Brexit, Boris, British Airways & Heathrow

Boris and Heathrow

Once upon a time, when he was merely the candidate for Uxbridge and South Ruislip (which abuts Heathrow) in 2015 before he became Prime Minister, Boris Johnson said:

“I will lie down with you in front of those bulldozers and stop the building, stop the construction of that third runway.”

Boris Johnson, 2015

Oddly, he also chose to be absent (in Afghanistan) for the parliamentary vote on Heathrow’s expansion. Mind you his vote wouldn’t have counted one way or the other since the proposal had overwhelming support in parliament.

There was no mention of the expansion of the airport in the Queen’s speech this week, that outlines the legislative program and intentions of the United Kingdom government. This seems in line with his backflip in June that he might drop his opposition to the third runway if he became prime minister – so not really any surprise.

Delays: Heathrow v Civil Aviation Authority (CAA)

The third runway was originally scheduled to be operational by 2026. Now virtually no one believed this would be the case – like, name one infrastructure project that came in on time, and on budget? But still, we can all hope.

Well, this date has been substantially pushed back to roughly sometime between 2028 and 2029.

Why is this so?

Just between us, Heathrow Airport – according to the CAA, has a reputation for ‘gold-plating’ projects and then upping fees and charges to cover the costs. The CAA is having none of this and has said that the £2.9bn (at 2014 prices) that Heathrow wants to spend before planning permission is granted should be shoved back where it belongs, or as they put it – is an ‘aggressive schedule’ to reach the 2026 target date.

What the CAA fears is that if planning permission isn’t granted, and given the controversy of the project and the disruption to surrounding villages and towns, that is a distinct possibility, Heathrow, will try and get these ‘sunk costs’ back by increasing fees and charges which will have a deleterious effect on the economics of the British airline industry.

The CAA also acknowledges that any delay in activating the runway may also have an adverse effect on airline industry economics.

“However, we have also been clear that timeliness is not the only factor that is important to consumers. Passengers cannot be expected to bear the risk of Heathrow Airport Limited spending too much in the early phases of development, should planning permission not be granted.”

Paul Smith – group director of consumers and markets, CAA

Who’s to blame?

It depends on who you listen to. According to the CAA its Heathrow that wants to jump the gun on planning permission, and according to Heathrow Airport its the CAA that is holding them back, and therefore causing the delay.

Let’s hear from the independent (ahem!) umpire – Willie Walsh of IAG

The CE of IAG, the parent corporation of British Airways, Willie Walsh, is voting for a plague on Heathrow Airport:

“We need a fresh look at the environmental viability and total cost of expanding Heathrow. … The airport has a history of spending recklessly to gold-plate projects and paying guaranteed dividends to shareholders while minimising the environmental significance of expansion.”

2PAXfly Takeout

Busy airport expansions in populous zones are never easy. They involve weighing up the environmental, industry, economic and customer imperatives, and coming to a bold decision and taking the flack from the dissatisfied.

This is only another ding-dong round in the proposed expansion of the airport. With its current complexity – there is even a group proposing a rival terminal ‘Heathrow West’ – odds are that it will never get built. So on that basis, I favour the CAA’s view that what the Heathrow Airport Limited wants to spend on development before planning permission is granted, is a bit too much.

Oh, and the Brexit in the title is deliberately misleading but comfortably alliterative. Although expanding Heathrow to accept all those non-European imports, is probably a post Brexit necessity and may make the odds of the third runway being built, better.

Thanks to the Independent, Guardian and Telegraph for background and quotes.