| SSE NEWS ARCHIVE - July to September 2011
AVIATION CALLS FOR TAX CUTS FROM ALL REGIONAL AIRPORTS
Airport Watch - 30 September 2011
Regional airports have joined forces to urge the Chancellor to abandon the
'one-size-fits-all' approach to Air Passenger Duty (APD) following his
decision to reduce the tax on long-haul flights from Northern Ireland.
In a joint letter sent to George Osborne this week, the collaboration -
which includes Birmingham Airport, Bristol Airport, the Manchester Airport
Group, Flybe and Jet 2 - said it trusts the decision will pave the way for
tax reductions on services from all the UK regions outside of London.
It warned that unless APD is reduced for regional airports, they will be
unable to expand to take the overspill from London airports.
Birmingham Airport chief executive Paul Kehoe said: "The Government has
already decided against airport expansion elsewhere and has indicated that
existing spare capacity regions should be utilised. However, if a
'one-size-fits-all' approach to aviation taxes continues, they will simply
be unable to deliver on this."
"We have argued for some time that APD has a disproportionate impact on the
regions, including those that rely on crucial lifeline air services. They
have a lower percentage of business travellers or inbound tourists than the
London airports and have been hit hard by the economic downturn. By reducing
the APD it would support economic growth and the rebalancing of the UK
THIRD RUNWAY PROTESTER ESCORTED OFF PLANE
AND BARRED FROM AMERICA
Ross Lydall - Evening Standard - 30 September 2011
An activist who campaigns against airport expansion has been barred from entering America - John Stewart - was escorted off a plane by armed guards when it landed in New York yesterday and sent back to London on the next available flight.
Mr Stewart, 62, who heads the anti-airport expansion protest group HACAN and who led the campaign against the third runway at Heathrow airport, was believed to have fallen foul of the US's strict visa entry requirements because he planned to spend a month travelling across the country campaigning.
One of his fellow HACAN activists, Monica Robb, told the Standard: "It's scandalous. I suspect it's because he's a campaigner. They are paranoid.
I don't think he's got any criminal convictions, he is not that sort of a person. He is a very mild-mannered person, but very persistent."
Mr Stewart, who lives in Clapham, has led the campaign against the expansion of Heathrow since the Nineties. He was due to land at Heathrow today.
He flew out yesterday on a KLM flight and is thought to have attempted to enter the US via its visa waiver programme, which permits UK citizens to enter the States for up to 90 days for "business or pleasure".
He sent an email to supporters overnight, confirming his ban on entering the country. It read: "Refused entry to US. Put on plane back to UK. Back Friday morning."
He was to have been joined by activist Dan Glass, a self-confessed "freedom fighter" who belongs to the Plane Stupid Scotland campaign group. However, Mr Glass did not travel because he has a criminal conviction for breach of the peace. Mr Glass said there were 3,400 airport construction and development projects planned across the US that "make the Heathrow third runway campaign look like a walk in the park".
Prior to departing for the US, Mr Stewart had denied charges of hypocrisy, not only for taking a long-haul flight, but for using Heathrow. He said the protest against expansion plans at the airport - cancelled by the Government - had been primarily against short-haul flights to Europe.
"I don't feel it is hypocritical. I feel comfortable about it," he told the Daily Mail. He added: "There would be a lot of hypocrisy if I were flying to Frankfurt."
He had planned to address activists in Chicago and Seattle He said: "They are keen to hear about our success, particularly how residents linked up with environmental groups."
OUR COMMENT: A warning for the future?
EC ANNOUNCES ETS BENCHMARKS FOR AIRLINES
ENDS Europe DAILY - 26 September 2011
The European Commission has published benchmarks to calculate how
many free carbon allowances will be allocated to individual airlines
under the EU's emissions trading scheme (ETS), based on 2010
revenue-tonne-kilometre (RTK) data.
Member states will have three months to issue the exact number of
free allowances (EUAs) each airline will get following the
publication of the benchmarks on Monday. Airlines will receive 0.6797
free EUAs per 1,000 tonne-kilometres emitted the first year, dropping
to 0.6422 over phase 3 of the EU ETS (2013-20).
