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It’s Heathrow…probably

[ October 25, 2016   //   ]

As widely expected, the government came down in favour of a third runway for London Heathrow Airport as its preferred route to airport expansion in south-east England on 25 October. The scheme will now be submitted as a draft ‘National policy statement’ for consultation.

However, the scheme still faces a number of obstacles before it becomes a reality, probably around 2025.

The plan still needs to be voted on by the House of Commons vote, potentially tricky in view of the Conservative government’s slender majority and the fact that a number of high-profile Government figures, including foreign secretary Boris Johnson, are vehemently opposed to the plan.

There is also the possibility of a legal challenge to the proposal, possibly by Gatwick airport, disappointed that its plan for a second runway did not find favour with the Government.

Environmentalists and other protesters could also disrupt the construction process, which is expected to take around five years.

Freight Transport Association director of global and European policy, Chris Welsh, was bullish on the prospects of the plan succeeding, however. He described it as “excellent news for the freight and logistics industry and the country. This decision is even more vital in a post-Brexit world where Britain’s capability to expand its trade and ability to compete in markets outside Europe is heavily dependent on connectivity to emerging markets.”

He pointed out that freight and passenger services have a strong synergy at Heathrow and it is the wide diversity of destinations and services which makes it such an attractive proposition for shippers.

FTA has long campaigned for Heathrow to be selected for expansion and its report ‘Sky-high value – The importance of air freight to the UK economy’ played a key part in influencing the Airports Commission recommendation in favour of a third runway at Heathrow, it said.

However, director General of the British International Freight Association (BIFA), Robert Keen, said he would not be booking a ticket for the opening ceremony just yet.

While the news appears to be the beginning of the end of years of procrastination over the expansion of UK aviation capacity and as such is long overdue good news for BIFA’s 1,500 member companies who have been dismayed over the ongoing delay on such a huge issue.

“However, we understand that a public consultation will now be held on the effects of airport expansion before the government makes a final decision as part of a national policy statement on aviation, with MPs then voting on that decision in the winter of 2017-18,” Keen pointed out.

“If that is the case, uncertainties remain. Whilst the UK Transport Secretary, Chris Grayling has hinted at an expedited planning procedure, with no reopening of high level arguments, the inevitable legal challenges and the convoluted parliamentary and planning processes that are also likely lead me to doubt that any expansion will be completed by the time that UK aviation capacity is predicted to run out in 2025.”

Chair of the All Party Parliamentary Group on Freight Rob Flello MP questioned the large amounts of taxpayers money being channelled into what is essentially a private sector scheme, although he said it was right for the Prime Minister “to stop dithering about how to enlarge the country’s air capacity.” Heathrow Airport Holdings is primarily owned by Spanish, Qatari, Canadian, Singaporean and Chinese investors, he pointed out.

He added, also that extensive work needs to be carried out on the M25 before anything can be done at Heathrow so arguably an expanded Gatwick could be up and running with its expansion long before the third Heathrow runway is complete.

Nevertheless, Transport Secretary Chris Grayling described the Government’s decision as “truly momentous” and proof that the government was taking decisive action to secure the UK’s place in the world.

It would bring new services to an airport that has seen capacity capped by a lack of take-off and landing slots. By most estimates, Heathrow is currently effectively full. While some of these are likely to be domestic routes, many of them to long forgotten Heathrow destinations such as Belfast International, Liverpool, Newquay, Prestwick and Durham Tees Valley and probably of little interest to the air cargo industry, many will be long haul flights.

Heathrow airport itself calculates that the new runway allow up to 40 more long haul destinations, such as Wuhan, Osaka and Quito. Heathrow currently handles around a third of the UK’s non-EU trade by value, almost all of it in the bellyholds of passenger planes. Very few all-cargo aircraft now use Heathrow, although increased runway capacity could in theory open it up to such operations in future.

For the air industry, though, the main question will be how to manage demand for air capacity between now and the new runway’s expected opening date in around a decade’s time.

Physical construction of the new runway and associated terminals is unlikely to have much direct effect on Heathrow’s freight forwarding community, most of whom are concentrated on the south side of the airport whereas the new works are mainly to the north. However, the new runway’s huge footprint could increase the pressure on the airport’s already extremely tight property market, increase land prices and rental rates and pushing more freight firms out to peripheral areas.

 

 

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