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Fri 4 Nov 2016 01:18 AM

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Why Heathrow will still be playing catch up for decades to come

Apart from the massive cost of a third runway, the rise of aviation hubs in the Gulf may pose another challenge for the UK’s premier airport, says Ed Attwood

Why Heathrow will still be playing catch up for decades to come

“Fifty years from now, I believe British Airways will still be flying from a two-runway hub at Heathrow — the world will move on, and the UK will get left behind.”

Speaking three years ago to this magazine, International Airlines Group (IAG) boss Willie Walsh was withering in his assessment of the UK government’s consistent inability to make a decision over the expansion of the country’s largest airport, London Heathrow.

“Politically, I don’t think there’s a solution and therefore I’m not wasting any time trying to beat my head against the wall when I don’t think I’m going to achieve anything,” Walsh added. “We get on and run our business, and seek to take advantage of growth in the industry. Unfortunately for us, a lot of that growth will be outside our core base of London.”

The decision to add a third runway at Heathrow was first suggested six months after the end of the Second World War, and the discussion has continued, at varying levels of intensity, ever since. Needless to say, airports elsewhere have benefitted — the chief executive of Amsterdam Schiphol has taken to sending a cake to Heathrow’s head office every time a decision on its future has been delayed.

It’s an understatement to say that Britain has a history of prevaricating when it comes to large-scale infrastructure projects. Two of the biggest in recent years — the third nuclear plant at Hinkley Point and ‘HS2’, a high-speed rail connection between London and the north of England — have drawn controversy and endless debate before even getting off the drawing board.

But Heathrow is a different proposition altogether. While there were cases to be made for not going ahead with either Hinkley Point or HS2, nearly every British politician agreed that a solution is needed to be found to solve the UK’s chronic lack of air traffic capacity. The only problem was that none of those politicians were brave enough to make a decision that might result in them in being booted out of their parliamentary seat by angry voters at the next election.

Britain’s new Prime Minister, Theresa May, deserves credit for actually having the gumption to take a decision from which previous leaders had shied away. But with Heathrow having lost its title of the world’s busiest international airport to Dubai in the last year or so, is the move too late?  The absolute best-case scenario is that the expanded Heathrow will be up and running by 2025, at a cost of around $22bn, with the airport’s new capacity standing at around 130 million passengers a year (a figure it is projected to reach by 2040).

That potential launch date, however, coincides with Emirates’ planned move from Dubai International Airport to Al Maktoum International, its new superhub in Jebel Ali. By then, Al Maktoum International will be able to handle up to 146 million passengers a year (roughly double the number passing through Dubai International today), with a planned eventual capacity of up to a quarter of a billion passengers annually.

And then there’s the cost. The bill for Hamad International Airport in Doha, built from scratch, came in at an estimated $16bn. The Al Maktoum International expansion project (from 7 million to 146 million passengers a year), for which some of the financing is being arranged at the moment, will cost somewhere in the region of $27bn.

Compared to those prices, the costs for Heathrow look high, and that’s even without the cost overruns and delays that some analysts are saying will be unavoidable. There’s also the question as to who will stump up the cash; the airlines are worried that higher airport fees would encourage passengers to fly either to other London airports or transit through nearby European hubs.

Walsh’s assertion that it could take 50 years for change to come to Heathrow now looks a little wide of the mark. But given the delays that nearby Berlin has faced building its own new hub, it could still be decades before Britain’s biggest airport starts to play catch up.

 

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