution of public funding across the UK ... the current differential is obscene and accelerating. Public funding for LHR/LGW on the scale proposed would significantly worsen this.

Of course, we've all heard the propoganda about how this is a project for the whole nation. As Sir Richard Leese ['Core Cities Group'] aptly quipped: "In my experience, trickledown really does mean a trickle!" So Liverpool and Teesside could get 3x daily Shuttles to LHR. Well ... whoopeedoo! Just think what those two regions could get for £3 Billion each in direct public infrastructure spending. Liverpool needs a total replacement for Lime Street Station (half the required size) which would enable a spur to HS2, doubling of frequencies to Euston and direct trains to Scotland. Sheffield requires a transpennine motorway. Taxpayer rail spending on NE folks has been five pounds per head annually in recent years (diabolical). Other regions have projects of merit to put forward also. And we mustn't forget that the allure of an expanded LHR could be expected to suck further air services, businesses and wealth directly out of the regions (in the footsteps of Astra Zeneca).

Personally, I am supporting the LGW option for London. It is clearly not the best choice operationally, but the price-tag differential is too enormous to disregard. Especially the public contribution required (five billion less than LHR). Although I would urge our politicians to ensure that any London runway option is entirely privately funded at the point of delivery.

London needs a new runway. But it is needed BY the South-East FOR the South-East. Claims that it will benefit the entire nation simply don't stand up to scrutiny. The benefits of the new runway will accrue overwhelmingly to the SE alone. LHR/LGW/Crossrail2 must not be allowed to dominate the public infrastructure budget until the regions have enjoyed a substantial period of playing 'catch-up'.

[Skipness One Echo]

Not being funny, but if there was a practical way of regional catch up, they'd have done it by now. Honestly, spreading that wealth in a practical way would be a vote winner, but it doesn't appear to be that simple.

Also another runway at LGW does nothing to address hub capacity, so you also managed to agree that we continue to allow that to wither sadly. Can you link to those numbers you're quoting costs on, keen to have a read?

Ta

[Shed-on-a-Pole]

The LHR/LGW numbers cited were lifted from a briefing document distributed at the 'Runways UK - Regions' event. I only have a hard copy plus info drawn from slides at the event. Sorry. The MAN figures are in the public domain and easily verified via the usual channels.

By the way, I don't expect the regions to [fully] catch up with the SE. That is as impractical as you suggest. But there is tremendous scope to close the gap.

As for the hubbing-capability issue, there comes a point at which the price-tag required to achieve that capacity enhancement surpasses the return on investment for so doing. What is that price-tag? Discuss! :-)

EDIT: Whilst I can't post a link to printed matter, I do refer you to the 'Runways UK - Regions' website. The full speaker presentations are posted online in ewe-choob* format for public viewing. Parts of the Q&A sessions have been uploaded also, though the question contrasting London costings with Manchester 05R/23L was amongst those edited out. The LHR/LGW costings I quote are discussed in-depth in the main presentations. [* this slight adjustment to the spelling should prevent site software converting the name to read PPRuNe!]

[eggc]

Wow...just wow ! Unreal and shocking figures. After seeing them personally I'd be appalled if that amount of public money went on LHR, or LGW come to that. Best post on Pprune in years.

[WHBM]

It is perhaps inevitable that contributors on a forum provided for aviation professionals

I can tell you, as one of the "professionals" more than a little involved with actually constructing a runway, that the figures being bandied around are equally incomprehensible to those of us who price up concrete, reinforcing bar and drainage pipes for a living. It certainly doesn't end up trickling down to the lads on the ground driving the excavators.

Although there's a lot more to it than the actual runway. Heathrow actually has a shortage of not only runway, but also aircraft stands, terminal space, access roads and railways, etc. However the way in which the figures get to these huge amounts, and whatever was quoted last time rises by way more than Spon's (the industry-standard pricebook of construction costs) inflation index tells you that, still, nobody has a real clue.

I understand that the figures include land purchase costs which get hiked by London-area house prices. But in actual fact, in Harmondsworth etc, Heathrow have (of course) been steadily buying up each house as it comes on to the market over the years, then just renting them out in the interim. Yet I understand these purchases already made are solemnly counted at projected forward prices.

[Bagso]

Runways at Heathrow and Gatwick will cost more than forecast - Telegraph

The bbc also had similar coverage.

