Business World

Friday 28 October 2016

UK's new Prime Minister faces the old London runway problem

Sarah Young and Kylie MacLellan

Published 11/10/2016 | 02:30

Britain's Prime Minister Theresa May. REUTERS/Toby Melville
Britain's Prime Minister Theresa May. REUTERS/Toby Melville

UK Prime Minister Theresa May is expected to decide where to allow new airport capacity near London this month in a long-awaited ruling that will help shape Britain's economy and trading ties following its vote to leave the European Union.

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Ms May will either support plans for an upgrade at Heathrow, the busiest airport in both Britain and Europe, or at Gatwick to the south of the city. The decision has been debated for more than 25 years and any further delay could risk economic growth as both sites near full capacity.

At £18bn (€20bn), Heathrow would be the more expensive project and face legal challenges over its environmental impact on densely populated west London. But its established trade links with emerging markets strengthen its case in the wake of Brexit. It also has the backing of the major airlines.

Gatwick, Britain's second busiest airport, mostly connects to Europe, but argues it can build a runway more quickly and cheaply and that its rural position means it would disturb fewer people with noise and air pollution.

The decision has split successive governments, faced with protests from high-profile politicians, local residents and environmental campaigners. But Ms May told her party last week an announcement would be made "shortly".

"She is the kind of person who won't baulk at making a decision," former Conservative transport minister Steve Norris said at an event on the sidelines of their party conference.

Industry sources say they expect a decision this month.

Three options are under consideration: building a new runway at Heathrow for £18bn, lengthening one of its existing two runways for an estimated £14bn, or building a new runway at Gatwick for £7bn.

Ms May's predecessor, David Cameron, had been due to rule on it in July, after he delayed an earlier decision, and sources and media reports said he favoured Heathrow. But the vote to leave the EU cost Cameron his job and the decision was delayed again.

For business leaders, Heathrow remains the preferred choice. A hub airport delivering passengers on to further destinations, Heathrow is also Britain's biggest port by value, handling a third of the country's non-EU exports through established connections with emerging markets.

"After Brexit, the case for Heathrow is stronger because it is the airport which links the UK to markets outside Europe," said Howard Davies, who backed Heathrow following his three-year government-commissioned independent inquiry.

"There is a very great need ... for the country to set a direction."

Airlines also prefer expansion at Europe's largest hub airport, a title Heathrow is set to lose to France by 2020. "We struggle to see any business case for the expansion of Gatwick," Willie Walsh, the head of IAG, owner of British Airways and Heathrow's biggest airline, told an industry conference in June.

He prefers Heathrow but says he will only support expansion where the costs are kept low.

Heathrow, 15 miles from central London, faces greater scrutiny after some of its air monitors breached air quality limits in 2014. Ms May's constituency lies under the flight path but she is giving little away, including whether to put the decision to parliament.

Analysts said the vote to leave the EU, and the uncertainty that had sparked about the health of the economy, mean a decision is now urgent. (Reuters)

Irish Independent

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