Heathrow at the end of the runway

The Court of Appeal has upheld a challenge to the decision to proceed with a third runway at Heathrow airport on the grounds that the Government’s Airports National Policy Statement (ANPS), which endorsed the runway, was unlawful in failing to take into account the Government’s commitment to the provisions of the Paris Agreement on climate change.

The Government takes the view that Heathrow expansion is a private sector project and so will not appeal against the judgement, leaving open the possibility of later amending the ANPS. This doubtless suites the Prime Minister, who represents a West London constituency under the flightpath and who had earlier been a vocal critic of the airport’s expansion. Abandoning the third runway would also add to the Government’s credibility when hosting the COP26 climate change conference in Glasgow later this year. Meanwhile, the owners of the airport must decide whether an appeal to the Supreme Court would be worthwhile.

The case for increasing the capacity of Heathrow, the UK’s main hub airport, has been based on the needs of business: more direct connections for exporters, facilitating inward investment to the British economy, and boosting London as a world city for doing business. There is no convincing argument for expanding tourism, inbound or outbound, given the need to reduce carbon emissions from aviation.

What is generally overlooked is that most air travel is for leisure purposes. Even at Heathrow, only 25% of passengers are on business trips. So there is ample room for business travel to grow if the demand emerges. Leisure travellers would be displaced to other airports with spare capacity, Stansted and Luton near London, and regional airports beyond. This would happen under the influence of market forces since most business travellers would be willing to pay a premium for the advantages of Heathrow.

Suppose I need to travel to India, to Bangalore for instance. If I’m on a short business trip paid for by my organisation, I’ll fly direct from Heathrow. But if I’m going on holiday, paying out of my own pocket, I’ll shop around for a low-cost flight, expecting to fly with one of the Middle East-based airlines, changing flights at an intermediate hub such as Dubai. I might leave from Heathrow or from Gatwick, Stansted or a regional airport, depending on price and convenience. If demand for business travel to Bangalore grows, leisure travellers who might have flow direct will be have viable alternatives.

Ultimately, growth of demand for air travel will be constrained either by airport capacity or by the need to limit carbon emissions to comply with the Government’s legally binding target of net zero emissions by 2050. One way or another, the cost of air travel is likely to rise, reducing growth in demand.

Hubbub, a UK environmental NGO, has released a report on flying by people in the 20-45 age group, based on a survey sample of two thousand. It found that no less than half the flights by men aged 20-45 in 2019 were for stag parties and a third of flights by women were for hen dos. Hubbub is concerned about the carbon emissions from these flights and the options for reduction by selecting a UK destination. For example, swapping Barcelona for Brighton is the equivalent of going vegan for 2.5 months.

The high proportion of flying for partying is surprising, and reflects the availability of low-cost flights outside the main season for tourist travel. Some increase in the cost of leisure air travel would increase the attractions of domestic destinations, without rather little loss of enjoyment, I anticipate.

Although the private sector operator of Heathrow has a natural commercial interest in expanding its capacity, not all the airport’s users agree. Willie Walsh, chief executive of British Airways’ parent company, has been critical on account of the likely need to cover the cost of construction through higher landing charges. A capacity constraint would allow BA as the dominant airline to raise prices over time, but would also allow the Government to claw back some of the increased profits through a rise in Air Passenger Duty.

In short, we can manage without a new runway at Heathrow. The market will allocate airport capacity to the highest value users, and the UK’s chances of meeting its carbon reduction target will be improved.