Manchester Airport - General Thread

[Aceshigh]

Some great points and interesting debate !

I think the reference refers to the fact that its easier for journalists to diceminate North / South and the North has a wee bit more clout in putting it's case over due to the conglomeration of major cities, but that should not diminish the case for " proportional" investment in the S West, Midlands and the N East!

Unfortunately it's a blessing and a curse as Manchester Leeds Liverpool Sheffield will not come together as one entity and play to their respective strengths. The message then becomes fragmented!

 

[Coathanger16]

A few years ago, AI's only profitable route into the UK was their service to BHX. Yet the moment they found extra LHR slots they moved lock stock and barrel to there. Sometime airlines are just clueless about the need to fly to LHR at the total expense of looking elsewhere. Even now, MAN has greater demand to India than a number of cities that AI has either started or announced. It's the mindset of airlines that needs to be addressed where only capital cities have the demand.

I suspect the reasoning for AI's move on this was due to how hard LHR slots are to come by. Sure their routes out of Heathrow might not have been making a profit then, but if 5 years down the line they could have been but they didn't have the slots, they'd have been kicking themselves for not having them. Because of capacity constraints Heathrow tends to have a "use it or lose it" situation.

Firstly, tens of millions (even extrapolated over the vast numbers of slot pairs) does not come close to £25bn plus.

I wasn't suggesting that the £25bn figure covers the costs of the slots available - my point was more about slots going for that much money at LHR, yet at other airports airlines pay little or nothing for slots. Whether or not its well placed is another argument, but it just goes to show how much airlines want to fly from LHR.

Secondly, they are only valued at that level because of slot constraints. Adding the supply of a third runway destroys that value. Using this as an economic justification you would actually be spending money to destroy value.

Again, my point on this was more to highlight the attractiveness of LHR to airlines and the unfulfilled demand that arises from LHR being full. It wasn't meant to be an economic justification, just trying to highlight the demand to fly from LHR that exists.

The core argument in favour of LHR was connectivity. If it were london capacity they would have chosen LGW, which is better value for money.

I'm not sure about the ins and outs of connectivity, but if you are looking at connecting point A to point C via point B, it doesn't matter whether point B is in the UK, or if in the UK whether it is in the north, south, east or west.

True it doesn't matter where point B is for connectivity purposes, however no airport relies solely on connecting passengers. Whichever city the hub is located closest to will benefit from having a greater range and frequency of flights than if they had no hub. Surely then its best to have the hub located within relatively close proximity to a countries largest economic centre? (Usually the Capital)

The London capacity argument (expand Gatwick as its cheaper) only works if each airport had the same role. Clearly it would be difficult for Gatwick (or Stansted, Luton or City) to become a major hub (LHR scale), just as it would be difficult for Heathrow to become a LCC dominated "sun & sand" airport.

I appreciate that there are a wide range of factors to consider, but in my mind at the end of the day, Heathrow is effectively full and can't meet the demand that exists, and the majority of the cost of expansion will be covered by Heathrow. As long as it doesn't negatively impact the regions, I feel that the benefits outweigh the negatives. Remember that a third runway at LHR won't be open for at least 10 years. 10 years ago was just before the recession and look how far our airports have come since then. One would hope that by 2025ish, Manchester has an extensive network that wouldn't be massively impacted by extra capacity coming online in the SE.

 

[Dobbo]

Coathanger - I agree.

LHR is the only airport offering that connectivity as things stand. London is also the largest aviation market on earth, so it makes sense to have the hub (or hubs) there or thereabouts.

The issue is the binary decision the government has made. It has allowed LHR to expand at a vastly inflated cost, whilst preventing LGW from doing so. This is a problem, because there is no reason why LGW cannot perform the same function as LHR if it has two runways, examples of which I'm sure you are aware of. The reason the government took this decision is because they realised (too late) that the correct decision of opening up competition to all London airports would lead to a compelling challenge from MAG (via STN) who were told they were out of the running. The decision was also unwisely rushed following the Brexit vote.

We have been here before. LHR will invariably fail to make one or more of the economic or environmental cases for expansion - or they will fall foul of competition legislation - and we will be back to square one. When the time comes, the government needs to address the issue properly at a national level and make the right decision for the right reasons.

