The Heathrow Shuffle

The London 2012 Olympic and Paralympic Games were barely over before the starting gun was fired on a fresh challenge that sent the UK’s airports policy sprinting up the political agenda.  What may have been the first UK cabinet reshuffle inspired by the demand for a new runway sent politicians on a fresh hunt for a solution to the need for more airport capacity. Bruce Hales-Dutton explains.
During the UK coalition government’s first cabinet reshuffle on September 4, Justine Greening’s move from Transport to International Development Secretary was widely interpreted as the prelude to a ‘U’-turn in the Conservative Party’s manifesto pledge against a third runway at London’s Heathrow airport.
Prime Minister David Cameron’s ministerial changes had been preceded by intense media speculation about Ms Greening’s future.  The Putney, Roehampton and Southfields Member of Parliament (MP) had made her views against the expansion of Britain’s premier gateway a key part of her campaign for election in the West London constituency, which lies directly beneath the airport’s flight path.
The Times summed up the Prime Minister’s dilemma:  “Mr Cameron has an airport policy he does not believe in but which his Transport Secretary is a passionate defender of.  He and [Chancellor of the Exchequer] George Osborne want to be able to drop their opposition to a third runway at Heathrow by the next election; Justine Greening said she would always oppose it.”
In the event, Ms Greening’s international development portfolio is widely seen as demotion for the woman who had succeeded the previous Transport Secretary, Philip Hammond, just 11 months earlier.  Aviation Minister Theresa Villiers, who shared Ms Greening’s views, became Northern Ireland Secretary.  The new Transport Secretary, former chief whip Patrick McLoughlin, was said by media commentators to be without airport policy baggage – apart from a fear of flying.
But in the hours immediately following the announcement, the government moved to damp down expectations of a radical change of direction.  Home Secretary Theresa May pointed out that opposition to the third runway was coalition policy, and that Mr McLoughlin would simply continue the process of consultation initiated by Ms Greening on the future of Britain’s airports.
Senior back-bench Tory Tim Yeo had earlier set the tone by calling on Cameron to show whether he was “a man or a mouse” by giving an immediate go-ahead for the third runway.  But the Prime Minister responded by stressing that opposition to new runways at Heathrow, as well as other London airports (Gatwick and Stansted), would remain a key element of the coalition’s policy until the next general election in 2015.
The government’s next move, however, was not long in coming.  The day after the reshuffle, it was announced that Sir Howard Davies, former head of the Financial Services Authority and of employers’ organisation the Confederation of British Industry (CBI), was to head a commission to inquire into the need for more airport capacity.
Sir Howard told the Financial Times:  “It seems unlikely that the status quo is going to be a tenable one for another ten to 15 years.”  He added that he expects to consider the case for mixed mode operations at Heathrow.
The Sunday Times reported that the commission will examine a variety of options, ranging from a third runway at Heathrow to a new four-runway airport in the River Thames Estuary.  Also included will be the expansion of Gatwick or Stansted, “or the construction of a £20 billion [US$32.5bn] to £40 billion [$65bn] airport in Berkshire or Oxfordshire.”  The newspaper quoted Sir Howard as saying: “Consensus is lacking on many issues – demand, the nature of a hub, the feasibility of other options.”
Mr McLoughlin put it more formally in a written statement.  The commission, he said, will, “examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub, and identify and evaluate how any need for additional capacity should be met in the short-, medium- and long-term.”
Sir Howard is expected to produce an interim report no later than the end of 2013.  The final report will not be available until after the next general election, leaving the decision-making to the new government.
The commission will be required to take account of the views of passengers and people living near airports, as well as the aviation industry, business, local and devolved government and environmental groups.  “We would like, if possible, to involve the opposition as part of our work alongside Sir Howard to finalise the arrangements for the commission,” Mr McLoughlin added.