Carbon market analyst Point Carbon estimates that the total number of
EUAs to be given out for free in 2012 is expected to be around 176
million . Airlines will have to buy a further 88 million EUAs, worth E1.1bn at today's carbon price. For the ten largest companies such as Air France, BA and United Airlines,
the shortfall in 2012 will be about 30 million.
The commission remained defiant over the legal challenge launched by a group of foreign airlines against the ETS, saying it has no intentions to change EU
legislation. Third countries can apply for exemptions, the EU executive stressed, adding that it was "ready to engage constructively [with them]" on equivalent measures outside Europe.
BAA'S NEW BID TO STOP STANSTED SALE
BAA is to make a last stand against the Competition Commission's (CC)
order to sell Stansted Airport
Web Reporter - Herts & Essex Observer - 16 September 2011
Today (Thursday, September 15) the operator confirmed that it will seek a judicial review of the monopolies watchdog's decision requiring it to auction its Uttlesford hub and either Edinburgh or Glasgow airport.
A statement confirmed: "The challenge relates to the Competition Commission's consideration of whether there have been material changes of circumstances since its original 2009 decision such that it is not necessary or appropriate to require BAA to divest Stansted." BAA will be submitting the application for judicial review to the Competition Appeal Tribunal tomorrow (Friday, September 16).
The move comes after July's judgement, when the CC rejected BAA's claim that there had been "material changes in circumstances" since it provisionally ordered the auction of its Essex hub in March - and concluded the deal must go ahead. Despite a series of legal challenges, the CC insisted that the sale of the airport was "fully justified" and that passengers and airlines would still benefit from greater competition with the airports under separate ownership - despite the current Government's decision to rule out new runways at any of the London airports.
Then BAA's chief executive Colin Matthews said: "We are dismayed? The Competition Commission has not recognised that the world and BAA have changed. This decision would damage our company which is investing strongly in UK jobs and growth."
After the judicial review bid was announced today, Stop Stansted Expansion's economics adviser Brian Ross said: "This is appalling behaviour and an abuse of the legal process. It's simply aimed at trying to cling onto Stansted for as long as possible in the hope of obtaining a better price."
DOOM, GLOOM AND OPTIMISM FROM THE AVIATION INDUSTRY
Airports: Heathrow's losing out to other hubs
Evening Standard - 20 September 2011
BAA chief executive Colin Matthews notes in a letter to the London Standard that the airport operator has commissioned a study to be released on Thursday on the economic value of hub airports. It found that UK businesses trade 20 times more with emerging market countries that have a daily direct link with Heathrow than they do with countries that do not. Hub airports are essential in establishing flights to growth destinations, Matthews argues, and because London's hub airport at Heathrow is full, Britain is missing out on opportunities and falling behind rivals. Paris and Frankfurt each boast almost twice as many flights as London to the three largest cities in China.
Separately, Caroline Pidgeon, leader of the LibDem London Assembly Group, claims calls by London mayor Boris Johnson and his supporters for an airport in the Thames estuary cannot be taken seriously. In a letter to the London Standard, Ms Pidgeon says their arguments are so unpopular and ill-founded that the Mayor's working group has to meet behind closed doors, with no access for the media or politicians to any of their meetings.
LONDON MUST FACE THE HARD TRUTH ABOUT ITS AIRPORTS
A wilderness on our doorstep: Cliffe in north Kent is
one of several possible locations for a new airport
Simon Jenkins - Evening Standard - 20 September 2011
I am changing my mind. Within my lifetime extra capacity will be needed for planes to land in the London area. The issue cannot indefinitely be kicked down the tarmac. Another runway at Heathrow would be hell for millions. The concreting of green land in the South-East should be near unthinkable, which rules out Gatwick and Stansted. I turn reluctantly to the Thames estuary as offering the least harm for the greatest gain.