I don't know what the right answer is, but it is definitely not expand LHR only. In this scenario LHR can backtrack on their promise vis a vis landing fees and raise them to cover the costs of expansion - passing the cost on to the consumer via the airlines. If LGW is unable to expand, the airlines have no choice to relocate and LHR is left with a monopoly over the largest aviation market on earth. That is not good for the UK, and would simply add to the problems faced by the UK as a whole.

The economics only add up at a reasonable price, and LHR is not a reasonable price.

 

[Coathanger16]

I think besides the competitive angle (MAG & STN) there was also concern that giving both LHR and LGW permission to expand would have resulted in neither expanding (something along the lines of investors not being prepared to fund both projects simultaneously).

Whilst yes it shouldn't be just LHR that expands, I think in terms of London it would be better to focus secondary expansion at STN & LTN, rather than at Gatwick. Gatwick is never really going to be able to compete with LHR (unless restrictions are imposed on the latter), so surely it would be better to ensure STN & LTN can compete with Gatwick.

With regards to Gatwick becoming a hub if it had two runways, I think that could only happen if Heathrow was restricted in some way. That then negates the benefit of providing new capacity.

I'm not an expert on it but is there any way that Gatwick's second runway (currently used as a taxiway) could be used to boost capacity. I know they're in close proximity but just look at San Francisco - two closely spaced runways used simultaneously.

At the end of the day, London has two airports that are full. Expanding just one doesn't solve the problem, and the governments having a tough time justifying one new runway let alone two, so expanding both seems unlikely.

The best approach I can see is to expand LHR now (that's where the largest unfulfilled demand is) and once construction has started effectively undertake another "commission" to examine what further expansion is required. That way Stansted, Luton, Manchester & Birmingham can each be seriously considered alongside Gatwick. Howard Davies himself said that with HS2, BHX would be a better option for expansion than Gatwick.

 

[Dobbo]

I think besides the competitive angle (MAG & STN) there was also concern that giving both LHR and LGW permission to expand would have resulted in neither expanding (something along the lines of investors not being prepared to fund both projects simultaneously).

If that is the case it rather torpedoes the assertion that LHR's expansion is self funded.

 

[Dobbo]

Whilst yes it shouldn't be just LHR that expands, I think in terms of London it would be better to focus secondary expansion at STN & LTN, rather than at Gatwick. Gatwick is never really going to be able to compete with LHR (unless restrictions are imposed on the latter), so surely it would be better to ensure STN & LTN can compete with Gatwick.

With regards to Gatwick becoming a hub if it had two runways, I think that could only happen if Heathrow was restricted in some way. That then negates the benefit of providing new capacity.

That simply creates the monopoly that was the cause of BAA break up. How can LGW compete with LHR if restrictions are imposed on it - because that it what the government are proposing.

If the government pursues a policy of favouring LHR over LGW (or any other London airport) then it may be on the hook for compensation.

 

[Dobbo]

I'm not an expert on it but is there any way that Gatwick's second runway (currently used as a taxiway) could be used to boost capacity. I know they're in close proximity but just look at San Francisco - two closely spaced runways used simultaneously.

No chance - far too close together.

 

[Dobbo]

At the end of the day, London has two airports that are full. Expanding just one doesn't solve the problem, and the governments having a tough time justifying one new runway let alone two, so expanding both seems unlikely.

I agree one does not solve the problem but a never ending drip feed of new capacity will always be a problem.

The reason why the government is having such a tough time justifying one new runway is because they have chosen a scheme where the commercial, environmental and competition case does not work and each time they try to force it through they get caught out.

 

[Dobbo]

The best approach I can see is to expand LHR now (that's where the largest unfulfilled demand is) and once construction has started effectively undertake another "commission" to examine what further expansion is required. That way Stansted, Luton, Manchester & Birmingham can each be seriously considered alongside Gatwick. Howard Davies himself said that with HS2, BHX would be a better option for expansion than Gatwick.

I agree a national policy is required, which requires the government to consider all UK airports, and not treat LHR as a special case by railroading its plans through and then trying to pick up the pieces 20-30 years down the line (when LHR will be asking for runway 4).