However, if Cameron is anxious to take the other political parties with him on this issue, he risks attracting criticism from within his own party.  London’s Mayor Boris Johnson reacted angrily to Ms Greening’s move.  He told BBC Radio:  “What I worry about is a stealthy U-turn being carried out which is not in the interests of London or, indeed, of the country as a whole.  Heathrow can’t satisfy the country’s needs as the principal hub airport.”
Mr Johnson, who has been promoting the case for an airport in the Thames estuary, was also critical of the government for putting off a difficult decision.  “It’s just a ‘fudgerama’,” he said, “and an excuse for delay for another three years.”  Asked if he would lead a campaign against the expansion of Heathrow, the mayor responded:  “You bet!”  He added:  “Now is the time for the government to make it clear that the third runway is not on the table.”
He was supported by Zac Goldsmith, MP for Richmond Park, who called on the government to come off the fence and let people living in West London know its intentions.  He repeated an earlier threat to resign his seat and force a by-election on the issue.
The idea that Mr Johnson might seek re-election in Mr Goldsmith’s place on a platform of opposition to the development of Heathrow went round the Commons’ tea room, but is seen as unlikely.  One political commentator said he couldn’t see Mr Goldsmith moving aside for Mr Johnson, “in a million years, nor Boris standing for a pretty dodgy seat” – Richmond Park is regarded as a marginal seat.  The Mayor’s office, while confirming the discussion between the two men, pointed out that the idea was, “laughingly dismissed.”
Nevertheless, Mr Johnson, whose popularity is riding high among some in the Conservative Party, following his association with the highly successful Olympic and Paralympic Games, is being seen as a possible leader in place of Mr Cameron.
He has also ordered his own airports policy review to be led by his aviation advisor, Daniel Moylan.  The London Evening Standard reported the review will focus on assembling Mr Johnson’s campaign against Heathrow expansion.  Inevitably the Thames estuary airport will be examined.  Reporting that Mr Johnson has appointed consultants to consider the implications of closing Heathrow, the Daily Telegraph noted it had been the subject of very little research so far.
The House of Commons Transport Committee has also launched an investigation into airport capacity.  Noting the Davies inquiry is not likely to report before 2015, Committee Chairman Louise Ellman MP, said she didn’t believe “a strategy for aviation capacity should be delayed further.”  She added:  “We aim to influence the government during the policy development process with sensible but challenging recommendations, to make sure that aviation policy stays high on the political agenda.”
Meanwhile, support for an estuary airport appeared to be gaining ground within Conservative ranks, even if Cameron has gone cold on an idea which he was said at one time to favour.  It is thought that Chancellor George Osborne has been impressed by the business case for developing Heathrow.
The Sunday Times called on Mr Cameron to “stop dithering” and go for a Thames Estuary airport on the Isle of Grain, as proposed by the eminent architect Lord Foster.  At the same time, it reported the results of a YouGov poll, which found that 44% of Londoners preferred an estuary airport to a third runway.
Crispin Blunt, MP for Reigate in Surrey, was quoted as saying it was, “blindingly obvious” that an estuary airport should be built.  Another senior Tory back-bencher, Bernard Jenkin, MP for Harwich and North Essex, was said to be about to establish an all-party parliamentary group to support the idea.
But to airport industry observers with long memories, mention of a commission of inquiry in the context of an offshore airport will evoke feelings of déjà vu.  In 1969, the Roskill Commission was appointed to find a site for a new London airport.  However, its recommendation for Cublington, Bedfordshire, was rejected by Edward Heath’s Conservative Government in favour of an estuary site at Maplin Sands near Foulness, Essex.
This was abandoned in 1974 by the incoming Labour administration, which argued that the recent quadrupling of oil prices had depressed the potential for traffic growth.  It switched the emphasis to the development of existing airports.  New terminals were subsequently built at Heathrow, Gatwick and Stansted.
It seems as if 40 years on, the wheel has come full circle.  This time, though, the political stakes are much higher.
 