Back in 1971 a great battle was fought to prevent a third London airport on Maplin Sands off Foulness Island in Essex. It was miles away and stuffed with birds, but the cost of that victory was Stansted, a tragic blight on the Essex countryside.
Since then, fierce arguments have taken place over using Gatwick's second runway - against a pledge to local people never to do so - and against similar pledges against seeking a third Heathrow runway, pledges the last government tried to break. Meanwhile, flights are crammed into Luton and elsewhere, while Heathrow creaks and groans, offering barely half the destinations of Frankfurt or Paris's Charles de Gaulle.
Like most Londoners, I regard the Thames estuary and the settlements along its shore as unknown territory probably full of dragons. North Kent and south-east Essex are little visited, and much of them are little occupied.
Marshes, flat farmland, islands and inlets merge into wide, hazy horizons. It was country beloved of Dickens and Conrad, perhaps because of its distance from the big smoke, its flat nothingness. There are pockets of charm, Hadleigh castle, a few fishing villages, the Medway estuary, the Sheppey coast, an old church here and there, but mostly it is a wilderness of marginal farms, oil terminals, squatter settlements and acres of mud and marsh.
Is it not the best place for a vast fourth London international airport? The London Mayor, Boris Johnson, has long championed the cause of a new island airport in the Thames estuary off north Kent, roughly opposite where Maplin would have been. His idea is for two runways in mid-stream, with two terminals on the north and south coast and a maze of undersea transits. It seems a recipe for expense, but is at least out of sight and mind.
A more recent proposal, from Foster and Partners, is for an airport on the Isle of Grain opposite Southend, similar to Foster's giant new airport for Hong Kong. This would be served by rail rather than road, but would link to the M2 and Eurostar line at Rochester. The cost of both these gargantuan projects and their infrastructure would be in the region of £40 billion and £50 billion, and that is not counting the cities that would be required to support them onshore.
I have toured the area and can report that even the Isle of Grain has some character. Cliffe and Cooling have fine churches, the latter depicted in
Dickens's Great Expectations. Ancient farms and hamlets seem lost in time. There is a ghostly wildness to this part of north Kent that is undeniably rare, and I am sure the citizens of Gravesend, Rochester and Gillingham regard it as special.
But development is a matter of balancing goods and evils. It is hard to imagine anywhere in southern England where airport development would impact on fewer people and cause less intrusion on the countryside. There are reputedly 258 species of wildlife in occupation of the Isle of Grain, of which a dozen are even "threatened with extinction". But I am sure the same applies to Maplin and to the island site. And how can we measure this against the human misery and destruction of nature that would attend the expansion of Gatwick, Heathrow and Stansted?
If there was any justification for the Olympics in Stratford or the Dome in north Greenwich, it was that they might bring some long-term prosperity to parts of the capital that seem detached from that of its northern, western and southern outlying suburbs. With the exception of the island fortress of Canary Wharf, from Docklands eastwards has been almost unrelieved poverty, which is one reason why the population density is so low.
Both the Dome and the Olympics have been one-off investments, "lumpy" projects with a short life-span and uncertain longevity. The Dome is only now coming to life, and then mostly at night. The Olympics is almost certain to be, like most prestige sports venues, a parking lot for disused stadiums.
Architect Sir Terry Farrell, who recently prepared a masterplan for the "Thames Gateway", remarked that the area was so little inhabited and, in many respects, so rural that it could one day be handled as parkland, indeed as a national park of the estuary. But without an economic generator and employment focus, park is all it is likely to be. With such a generator, these coastal settlements will prosper and grow. The urban drift will emphatically shift east.
A big airport is a city, supporting a population of some 100,000 souls. It is activity, jobs, wealth and development. East of London is not an ideal location for links to the rest of Britain, but it is for the rest of Europe. More to the point, an airport in the Thames would relieve the near intolerable pressure on London's existing airports and those living round them.
I hate big projects. They tend to cost too much and run away with themselves. Too many people have a vested interest in them, and tell lies to get their way. But an airport is an airport. It is needed because, like cars and motorways, people will continue to own them and want to use them. People will not stop travelling. If more planes must land in London, to the east is where I would put them.
