Political Economy of Airport
Capacity Planning in the London
Airport SystemJagoda Egeland
Economist, Infrastructure Planning LeadInternational Transport Forum at the OECD
TRB Annual Meeting
Session 236: International Perspectives in
Airport System Planning for Capital Cities
Washington, D.C., 7-11 January 2018

With 164 million served passengers, London
has the busiest airport system in the world

Source: Google Maps.

Heathrow

75.9

46%

Gatwick

43.4

26%

Stansted

24.4

15%

Luton

14.89%

London City

4.53%

Southend

0.91%

Total

164.0100%

3The UK airport system is heavily privatised incomparison to those of other countries
 Each of London’s airports is in separate majority ownership Apart from Stansted and Luton, all London airports are entirely
privately owned
 Private ownership means that airports
 Do not rely on government funding to finance new infrastructuredevelopments, or to support their operating costs
 Control how they conduct their businesses and carry out theiroperations
 Will make choice to fund any new capacity only when they are
confident that that capacity will be utilised and provide asatisfactory rate of return for investors

Nevertheless, Government has an important roleto play in the aviation sector
 It determines the overall policy for aviation and carries out
negotiations at international level It delivers the surface transport infrastructure on which
airports rely It determines how airports should engage with local
communities

 It establishes emissions targets and restrictions
 It sets out the process for delivering any major new airport
infrastructure developments

5

Airport expansion is contentious andcontroversial
 Airport site selection methodology is challenging
 Infrastructure projects take a long time to build, muchlonger than governments stay in the office Costs imposed upon local populations from building
airports are concentrated, economic benefits ofexpansion are dispersed6

7

50+ years of airport expansion debate

1963-7: Stansted recommended as a the location for a new London airport; Government sets up a committee torevisit case for Stansted; Ministerial decision to develop Stansted

1968-74: Government sets up the Roskill Commission; Roskill recommends Cublington as new airport site;
Government selects Maplin Sands to abandon it three years later

1978: Aviation White Paper identifies Heathrow capacity as ‘restricted’

1990: Government commissions a study on airport capacity (RUTCASE); 7 years later the study concludes thatHeathrow expansion would deliver the biggest benefits; Planning permission granted for 2nd runway at Manchester
Airport

2002: Government publishes another study with options for new runway capacity in the south east of England

2003: Another Aviation White Paper point to Heathrow and supports a 3rd runway and a 6th terminal, and a 2ndrunway at Stansted, 3 years later a Government Progress reports confirms the commitment to the new runways

2007: Government consults on expanding Heathrow2009: Government backs a 3rd runway decision and rules out mixed-mode operations of the existing runways atHeathrow

2010: “No ifs, no buts, no third runway”. New Government comes to power and reverses its decision on Heathrow
and rules out new runways at Gatwick or Stansted



2012: Government publishes draft aviation policy framework for further consultation, independent Airports
Commission established in November

July 2015: Airports Commission recommends a 3rd runway at HeathrowJune 2016: Brexit

October 2016: Government endorses third runway at HeathrowFebruary 2017: Draft Airports National Policy Statement



October 2017: Revised draft Airports National Policy Statement (closes December 2017)

Davies Commission
 Objective: To examine the scale and timing of any requirement
for additional capacity to maintain the UK’s position as Europe’s
most important aviation hub; and […] identify and evaluate how
any need for additional capacity should be met in the short,medium and long term Approach: Independent Transparent and collaborative
 Scenario-based Iterative assessment and methodology development
 Comprehensive: Accounting for positive and negative knockon socio-economic and environmental impacts (region-wideassessments taking into account the impacts on otherairports)

10The Commission undertook an extensive
programme of engagement with stakeholders…

11…every step of the way
 Calls for evidence Demand forecasting, Airport connectivity, Airline
business models, Noise, Best use of existing
capacity, Relocating airports capacity
 Expert Panel Sessions
 Public Evidence Sessions
 Consultations
communitiesandinformation

sessions

withlocal Appearances in local/national government meetings

12The process was split into clear-cut phases Phase 1 (2013)
 Assessment of need for new capacity
 Sifting through proposals

 Output: A shortlist of options
 Phase 2 (2014-5)
 Development and analysis of shortlisted proposals
 Output: A recommendation

Assessment of need for new capacity
 “A case for at least one net additional runway in London
and the South East by 2030, and most likely a case fora second net additional runway by 2050”

 Result robust across different scenarios and compatible
with the climate-change constraint

Sifting through proposals
 52 credible proposals were received and scrutinisedalongside proposals developed by the Commission
 Three sifts through a suite of 58 possible options
identified in the initial sift
 1st sift: 58  28 proposals
 2nd sift: 28  9 proposals
 3rd sift: 9  4 proposals
 The sifting process concluded with 3 shortlisted proposals

Heathrow Airport Ltd: Heathrow NW

Source: Airports Commission, Final Report, p. 99

Heathrow Hub: Extended Northern Runway

Source: Airports Commission, Final Report, p. 101

Gatwick Airport Ltd: Second Runway

Source: Airports Commission, Final Report, p. 97

The UK airport debate:The Airports Commission
recommended expanding Heathrow over expandingGatwick A third runway would unlock significant suppressed demand
at Heathrow, and the airport could finance the expansion on
its own from increasing its aero-charges
 The benefits of expanding Heathrow were estimated to besignificantly greater for business passengers, freight
operators and the UK’s economy
 The Commission judged that the proposal for a third runway
at Heathrow, in combination with a package of measures toaddress its very significant environmental impacts in terms ofnoise, air quality and other impacts on local communities,
presented the strongest case

18

19

Airports Commission’s package of measures toaddress adverse impacts of expansion

Support for regional air connectivity
The Government should alter its guidance to allow theintroduction of Public Service Obligations on an airport-toairport basis and should use them to support a widespread
network of domestic routes at the expanded airport.
Heathrow Airport Ltd should implement additional measures toenhance regional connectivity, including introducing reduced
charges and start-up funding for regional services.

21

Delivering benefits across the UK

Source: Heathrow Airport

22

What made the process successful?
Engagement will all stakeholders, not just the ones
with salient positions



Incorporating evidence base and views
stakeholders into the decision-making processTransparency about the process every step of the wayIndependenceConsideration all possible mitigation strategies andcompensation measuresfrom23

Will the runway actually be built?

Thank you
Jagoda EGELAND
Economist, Infrastructure Planning Lead
International Transport Forum at the OECD
Postal address: OECD/ITF, 2 rue André Pascal, F-75775 Paris Cedex 16
Tel. + 33 (0)1 45 24 97 20, Mob. +33 (0)6 68 32 03 68
Jagoda.Egeland@oecd.org, www.itf-oecd.org