 

Sum
of Freq.
Time Series
Dep
Airport
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Grand Total
AMS 178,038 181,425 183,941 191,958 198,795 196,874 182,226 184,460 193,166 196,365 1,887,248
CDG 230,353 232,003 232,290 242,930 246,888 252,977 238,783 230,909 230,676 225,751 2,363,560
DXB 58,837 68,050 75,200 85,176 92,999 102,468 113,638 126,956 132,876 151,597 1,007,797
FRA 208,915 215,865 222,871 225,046 226,851 225,453 215,289 222,165 223,467 228,782 2,214,704
LHR 229,693 235,270 237,008 237,333 239,000 238,762 230,856 235,641 237,428 236,540 2,357,531
SIN 70,929 83,461 94,064 99,270 101,038 107,092 113,473 124,739 141,117 153,608 1,088,791
Grand Total 976,765 1,016,074 1,045,374 1,081,713 1,105,571 1,123,626 1,094,265 1,124,870 1,158,730 1,192,643 10,919,631

 
Heathrow
Competition Analysis
Source: OAG Analyser
This data shows the total number of scheduled flights (frequency) departing from London/Heathrow Airport (LHR) and three other comparable European hub airports, as well as Singapore Airport (SIN) and Dubai Airport (DXB), each year between 2003 and 2012.  Flights between now and the end of the year are those which are scheduled to operate.
Key Observations
Growth in capacity at the European hub airports, including LHR, has averaged 2% or lower per annum since 2003.  Amsterdam/Schiphol (AMS) and Frankfurt Airport (FRA) grew at an average annual growth rate (AAGR) of 2.0% and 1.5%, respectively, while LHR and Charles de Gaulle Airport (CDG), Paris, grew at 0.6% and 0.8% per annum (p.a.), respectively.
A similar pattern emerges with frequencies, although the number of flights from CDG was lower in 2012 than in 2003.
Given that frequency growth at LHR has been slightly lower than capacity growth, this implies the average size of aircraft operating has increased.
‘Seat capacity’ divided by the ‘frequency’ gives the average aircraft size.  LHR has by far the highest average aircraft size of these airports with the average number of seats per aircraft at 265 seats.  This compares to 214 at FRA, 213 at DXB, 210 at CDG, 193 at SIN and 160 at AMS.
LHR is expected to offer 47.3 million seats to the market in 2012.  This is 24% more than the next largest in this group of airports which is FRA with 38.1 million seats.
In contrast, capacity at DXB grew by 10.2% p.a. and capacity at SIN grew by 5.5% p.a.
 
 

Sum of Freq.
DESTINATION REGION Total Percentage Share
Africa : Central/Western Africa 2,298 0.97%
Africa : Eastern Africa 1,947 0.82%
Africa : North Africa 3,035 1.28%
Africa : Southern Africa 3,043 1.29%
Asia : Central Asia 440 0.19%
Asia : North East Asia 7,132 3.02%
Asia : South Asia 5,911 2.50%
Asia : South East Asia 4,861 2.06%
Europe : Eastern/Central Europe 12,638 5.34%
Europe : Western Europe 140,350 59.33%
Latin America : Caribbean 261 0.11%
Latin America : Central America 188 0.08%
Latin America : Lower South America 1,561 0.66%
Middle East 13,750 5.81%
North America 39,125 16.54%
Grand Total 236,540 100.00%

 
Schedule by destination data
Source: OAG Analyser
This table draws on flight frequency data for 2012 from LHR by destination airport.  The data is summarised by destination region so it is possible to see the distribution of all seats and flights from LHR by world region.
Key Observations
The majority of all flights from LHR are destined for elsewhere in Western Europe (including domestic flights) or North America.  These regions account for 59.3% and 16.5% of all flights, respectively.
The next largest destinations for flights are the Middle East (5.8%) and Eastern/Central Europe (5.3%).
North East Asia, which is defined as the region for the People’s Republic of China (including Hong Kong) attracts just 3% of all LHR departures.
The fact that aircraft operating long-haul flights are typically larger than those flying short-haul means that 3% of departures equates to 4.7% of all seat capacity that goes to North East Asia.
 

Sum of Freq. International/Domestic
Dep
Airport
Domestic International Grand
Total
Domestic % Share International % Share
AMS 5 196,360 196,365 0.00% 100.00%
CDG 24,147 201,604 225,751 10.70% 89.30%
DXB 55 151,542 151,597 0.04% 99.96%
FRA 34,755 194,027 228,782 15.19% 84.81%
LHR 22,825 213,715 236,540 9.65% 90.35%
SIN   153,608 153,608 0.00% 100.00%

 
International/domestic FREQUENCY
Source: OAG Analyser
This table shows flight schedule data for 2012 and illustrates the split between international and domestic flight frequencies from LHR, other comparable European hub airports AMS, CDG, and FRA, as well as DXB and SIN.
Key Observations:
Unsurprisingly AMS, DXB and SIN have no, or virtually no, domestic flights.
LHR has the lowest proportion of domestic flights of the three airports LHR, FRA and CDG.  This reflects a progressive move away from domestic flights so that valuable runway space can be used for long-haul, larger capacity aircraft.