IATA SAYS WEAK ECONOMY WILL CUT
2012 AIRLINE INDUSTRY PROFIT
The International Air Transport Association (IATA) forecast a 29 percent fall
in 2012 industry-wide profit on the back of a weak global economy and stubbornly high jet fuel prices
Harry Suhartono - Reuters - 20 September 2011
The 230-member IATA, whose members carry more than 93 percent of scheduled international air traffic, said on Tuesday it expected industry profits of $4.9 billion in 2012, compared to a revised 2011 forecast of $6.9 billion. The group raised its 2011 estimate from a previous forecast of $4.0 billion it made in June, citing stronger-than-expected growth in the first half of 2011.
The forecast is closely watched by analysts and economists as it provides guidance to the strength of cyclical recovery in developed markets and growth in emerging economies, which rely heavily on air transport. Airlines rebounded faster than expected from recession last year, helped by higher traffic and a drive to keep a lid on spare capacity. But a series of external shocks and higher oil prices have hit the industry hard this year.
"The overall industry outlook grows weaker in 2012. Debt-burdened Western economies look set for an extended period of weak economic growth," the association said in a statement. The fourth quarter of 2011 and the first half of 2012 may well see the weakest point of air transport markets."
IATA said relatively stronger economic growth and a rebound in cargo will help Asia-Pacific airlines to maintain their 2012 profits close to 2011 levels at $2.3 billion, while the rest of the sector, especially in Europe, will see declining profitability.
COALITION AVIATION POLICY LEAVES
UK TRADE GROUNDED, SAYS REPORT
Kamal Ahmed - Daily Telegraph - 18 September 2011
The Government's aviation policy will face a fresh attack this week when a new report reveals that Heathrow is falling further behind its European competitors in the battle for lucrative routes to emerging market economies. The report, by Frontier Economics, will argue that hub-airports, such as Heathrow are vital to promoting economic growth. Because of the amount of through traffic, it means that many more flights to emerging market destinations are economically viable.
The report commissioned by BAA, which owns Heathrow, is set to show that the value of business trade to emerging markets with a direct flight link to the UK is 20 times higher than to those markets where there is no link. The value of the trade potential being threatened could run to billions of pounds.
The report, by Frontier Economics, will argue that hub-airports, such as Heathrow are vital to promoting economic growth. Because of the amount of through traffic, it means that many more flights to emerging market destinations are economically viable. It will say that the UK is losing out to Paris Charles de Gaulle and Frankfurt airports which now offer many more direct routes to major cities in China.
The report argues that 25pc of all economic growth by 2016 will come from China and that in the next decade half of all economic growth will come from emerging market economies. China itself is building 97 new airports to service its fast-growing cities.
The findings will put further pressure on David Cameron and the aviation minister, Theresa Villiers. Before the general election, the Conservatives said they would not support the building of new runways at Heathrow despite it being the UK's only leading international hub airport.
The Government is at present undertaking a review of its aviation policy and many business leaders believe that it should reverse its decision. Although that appears unlikely as it would be politically controversial, the London Mayor, Boris Johnson, has backed plans for a new airport to be built in the Thames estuary.
The Heathrow report will echo findings by the Department for Transport which said UK airports in the south-east of England will be full to capacity by 2030. Although it says that regional airports such as Manchester could take some of the strain, because they are not hub airports they could never replace Heathrow.
A source who has seen the report said: "Our case is that the centre of gravity in the world economy is shifting and Britain should be forging new links with emerging markets. Instead we are edging towards a future as an island cut off from some of the world's most important markets. If Britain is not to lose out to international competitors, we need an aviation policy that recognises the role of a hub airport in supporting growth."
AIRBUS: PASSENGER PLANES TO DOUBLE OVER 20 YEARS
The number of passenger planes worldwide will more than double
over the next 20 years, planemaker Airbus has predicted
BBC News - 19 September 2011
The number of planes made by all manufacturers of more than 100 seats will grow from 15,000 this year to 31,000 by 2030, it forecast. China, the US and Germany are predicted to generate the greatest demand.
