16 October 2006 1

21 March 2011 2

The Need for New Airport Capacity for the South East

Michele DixManaging Director – TfL Planning

Contents

21 March 2011 3

1. Demand

2. The importance of aviation

3. Environmental impacts

4. London’s airports

5. The importance of a hub airport

6. The need to plan for growth

7. Future options

London’s primary airports

Heathrow:2 runways

66m pax

Gatwick:1 runway31m pax

Luton:1 runway8.5m pax

Stansted:1 runway18.5m pax

London City:1 runway3m pax

+ Supported by a number of smaller regional and non-commercial airports.

Regional airports such as Birmingham and Southampton have a limited influence

(demand figures, CAA, 2010)

The UK and London’s air markets

• In 2010 the UK’s airports handled 211m passengers

• London’s five main airports handled 60% of this

• 75% of London’s demand is for leisure travel and 25% for business

• 25% of passengers across Heathrow, Gatwick and Stansted are making connections – they do not make a terminating journey at the airport

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Where are passengers travelling to and from?

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•45% from GLA

•Demand relatively evenly spread but significant local catchments

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London airports’ passenger market(2009 CAA passenger data)

Area of pie denotes demand

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London’s airports – annual demand/flights in comparison with other European cities

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London’s existing airports Daily Departures: Destinations served and flight frequency

Area of circle denotes number of flights per day

Number of destinations served

200

160

120

80

40

0

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Demand is growing…

• Demand for air travel is growing around the world

• It is closely correlated with wealth creation and Globalisation, so will continue to grow

UK-wide Air Passenger Demand Forecasts: DfT, 2009

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But capacity isn’t Historically London’s airport growth has been incremental – recent focus on terminals not runways Both are needed!

Growth is needed – London’s airports are full

• Runway capacity is the greatest capacity constraint

• Heathrow – world’s busiest international airport with 66m passenger in 2009

– runways operating at 99% of their capacity

– In the past 20 years flight sector times from Schiphol have increased from 60 to 90 minutes

• Gatwick– world’s busiest single runway airport with 32m passengers in 2009

– Operating at 95% of its capacity

• Stansted, Luton and City have some spare capacity but this is minimal in the overall London context

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Does it matter?

• We are an island nation participating in a global economy

• Aviation generates substantial economic and quality of life benefits

However -

• Aviation is responsible for huge environmental impacts

It is therefore a wide-ranging, significant, and emotive issue

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Aviation benefits everyone

• 4 out of 5 trips to or from the UK are made by air

• In 2009 47% of the UK’s population flew at least once

• £100bn of goods were exported or imported by air

• Aviation and its supply chain accounts for around 1.5% of UK GDP (£19bn)

• London’s primary airports account for 80,000 jobs and a further 70,000 in their supply chains

• Aviation is worth about £8bn a year to the UK Exchequer in tax receipts and duties

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Aviation can be a cornerstone of the Government’s ambitions for Economic Growth

• As the world becomes more globalised, there is a need to connect to more cities in emerging markets such as Brazil, Russia, India and China

• Sectors vital to economic growth are aviation intensive: pharmaceuticals, high-quality and innovative manufacturing and scientific research as well as finance and business services

• Airports play vital roles in regional economies and so could lead a rebalancing of London’s economy towards the east

• The Government published an ambitious Tourism Strategy this month and airport capacity needs to grow to improve our position in an increasingly competitive market

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But what is the Government doing?

• In May 2010 the Coalition withdrew its support for Heathrow’s third runway and stated that it would not support future runway expansion at Heathrow, Stansted or Gatwick

• It set up the South East Airport Task Force to look at quality of service at the London’s ‘big three’ – NOT CAPACITY FOCUSSED

• DfT embarking upon new aviation strategy ‘A Sustainable Framework for Aviation’

• Scoping study to be published March 2011

• DfT currently reviewing demand figures, Commission on Climate Change (CCC) findings and Regulatory arrangements – to be reported in Summer 2011

• Government wants to have a growth-led deficit reduction and rebalancing of economy

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Localised Environmental Impacts of Aviation

• While airports can have tremendous benefits, they can also have a detrimental impact on their local environment in terms of air quality and noise pollution

• Heathrow’s – located within densely populated area, and flight paths over London - is unsuitable for further expansion

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• Improvements in technology could mitigate the effects of a new airport

• Crucially, any new airport capacity would be sited and designed so as to minimise the noise and air quality impacts

New aeroplane technology

• Aeroplanes are getting cleaner and quieter:– Engines are becoming more efficient– Aircraft bodies are becoming lighter through the use of

lightweight composite materials– Progress has been made in aerodynamics allowing

planes to take off using lower thrusts– Progress upon biofuels

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Is additional capacity compatible with climate change targets?