 

[Coathanger16]

If that is the case it rather torpedoes the assertion that LHR's expansion is self funded.

I think the point was Heathrow's investors wouldn't want to fund expansion there if expansion was going ahead at Gatwick at the same time. Likewise with Gatwick's investors. The idea being that there is only sufficient demand for 1 new runway in the SE at the current time. Not my own view - just repeating comments that others have made.

That simply creates the monopoly that was the cause of BAA break up. How can LGW compete with LHR if restrictions are imposed on it - because that it what the government are proposing.

Sorry, maybe I didn't make myself clear. I meant the only way that Gatwick could compete with Heathrow is if restrictions were imposed on Heathrow. Clearly that's not a favorable situation either.

No chance - far too close together.

SFO runway centreline separation - 228m
LGW runway centreline separation - 196m

Difference 32m (wingspan of a B737) - don't know how much it would cost, but shifting the southern most runway South by say 100m should surely allow operations (not independent, but enough to increase capacity).

The reason why the government is having such a tough time justifying one new runway is because they have chosen a scheme where the commercial, environmental and competition case does not work and each time they try to force it through they get caught out.

The problem here is why do they want to expand LHR in the first place? Because it it full. Expanding Gatwick (or any other airport) won't change that. At the end of the day, the problem is LHR, and the solution must therefore include LHR (either expanding it or replacing it - whether that be with a new hub or a "constellation" of expanded airports).

 

[Dobbo]

LGW is as full as LHR. The government have clearly taken a decision that LHr gets their way or no one does. Unfortunately the case is so poor that we will be back in this position in a decade.

The reason LHRs investors don't want to fund expansion if LGW is allowed to expand is because they need to charge a monopolistic premium at LHR to make the commercials work. They could not do that if LGW is not constrained as the airline customers would vote with their feet.

 

[EGCC_MAN]

There are two key problems at play here.

1) The LHR R3 proposals are costed at around GBP18Bn basic (funded by HAL, but likely underwritten by the taxpayer) plus around GBP12Bn in necessary support works to surrounding infrastructure (much of which would be taxpayer-funded). These numbers don't work; they're just way too expensive. Note comparative costings for the build of a complete new 90mppa airport in Istanbul, the rebuild of New York La Guardia, the inflation-adjusted cost of building Hong Kong Chep Lap Kok. And these considerably smaller sums effectively buy a whole new mega-airport, not a one-third increase at a poorly-located existing one.

2) Much as the Westminster narrative would have us believe that SE demand growth is driven by a clamour for new schedules to Chongqing and Okinawa, it simply isn't the case. Demand for hubbing (already provided for) isn't the main driver of growth either. What nobody wants to acknowledge is that SE demand growth is primarily driven by exactly the same destinations that have been prospering from MAN, BHX and others. ie. Malaga, Dublin, Ibiza, Tenerife, Lanzarote, Warsaw, Prague. The places to which no-frills carriers have been piling on capacity at bargain fares. That is a market best satisfied via Stansted and Gatwick which can be expanded far more cost-effectively than LHR. Luton has a role to play in this, but the topography of the site would likely make it extremely difficult to physically accommodate additional runway and terminal capacity there.

Note that LHR would still be able to accommodate any compelling new long-haul business route should sufficient demand arise. Because, as always happens, a marginal short-haul route will make way as the valuable slots underlying it are sold on. And ultimately, if some remote business destination can't be reached directly, the SE business traveller can easily make one change at DXB or ATL en route. It's not so bad. It's not a deal-killer. People like us do this all the time.

 

[Dobbo]

Ultimately it comes down to what you think is an acceptable price to pay.

Taking figures out of the air, £75bn is not but something like £10bn probably is. LHR need to be clear about what their business case actually is, because it is currently reliant upon some inherently unlikely assumptions that does not stand up to scrutiny.

 

[Coathanger16]

Ultimately it comes down to what you think is an acceptable price to pay.

Taking figures out of the air, £75bn is not but something like £10bn probably is. LHR need to be clear about what their business case actually is, because it is currently reliant upon some inherently unlikely assumptions that does not stand up to scrutiny.

I agree that the argument is essentially about cost - is it worth it?