"Over the next 20 years, Asia-Pacific will account for 34% of demand, Europe 22% and North America 22%," it said. Airbus, speaking at its annual global forecast meeting, predicted that the number of low-cost airlines will make up around 19% of all air traffic by 2030, compared with around 5% currently.
It claims the number of middle-class people - traditionally more likely to fly - will grow from 1.84 billion this year to almost 5 billion by 2030.
Airbus's forecast also includes 900 newly built freighter aircraft for commercial use. Two thirds of the world's cargo planes have been converted from conventional passenger planes.
The European firm, which makes the giant double-decker A380 superjumbo, believes long-haul air traffic will grow three-fold over the next 20 years.
It could even launch an extra-large version of the A380 by the end of this decade, it said.
UK 'SET TO MISS' CLIMATE TARGETS
The government's "greenest ever" pledge
has come under attack on the carbon front
Richard Black, Environment Correspondent - BBC News - 16 September 2011
The UK is set to miss climate change targets it is legally bound to meet, according to an independent analysis. Cambridge Econometrics says the UK will narrowly miss carbon budgets up to 2017, and by bigger margins after that. The government is legally bound to keep emissions within its carbon budgets.
Separately, a report from a coalition of green groups says the government is not living up to its "greenest ever" pledge. The government says it is making progress on a number of fronts. It points out that emissions from the government's own activities, in Westminster, Whitehall and around the country, have fallen by nearly 14% in a single year.
But emissions from the nation as a whole actually grew during 2010, as the economy began a modest recovery from the recession. According to analysts Cambridge Econometrics, this has helped to put the UK off the trajectory required to stay within its carbon budgets. "The unmistakable lesson from the effect of emissions reduction policies 1997-2010 is that policies tend to have a lower impact than forecast, and therefore their strength needs to be increased if targets are to be achieved," said Paul Ekins from the Energy Institute at University College London, senior consultant to Cambridge Econometrics.
The country has also missed the target of cutting carbon dioxide emissions by 20% from 1990 levels by 2010 that was set by Labour before coming to power in 1997. It has been clear for many years that this ambition would not be met, although a recession-induced 10% cut in CO2 emissions during 2009 brought it much closer. That the country fell short, despite the recession, "shows the policy challenge of carbon emission reduction," observed Prof Ekins.
The majority of greenhouse gas reductions in recent years have been secured in gases other than CO2, notably in curbing methane release from landfill sites.
The carbon budgets agreed by the government run for four successive five-year periods. The government has agreed carbon budgets for four successive five-year periods, running collectively from 2008-2027, following recommendations from statutory advisors the Committee on Climate Change.
The committee has also warned on several occasions that existing government policies would not do enough to meet the budgets. The 2027 target amounts to a halving of emissions from 1990, the internationally agreed baseline year.
Cambridge Econometrics forecasts that emissions from electricity generation and road transport will fall over the next few years, while a number of sectors - particularly aviation - will pump out increasing quantities of CO2. However, the analysts acknowledge that a number of government policies such as the Renewable Heat Incentive were finalised so recently that it is not possible to model their impact.
"On the face of it, there is still a good prospect that, with these policies, the gap between these forecasts and the now legally binding targets will be closed," said Prof Ekins. "But the time taken for new policies to be worked up, consulted on and implemented is long, and few new policies will be able to be put in place and be effective even for the third budget period (2018-22), if it becomes clear that emissions are not being reduced as hoped."
The analysts also forecast that investment in renewable electricity generation will not be enough to meet the UK's target, under EU legislation, of producing 15% of its electricity by renewable technologies by 2020.
When the coalition government assumed power last year, its leaders pledged to be the "greenest ever" in UK history. On the climate change front, a report out this week from organisations including the Green Alliance, Christian Aid and Greenpeace says the government is falling short.