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Strategic Context – Expansion is both desirable and permissible

• Substantial growth in aviation is both desirable economically and permissible within environmental limits

• An airport handling 85mppa could be built in the South East

• Key findings:– London’s economy is reliant on its good international links and

failure to safeguard and develop these could see London lose out

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Additional capacity in context

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Heathrow 66m

Gatwick

Stansted

Luton

London City

31m

18.5m

8.5m

3m

85m

Additional capacity

Figures for 2010 (CAA)

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Is incremental expansion at London’s existing airports the best way to meet demand?

• There is spare capacity at some of London’s airports.– At Stansted and Luton it is at unattractive times of the day to the current

operators– It is not enough to provide for an extra 85mppa

• Two new runways at existing airports could provide close to 85mppa

– However, would require improved terminal and surface access capacity wherever it occurred

– At Heathrow, a new runway would be detrimental to the quality of life of millions of people

– Adding a new runway at Stansted or Gatwick (or both) would still be unable to facilitate full hub operations

• Incremental improvements are inefficient. Spreading costs and disbenefits across the South East without securing a world-class hub airport for London

HS2• Cost ~£30bn• Delivery ~2026 (phase 1)• Delivery ~2033 (phase 2)• Capacity 18tph (~30,000 pph)• Birmingham 46min •Edinburgh 3hr 30• Glasgow 3hr 30

HS1•Continent within reach

•Paris 2h 15min•Brussels 1h 45min•Amsterdam ~4hr•Frankfurt ~4h 30m

BUT capacity constrained through the Tunnel

Can High Speed Rail play a role?

N. America

S. America

S. Europe / Africa

HSR’s ability to substitute for aviation demand is limited

Majority of aviation trips not viable by other modes

Potential role of High Speed Rail is limited• Excellent substitute for air travel for city centre to city centre

travel where the journey time by rail is under 4 hours

• High speed rail could remove a number of domestic flights as well as some to near Continent cities such as Paris, Brussels and Frankfurt.

• this is likely to be only a maximum of 8-10% of total demand at Heathrow = large gap

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Challenges and opportunities for growth at London’s airports

• Airport Ownership and Governance

• Airport Planning System

• Regulatory Burden

• Raising Capital

• Surface Access Links

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16 October 2006 26

Benefits of a New Airport

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A Hub Airport

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A Hub Airport

• Although point to point flying is of importance to passengers, frequency of flights is equally important, especially to business passengers.

• A hub airport can offer a wider range of destinations at higher frequencies than its catchment area would typically justify due to a interlining passengers

• ‘Interlining passengers’ help ‘fill up’ planes so enabling the airport to offer higher frequencies for certain routes and/or a wider set of routes , particular for long haul flights.

• A hub airport needs at least two runways (most new ones have at least 4 now) with good terminal facilities to allow incoming flights to readily connect with other flights (ie to accommodate interlining passengers).

Competing hubs are developing across Europe

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Charles de Gaulle4 runways58 mppa

Madrid – Barajas4 runways48 mppa

Frankfurt4 runways by 201251 mppa

Schiphol5 runways 44 mppa

Frankfurt Airport. Two terminals. 3 runways. A third terminal and fourth runway are under construction. A hub for Lufthansa for their extensive long-haul offer.

Madrid Barajas. Terminal 4 and 2 new runways opened in 2006. Functions as a major hub for the Oneworld Alliance with flights to hundreds of destinations with a strong link to emerging markets in South America.

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Los Angeles

Sydney

16 hours direct

14 hours direct

The growth of Middle eastern airlines and additional airport capacity in places such as Dubai and Abu Dhabi are creating new global hubs midway between the Americas and Asia/Australia

Competition is growing in the Middle East

Dubai – new 5 runway airport under construction

London can have two hubs

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• There is no independent evidence to say otherwise

• New York has two hub airports – JFK and Newark which compete with each other

• Heathrow would not have to close if a new airport were to be constructed. A new hub would cater for additional demand.– pressure on

Heathrow could be relieved

– Could enhance the long-term viability of Heathrow as an attractive gateway airport

• Each hub could serve competing airline alliances

What happens if we do nothing?

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• If we fail to provide for growth via a hub airport, London and so the UK lose out

• Heathrow is losing traffic. It is coming under increasing competition from other hub airports

• Airlines and their support services are footloose. They have a choice

• London is at risk of continuing to lose traffic from key global aviation players.

• Carriers ‘excluded’ from their first choice airport due to lack of capacity, will build their businesses elsewhere in Europe.

• Qantas has intimated that if capacity problems in London continue, it would relocate its European hub to Berlin

• This has no global environmental benefit, and diverts commerce away from the UK.

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Growth Options?

21 March 2011 34

Questions?

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tfl.gov.uk