There has been much talk of the #Northernpowerhouse but what we accept are "make do and mend policies" rather than the Mega-transformatiomal investment that Ministers sign off with a flourish in the South East. Our MPs and local media are equally culpable.

We salivate at investment figures of £5m, £20m thinking we are being offered a great deal on a silver platter, we are not !

Last week a political discussion on 5 Live was interrupted by a caller asking the panel if they knew the difference between £1m and £1b..of investment

...one person confidently suggested, "it's three times more" before they eventually agreed it was of course 1000times more. It took 30 seconds for them to agree !!!!!!!!

Lord help us if people, MPs, and the media cannot do basic maths

Maybe that IS a part of the problem the figures quoted by The Airport Commission SHOULD be subject to forensic scrutiny , rather than be nodded thru with some ultra vague assurance that "it's in the national interest".

I have asked the Comission for the ROI figures, whilst they bandy about sums between £200B and £500B in the press there does not appear to be any concrete forensic valuation which fully supports these wildly optimistic figs.

FDF I appreciate that you are as passionate about more runways as some of us are about the cost of actually paying for them, but what is the cut off ?

At what point do the figures simply become untenable ?

[All names taken]

A very good post Shed.

Another point that troubles me is this notion of maintaining the UK's hubbing capacity.
If we are concerned about this subject, then the biggest beneficiary of the State's largesse would be British Airways. This cannot be right. A new runway at LHR would essentially provide the capacity to run a small number of extra flights from places like LPL or EXT by BA for their benefit....if the numbers stack up. And there's no guarantee they will. After all other airlines offer much better point to hub service than BA can dream of - KLM being a case in point. If these opportunities are so lucrative why are KLM not offering them now?

I also totally refute the argument that what's good for London is good for the rest of the country - it's a line we've been fed for years - ''the Olympics will be good for the whole country'' indeed !!! Total bull.

Likewise an expanded LHR or LGW is likely to be be bad for UK regional airports such as BHX; it will also stymy MAN's aspirations to grow into a northern counterweight as airlines put all their efforts and energy into getting hold of new slots at an expanded LHR.

As Shed has said - if London wants new airport capacity, get the private sector to pay for it - it benefits the privately owned London Airports and the privately owned BA not the rest of the country.

I paid a large amount to the taxman last week and I'm getting sick of the thought that the CAPEX part of the national budget almost totally benefits London and the South East.
Taxpayer revolt anyone?

[eggc]

I think we'll see a trend here...

Those in London and SE will defend expansion.

Those outside London and SE will condemn it.

That speaks volumes in itself.

From an outside of SE point of view the whole thing benefits purely the SE, despite of any propaganda of the contrary, and BA...and worse still will damage the likes of BHX, MAN, GLA etc further growing the gap between the rest of the country and the SE.

[Bagso]

Ed Cox of the Northern think tank Ippr was on 5live last week.

Admittedly it is a left thinking.

There was a discussion re North/South investment but YET AGAIN the political commentators fail totally in making the killer points so admirably demonstrated in Sheds post......!

When will somebody grasp this issue and lay down a proper authoritive challenge !

The CBI, Unite union, various regional airport chiefs, various regional Chambers of commerce all support a 3RW at LHR !

Has anybody actually said to these guys..

"...and you do realise it will cost.... £18B
£6B being public money.

I do wonder if any of them have a glimmer as to what a small proportion of that £18b split across the UK could actually buy in there area ?

[BasilBush]

I'd be careful about provoking a taxpayer revolt. All the studies show that if you compare tax receipts with Government expenditure, the only region that pays its way is London and the South East. My own region of the Northwest is better than some (eg Wales, NI and the Northeast) but it still depends on 'subsidies' from other regions.

There's nothing wrong with that - we are one nation after all, and there is greater deprivation in many regions outside the Southeast - but be careful of overplaying the 'fairness' hand.

That being said, I agree that the costs put forward for new runways are beyond the pale. Part of the problem results from Davies including a very large uplift to reflect 'optimism bias', based on the assumption that the costs will escalate in the same way as badly managed projects in the public sector (eg rail etc). Of course as soon as you include such a cushion, it ensures that the project cost will increase to take up the slack. There needs to be much more discipline in setting the new runway costs, and reference back to MAN R2 is relevant, even if there is no direct comparison (a large chunk of the new runway costs relate to new terminals, whereas MAN R2 was purely a runway with associated taxiways etc).

