Airports Commission: Final Report — House of Commons, 2015-11-26
Topic: Transportation
Adam Afriyie (Conservative, Centre-right): Thank you, Mr Deputy Speaker, although I shall try not to use the five minutes, to give the Front-Bench speakers time to respond I would like to make some remarks about competition and markets, and this weird belief that Heathrow Airport Holdings Ltd, a private limited company owned 100% by overseas shareholders, is still part of our national state-owned infrastructure. It might perform part of that function, but it is not a state-owned enterprise First, however, a quick word on noise: Heathrow airport is currently the noisiest airport in Europe. Sixty-eight times more people are affected by noise around Heathrow, south-west London and Berkshire than are affected by Gatwick. If the Davies commission assumptions are correct, in 60 years’ time—I am not sure how we can say with any accuracy what will happen 60 years from now—27 times more people will be affected by noise and pollution from Heathrow than if there was an expansion at Gatwick Heathrow Airport Holdings Ltd is a privately owned company. I thank the Minister for his answer to my question about the infrastructure required as a direct result of expansion, but the Government have said they will not spend taxpayers’ money on this. Were they to do so, it would probably end up involving £15 billion or £20 billion, which would equate to a £300 subsidy to a private company from every person in the United Kingdom, so I am glad that that is not happening. On the other hand, Heathrow seems to be thinking, "Hang on, the taxpayer should subsidise us, a foreign-owned private company." That is unacceptable; I do not think that the public would accept that kind of behaviour I hope that we will not decide on Heathrow, because that would not be in the national, regional or local interests, or in our economic interests. Were we to do so, we would be further entrenching an existing market-dominant player. Conservative Members, and probably most others as well, feel that that is not the kind of monopolistic practice that we should be entrenching Let us look at the economics. At the moment, it already costs £26 per passenger to land at Heathrow, which is not very competitive. The cost at Gatwick is £8.63. The cost following the construction of a new runway at Heathrow has been calculated at about £30 per passenger, which is not particularly economically viable, given that the price in the rest of Europe is generally between £18 and £20. So let us not assume that an extra runway at Heathrow would be cost-effective or economically beneficial, because that is not necessarily the case As I have said, Conservative Members would certainly not wish to entrench semi-monopolies. Let us look at the evidence on competition. When Gatwick put on a flight to Moscow, the price dropped from £700-plus to £350. Surely we believe in that kind of competition. I have a long history in business, and some might argue that business people such as chief executive officers are desperate for expansion at Heathrow. Utter nonsense! What CEOs and other business people are interested in is being able to get on a flight and get to where they want to go, whether from Gatwick or Heathrow. They will choose to fly from wherever the price is lowest and the connection the quickest. So I think those objections can be put to one side I want to return to the point about projecting 60 years hence. We cannot predict tomorrow’s weather, so the idea that we can predict what the economic consequences of this decision on Heathrow will be 60 years hence is quite bizarre. I should like to quote the former director of the Institute for Fiscal Studies, John Kay, who rubbished the entire methodology, saying: "The Commission purports to describe in immense detail the evolution of air transport over the next 60 years, even which routes airlines will choose to fly." Anyone with an economic or business background will know that that is simply not possible The judgment that we need to make today is also about the type of model that future aviation will adopt. We keep talking about a hub. I have written to British Airways, to Heathrow Airport Holdings Ltd, to the Ministers and to several authorities connected to aviation to ask what constitutes a hub. I asked them to show me some sort of model, but none has been forthcoming. This idea that the hub will continue to operate exactly as it does now is a comfort blanket. And even if we do require a hub, like the one with two runways that we have at the moment, no one is arguing that Heathrow should close. The two-runway hub will continue as more modern forms of transport, such as point-to-point transport, arrive. Now, 90% of all the aircraft being ordered by airlines are suited to point-to-point transport and not to the old hub and spoke model.