Ready For Take Off: Airport Expansion is Back in Business

March 25, 2012

Suddenly, members of the government and key energy and climate change select committee have begun to urge the public to accept the rapid expansion of airport capacity in London.

According to the Guardian, both David Cameron and George Osborne have become convinced by the entreaties of “overseas leaders and business figures” that airport expansion is now an economic necessity. Either that or trade will shift “elsewhere in the EU.” In his budget speech, Osborne argued that the nation has to “confront” the lack of runways in the south-east, while David Cameron has described himself as “not blind” to the need for runway capacity.

This represents a total u-turn by the government on airport expansion, possibly suggesting that any earlier support for environmentalists and local anti-noise campaigners was merely skin deep, and ready to be jettisoned at a suitably distant date.

In 2008, David Cameron said that “There are now increasing grounds to believe that the economic case for a third runway is flawed, even without addressing the environmental concerns”, so his new found enthusiasm for expanding Gatwick or redeveloping RAF Northolt is striking.

Along with the PM and Chancellor, Tim Yeo, head of the energy and climate change select committee, has executed a volte face of his own, reportedly saying that there is now “no option but to build a third runway to ensure the south of England remained a worldwide aviation hub.”

In all cases, such sentiment flies in the face (so to speak) of the agreement which created the Lib Dem-Conservative coalition, which ruled out airport expansion in the south-east (probably influenced by high profile Lib Dems like Vince Cable holding seats directly under Heathrow and Gatwick bound planes).

Some of the blame for the move is devolving upon China, but there is good reason to see the hand of big business behind the u-turns. At the time of his earlier statement, Cameron was pilloried by Willie Walsh, head of British Airways. BAA, which runs many British airports, was also a strong critic. Both firms have battled opponents of airport expansion ever since, and continue to do so, sometimes in distinctly unpatriotic forms.

As Willie Walsh told the British Chambers of Commerce recently, for some reason, those seeking to do business in China should start from Frankfurt, instead of a country like the UK with “no aviation policy to speak of.” This is despite his railing against both the runway block and the UK’s air passenger duty, both certainly “policies” – if not ones that he personally supports.

If we are serious about reducing greenhouse gas emissions from aviation, it is this kind of corporate bullying that politicians will have to confront, but Cameron and Osbourne appear only too willing to roll over.

A new consultation is due to begin on airport capacity, and the government’s policy on the growth (or not) of aviation is due to be published by this summer. The new whisperings from government are clearly primers for a complete change in policy and a blitz upon anti-expansion campaigners (of whom, perhaps absurdly, the current Environment Secretary Justine Greening, is one).

They are also a sign that business lobbying is bearing fruit, and that green campaigners are losing the argument over the virtues of economic growth, and the form that a green transport policy should take. As John Crudland, director of the CBI crowed this week, ” think we are beginning to win the battle for extra capacity in the south-east. Whilst all the focus has been on whether we need a third runway at Heathrow or not, the battle we need to win first is establishing that we cannot run our airports properly without extra capacity. Once we win that argument, it is a locational issue.”

Crudland is confident that a strategic victory has been won, and he may be correct. For him, the primary issue is profit and the need for economic growth – with the obvious route to such growth entailing the expansion of London’s links with industrialists and financiers in China and India.

Campaigners should not lose heart, however. Alternative economic strategies can be imagined which certainly do not require airport expansion. Tourism is one key battleground. Airport expansion will result in more Britons flying abroad to take their holidays, and probably more people visiting Britain as well. However, most of these visitors will likely stay in London. British regions, desperate for tourists to visit and support local retailers, hostelries and recreational pursuits, will lose out to international tourism – generally to the benefit of large hotel firms and the aviation industry.

The expansion of aviation also stands in contrast to the lack of action to rejuvenate British rail travel, beyond the highly dubious benefits of High Speed 2. A program of rail expansion tied closely to the marketing of British tourist destinations could be an effective riposte to airport expansion.

However, this doesn’t deal with the core of the “business case” for airport expansion. Here there is the theory that London will lose out to alternative world cities (such as Frankfurt, name checked by Willie Walsh) due to its loss of “interconnectedness” – the ease with which international business travellers enter the City of London, meet with potential business partners and secure commercial deals.

The rhetoric is that Britain must continue to serve as a “global hub” for air travel, but is this even true? If the government believes that commercial links with China are a crucial national interest, then in the future this could be ensured – by demanding that airport operators offer a certain number of landing slots to Chinese airlines, regardless of the capacity of the airports themselves. Others would lose out, but this may not be such an economic loss to the country. But airports are privately operated, obeying the financial imperatives of their owners. National interests do not apply. And it is in the national interest to limit airport expansion, while retaining connections to China. This can be done, but allowing a small group of investors and corporate managers to profit from the airport may be harder to reconcile with the needs of the nation.

In an economy dominated by the free market, such an intervention is unthinkable. Instead, the needs of BAA, with part ownership by a sovereign wealth fund in Singapore and the Spanish investors in Ferrovia, are more important than residents of London.

Other nations have managed to perform well economically despite lacking phenomenal aviation links with the growth centres of the world economy. Denmark, for example, is not overly worried about establishing strong economic links with China. Presumably, if the Chinese want something the Danes produce, they will find a a way of purchasing it – maybe even using a connecting train from Frankfurt or a plane from Heathrow. Similarly, Danish commercial travellers can find their way to Beijing, should they wish.

What Denmark lacks is the vast financial community of the City of London. The City seems to need connectivity with China for its own reasons, which do not necessary align with national interests. Its banks want to tie up deals with Chinese energy firms (and banks). Its consultants want to sell their supposed expertise to Chinese companies. Its fund managers want to invest in the despoilation of the Chinese environment and exploitation of its labour. It wants, in short, a share of the loot acquired by the Chinese economic elite.

With the European and American economies struggling to generate “growth” opportunities, the eyes of those in the City are fixed upon India and China to provide salvation. Maybe this will be through dominating the renminbi business, managing what may be the world’s next reserve currency? If so, then it will require more financial “innovation” of the like which attracted AIG to London, where it carried out most of its most purchases of sub-prime derivatives, bankrupting the company.

Yep, the people who bankrupted America’s largest insurance company arrived in London…in planes. Maybe we can provide similar services for Chinese fools? There will be plenty.

The point is that airport expansion does not necessarily lead to the expansion of the kind of business activities which support broad-based, sustainable national growth. Naturally, it is great if Chinese investors or technicians want to come and help develop tidal power technologies, photosynthetic hydrocarbon generation or heat pumps, but these kind of investors will come in any case, if the expertise is here (which in many useful fields of endeavour, it is).

You don’t need thousands of planes a year to create such links. We don’t need airport expansion at all. What we need is to get a grip on our transport policies, and to work out precisely what our national interest is, and who speaks for it. Cameron and Osborne may have stitched us up with a “secret deal” to back airport expansion, but with the white paper on aviation yet to appear and a consultation planned, there is an opportunity to present an alternative.

 

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