The government's aviation policies get a mixed reception from environmental groups. They calculate that the coalition has made 29 low-carbon commitments, spanning the curbing of new airport runways, support for renewable heat and acceptance of the fourth carbon budget.
According to their analysis, the government is making good progress on seven, moderate progress on 16, and failing on the remaining six.
"The government has taken some good decisions in tough economic circumstances, but it is hobbled by a lack of cross-government support for the Coalition Programme," said Matthew Spencer, director of the Green Alliance. "It will miss opportunities to get economic and political benefit from its policies without more public leadership from the prime minister and greater accountability across Whitehall."
Prominent among the "successes" noted by the report is the government's cancellation of Heathrow's third runway, while the chief "failures" include the absence of a major shift towards green taxes. It also gains credit for trying to advance carbon cuts on the international front, through attempting to persuade the EU to move from its current target of a 20% cut from 1990 levels by 2020, to a 30% cut over the same period.
OUR COMMENT: This problem will not go away! The aviation industry has to accept/find ways to contribute to CO2 reduction, there is no alternative.
EU'S AVIATION SCHEME HITS TURBULANCE
Mike Scott - EuAviation Online - 12 September 2011
On January 1 2012, the aviation sector is set to become part of the European Union's Emissions Trading Scheme (ETS). The move has been on the cards since 2008, but as the start date nears, the voices of protest against it - from airlines and governments outside the EU - grow ever louder.
From the start of next year, airlines will have to account for the emissions produced on flights to and from EU airports. In the first year of the scheme, airlines will be given allowances matching 82 per cent of their historic emissions, with 15 per cent auctioned and the remaining 3 per cent held in a special reserve for new entrants.
Under the Kyoto Protocol, the International Civil Aviation Organisation (ICAO) is responsible for reducing the environmental impact of the industry which would prefer a global scheme. "Market-based measures require international consensus because of the nature of aviation," says Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines.
The EU proposed extending the ETS to aviation because of what it saw as a lack of progress on the issue at the UN body. Despite the insistence on the need for a worldwide scheme, there is still no global agreement. ICAO's "roadmap for action" merely invites its members to submit - by June 2012 - action plans outlining "the specific voluntary measures they intend to take in order to improve efficiency".
For the EU, the inclusion of aviation in the ETS is a matter of common sense. "Firm action is needed," climate commissioner Connie Hedegaard said earlier this year. "Emissions from aviation are growing faster than from any other sector, and all forecasts indicate they will continue to do so under business-as-usual conditions."
Greenhouse gas emissions from aviation have more than doubled since 1990 and are forecast to continue to rise, says David Symons, director at WSP Environment & Energy, a consultancy. "Aviation accounted for 9 per cent of UK greenhouse gas emissions in 2005, and this is expected to increase to 15 per cent by 2020 and 29 per cent by 2050."
But the plan has aroused strong opposition. The US, Canada, China, India and Russia have all protested against the plan, while the US Air Transport Association has attempted to stop it going ahead through a case at the European Court of Justice, where it has argued that tackling emissions must be done on a global basis and that the EU scheme was illegal.
"ATA challenges EU ETS because it is a unilateral measure, which has not been agreed by countries outside the EU, yet nevertheless applies EU law to third country carriers in third country airspace," the association told the court.
However, in testimony to the House of Representatives Transportation and Infrastructure Subcommittee on Aviation, Nancy Young, ATA vice-president, environmental affairs, spelt out one of the main bones of contention for those opposed to the ETS: that the EU is taxing airlines and not using the money for environmental improvements. The ATA estimates that "US airlines will be required to pay more than $3.1bn into EU coffers between 2012 and year-end 2020".
Elsewhere, Emirates airline has estimated the initiative will cost it ?500m-?1bn, Lufthansa says it will cost ?350m per year and China says its airlines will have to pay ?123m in the first year, a figure that will triple by 2020.
Even though the Commission insists that all the money the scheme raises should be spent on reducing climate impacts, "none of the monies collected by the Europeans are required to be used for environmental purposes", Ms Young told the committee, which has proposed a bill that would prevent US airlines from complying with the ETS.