Assuming an expansion cost of £18bn and associated access cost of £12bn - total £30bn, economic benefits of LHR expansion have varied between £60bn and £220bn. These equate to benefit:cost ratio's of 2:1 and 7:1 - all in all, that's not too bad.

Whilst its important to look at the overall cost, its also important to look at each section individually. For instance:

The actual runway itself I believe has been costed at <£1bn.

Part of the expansion is the construction of a new terminal on a similar scale to T5 - £4bn.

The surface access costs have been heavily disputed. The airports commission estimated £5bn, whilst TfL estimated £15-20bn. It should be noted that TfL's estimates were based on something like 150mppa - something that isn't likely to be reached at an expanded LHR until 2040 at the earliest (more likely 2050). Also that figure was quoted as the investment required to offer the absolute best optimum level of service - would be interesting to see how TfL classify the existing level of service.

Whilst £18bn may sound like a lot, if in reality it turns out to mean say £5bn from 2020 - 2025, and the other £13bn spread out from 2025 - 2035, does that still seem like too much to pay?

Its already been done to an extent, and I'm sure it will happen again with detailed planning, but the government needs to put serious pressure on Heathrow to say "this £18bn figure, how much do you REALLY need?". For instance I recall Mr. Walsh complaining about there being an £800m underground car park in the plans - is that seriously needed or is it a luxury (its no secret that car parking charges are one of LHR's largest sources of income).

I don't mean to be spiteful, but I wonder how much would be too much if Manchester were full and seeking to expand.

 

[Coathanger16]

I do often wonder if there's some kind of conspiracy going on with regards to Heathrow.

The government has been under intense pressure to do something about airport capacity in the SE for a number of years. Whichever option they chose they were going to upset somebody.

I wonder if government opted for Heathrow to make it appear as though they were finally doing something about it, but knowing full well it wouldn't get past the legal hurdles. That way they could say "well at least we tried".

 

[Dobbo]

I agree that the argument is essentially about cost - is it worth it?

Assuming an expansion cost of £18bn and associated access cost of £12bn - total £30bn, economic benefits of LHR expansion have varied between £60bn and £220bn. These equate to benefit:cost ratio's of 2:1 and 7:1 - all in all, that's not too bad.

The problem is that a number of the claimed benefits are questionable at best. The strong suspicion is that these are being "created" in order to justify the cost of the project.

 

[Dobbo]

I recall Mr. Walsh complaining about there being an £800m underground car park in the plans - is that seriously needed or is it a luxury (its no secret that car parking charges are one of LHR's largest sources of income)

Precisely - £800m is nearly the total cost of MAN's TP.

LHR is in an expensive part of the country - but they need to get a grip on costs.

 

[Dobbo]

I don't mean to be spiteful, but I wonder how much would be too much if Manchester were full and seeking to expand.

Regretfully, I don't think we will ever need to answer that question. If MAN got 10% of the support LHR got, it would be a miracle.

[I really need to learn how to multi quote!!]

 

[Dobbo]

I do often wonder if there's some kind of conspiracy going on with regards to Heathrow.

The government has been under intense pressure to do something about airport capacity in the SE for a number of years. Whichever option they chose they were going to upset somebody.

I wonder if government opted for Heathrow to make it appear as though they were finally doing something about it, but knowing full well it wouldn't get past the legal hurdles. That way they could say "well at least we tried".

You may be right. To me the easiest way to do it is to open the doors to competition.

It would be embarrassing for the government to fight tooth and nail for LHR over LGW/STN only for EZE to move their operation to LHR from LGW. If that came to pass it would be a national scandal.

 

[Coathanger16]

The problem is that a number of the claimed benefits are questionable at best. The strong suspicion is that these are being "created" in order to justify the cost of the project.

The problem with cost benefits of aviation is it is very hard to put a figure on the benefit it provides. If expansion didn't take place would the supposed benefits of expansion still occur as people would likely just travel on an alternate route.

Another point about costs is would ticket prices be forced up due to a lack of capacity? Heathrow may require an increase in charges to pay for expansion, but how does that compare to the impact on cost of tickets at a constrained Heathrow? Its already widely acknowledged that costs are higher at Heathrow now than if Heathrow had spare capacity.