[Fairdealfrank]

Now I know that London can be pricey, but seriously ... upto EIGHTY-NINE TIMES the price of delivering a directly comparable facility at Manchester? Surely that is outrageous? Even ten times the price would be outrageous! Arguably Britain's greatest engineering achievement to date - the Channel Tunnel - was delivered for £4,650M in 1994. That is £8,270M adjusted to today's money via the inflation calculator. How can a single additional runway at LHR possibly amount to more than twice the cost of constructing the Channel Tunnel at today's prices? This is simply mindblowing!

Price doesn’t matter, rwy construction is a private sector undertaking. The public sector undertakings may be highway diversion/tunnelling (was the same at MAN although on a smaller scale) and rail infrastructure (which is needed and has been/is being done at MAN).

MAN already doubled its number of rwys (good), why shouldn’t LHR? Have racked my brain but can't remember Ringway being at 100% capacity in the years before 2001.

Even now the second Ringway rwy isn't used all day, and you begrudge Heathrow a third rwy which would be used all day every day.

So a decent bit of forward planning at Ringway, should have been the same at Heathrow.

And London has enjoyed a veritable feast of enormous infrastructure innovations one after another spanning the last 30 years. Crossrail 2 is next up for funding ... projected cost £27,500M. This follows on from the Channel Tunnel, HS1, Crossrail, Thameslink re-invention, underground extensions, DLR, terminus station rebuilds, London City Airport, 'reborn' Stansted with Norman Foster terminal, Gatwick North Terminal, LHR T2 & T5, Olympic village, the M25 and assorted other new roads / motorway upgrades etc etc.

And don't forget HS2, that will suck even more economic activity towards the capital/largest city as the high speed railways do in Japan, France, and Spain.

Of particular concern to those of us outside the SE is the amount of public (taxpayer) money required for the respective projects. The numbers cited are £6,000M for LHR and just short of £1,000M for LGW. Even at LGW - by far the cheapest option - the public element of funding is just shy of 4x the entire cost of delivering EGCC 05R/23L (which was privately funded, BTW).

LGW is cheaper but doesn’t deliver the goods. If you don’t want more money spent in the south, why would you want to waste public money on a remedy that does not resolve the problem?

The non-SE 70% are taxed at exactly the same rates as Londoners.

Indeed, but we are clobbered by very, very much higher train fares.

I think we'll see a trend here...

Those in London and SE will defend expansion.

Those outside London and SE will condemn it.

That speaks volumes in itself.

Not everyone outside the southeast is against LHR expansion.

[682ft AMSL]

I think we'll see a trend here...

Those in London and SE will defend expansion.

Those outside London and SE will condemn it.

That speaks volumes in itself.

Plenty of support for Heathrow expansion over here in Leeds. Places like Leeds (the city region and the airport) benefit from connectivity to global centres of trade. The fact that London (being one such economic powerhouse) happens to share the same geographical land mass doesn't change the fact it's still the type of place you want connectivity to. Labour and property costs are cheaper here than the South East, so we can leverage that advantage if we can make it an attractive place for businesses to locate here. For businesses that depend on international connectivity, a regular, reliable, high frequency link into Heathrow is a major selling point in making that case.

[Bagso]

FDF

Heathrow "can" double it's runways, but can the rest of us not have to stump up a third to pay for it ?

LEEDS
With ref to Leeds you ALREADY the connectivity, if every flight was full do you not suppose BA would increase levels as per MAN, GLA, EDI etc ?

That is part of the point connectivity is key and yet all the regions already have it!

If they need more it WOULD be found !

[MANFOD]

Likewise an expanded LHR or LGW is likely to be be bad for UK regional airports such as BHX; it will also stymy MAN's aspirations to grow into a northern counterweight as airlines put all their efforts and energy into getting hold of new slots at an expanded LHR.

Not that it will do much good, but I made this very point among others in a letter to our MP, more especially about LHR. It could even mean that MAN gains routes in the short term but will then lose business if and when R3 at LHR is built and airlines transfer flights there using the newly available slots. I know aviation is a commercial business but to me it will simply distort further the imbalance between London/SE and other regions which is not good for the UK as a whole.

Thanks for an excellent post Shed. I hope you've sent copies or something similar to various interested and possibly influential parties, given that our MPs and most business leaders appear on the surface to be silent on the issue or are openly supportive of Heathrow expansion, whatever the cost.

[AndyH52]

Bagso, you aren't looking at costs for a directly comparable facility. Of the £18bn quoted for the third runway, £11bn is for 'airfield infrastructure' which includes the runway, associated taxiways, a new terminal 6 and an expanded terminal 2 and the infrastructure to get passengers and their baggage between terminals. Not quite like-for-like. The fact it cost £21 million in 2011 just to resurface 05L/23R gives an indication of how costs have risen since runway 2 opened.

[BasilBush]

The figure of £6 billion public expenditure for R3 needs to be put into context. It relates to the estimated cost of surface access, including roads and rail. Davies has stated that the allocation of this between the scheme promoters and the public sector would be a matter for negotiation. For some reason, however, his 'base case' numbers assume that it is funded by the public sector ( ie the taxpayer).

In the supporting documents on the website alternative scenarios are considered. One of these assumes that the scheme promoters meet the full cost of the £6bn surface access works. It calculates the impact on Heathrow's airport charges, showing that the swing of £6bn from public to private only adds c10% to HAL's projected airport charges.

I think it would be safe to assume that HAL, as the scheme promoter, will end up having to swallow these £6bn costs. That would be my view anyway. Recent precedent is that HAL has had to foot the bill for surface access costs, at least in relation to extending HEX and the Piccadilly Line to T5. I can't see why this principle shouldn't also apply in the case of R3-related surface access costs.

[WHBM]

I can't imagine why BA is not out there announcing that, with a third runway, they will be adding domestic services to various points around the UK. With the absorption of BMI they already added two Heathrow domestic routes, Leeds and Belfast, which has given them some additional UK coverage. Inverness, Cardiff, Norwich, Liverpool etc would have politicians biting their hand off if offered a trunk route connection to Heathrow.

It is notable I believe that at all the UK provincial airports which have a Heathrow service, that route is the No 1 for flights per day from those places, and for all that we hear of diversion of provincial traffic through Continental hubs, the route to Heathrow is still the principal destination for Edinburgh, Glasgow, Belfast, Manchester etc.

[pax britanica]

Well I for one can believe the estimate and indeed would be willing to bet it would ultimately prove to be too low. While we like to think 'it doesn't happen here' large construction projects worldwide are endemic for corruption and there is no reason to suppose the UK is any different.

Also this project has particularly great opportunities for dodgy accounting because where does a third runway stop and new taxiways flyovers /unders etc etc begin. What actually is the definition of the project does it include compulsory purchase -does HAL get compensated for all the homes they already bought etc etc.

It will also drag on for ages because of planning processes requiring armies of highly paid consultants doing work that is unnecessary, repetitive , or could be done by a few full time staff just getting on with their job.

There are multiple stakeholders - Mayor of London (the office not the person ) Borough of Hounslow/Uxbridge -maybe it extending into the neighbouring counties plus central government.

it will likely span two government terms meaning there is a chance one side will pass it on to the other ensuring that no dodgy activity will be pursued because it happened on both watches and both parties will want to cover it up.

Who will be in charge of the project management , who will guarantee that the airspace can handle the new volumes of flights .

It can go on and on and on and each day delay probably adds $1m to the bill.

And I support the project because it is necessary for the country - extending Gatwick alone is daft and just means London has two big airports which cannot compete with CDG AMS and FRA instead of just one . Blindingly obvious to anyone who has ever travelled on business but nevertheless a huge costly complex enquiry is seemingly necessary to come to the same conclusion that could be determined over a weekend and that would be one day more than necessary.

PB

[Skipness One Echo]

who will guarantee that the airspace can handle the new volumes of flights .

NATS have done the modelling, do you think when this much £ is being invested no one thought to ask?

LEEDS
With ref to Leeds you ALREADY the connectivity, if every flight was full do you not suppose BA would increase levels as per MAN, GLA, EDI etc ?

That is part of the point connectivity is key and yet all the regions already have it!

If they need more it WOULD be found !

Of course it would, in an unrestricted market. Which this isn't! Every slot has to have an ROI or a raison d'etre like slot sitting in the casee of Leeds.