In one sense, the opposition from non-EU airlines is irrational, says Anna Sargeant, assistant director of PwC Strategy. "It is a charge that everyone flying to Europe has to pay, but for US and other airlines, this makes up a far smaller proportion of their business than for European airlines, which puts non-EU airlines at a competitive advantage."
The assumptions upon which some of the cost projections are based are unclear, according to Andy Taylor, who deals with aviation and the ETS for verification company Bureau Veritas. "If you think about rules of the free allocation system, you do wonder how some of the public statements on potential financial impact have been calculated," he says. For every $1,000 spent on fuel, at current prices the total cost of the CO2 allowances would be about $60, and airlines will get more than four-fifths of their allowances for nothing.
It is also important to remember that airlines "do have the option of doing something about it - something that is very much in their interests", adds Mr Taylor. By becoming more efficient, the airlines will make huge savings on fuel costs that will far outweigh any costs of the ETS.
The European Commission argues that to exclude non-EU airlines from the ETS would be discriminatory to European companies and it is standing firm in the face of the growing pressure. "The Commission's position has not changed. We are not modifying or amending our adopted legislation. There's no plan B as we are confident that ECJ will side with us and understand our arguments," a spokesman says.
Brussels also points out that airlines can be exempt from the scheme if their governments introduce "equivalent measures" to cut pollution from aviation, although it remains deliberately vague on what such measures might be. "It's up to the third country to table the measure it feels more comfortable with and then the Commission and the member states will analyse it and decide whether its equivalent environmental impact is guaranteed," the spokesman adds.
Assuming the scheme goes ahead, it is likely to intensify pressure for efficiency improvements not just within aircraft and through an increased use of biofuels but also in making routes more efficient through initiatives such as the Single European Sky, which aims to co-ordinate the management and regulation of EU airspace.
European hubs may lose out to rivals in the Middle East in the battle for long-haul flights to and from Europe. There may also be an increase in global dealmaking and alliances as airlines try to diversify from European markets. The creation of IAG through the merger of BA and Iberia is an example of this, says PwC's Ms Sargeant.
As far as the carbon markets are concerned, the arrival of the aviation sector is welcome, says Alban Brindle, chief operating officer of the London Energy Brokers Association. "We are looking forward to the inclusion of airlines because it will provide a broader range of participants and will provide additional dynamics to the market."
However, the move is likely to have little effect on the carbon price because the market has already factored in the extra demand, says Andreas Arvanitakis, associate director at Point Carbon. Once the sector's inclusion in the ETS is a reality, some of the opposition could recede, he adds.
"The experience of other sectors is that once they have factored in the extra costs, then engaging in the market as effectively as possible becomes a priority. Already the big airlines are pretty advanced in their preparations."
BAA MOVES TO SELL OFF STANSTED
BAA has begun sounding out bankers about a sale
of London Stansted airport for more than £1bn
Ben Harrington - Sunday Telegraph - 4 September 2011
Sources said the airports' operator is preparing to carry out a beauty parade of investment banks at the end of the month, with a view to appointing one to carry out a sale of the airport next year.
The move comes as BAA - for which Spanish group Ferrovial paid £10.1bn - weighs up whether it should seek a judicial review of the Competition Commissions's decision to force the company to sell London Stansted and one of Scotland's two main airports, Edinburgh and Glasgow. In July, the Commission confirmed the decision, arguing "that passengers and airlines would still benefit from greater competition with the airports under separate ownership".
Peter Freeman, chairman of BAA Remedies Implementation Group, added: "The introduction of new ownership at Gatwick [which BAA sold to Global Infrastructure Partners in 2009], whilst too recent for us to draw any firm conclusions, has given a foretaste of the benefits competition can bring. We think that these benefits will be all the greater once Stansted, Gatwick and Heathrow are all in competition with each other."
However, at the time, Colin Matthews, chief executive of BAA, said he was "really dismayed" by the decision and said the "world and BAA have changed" since the commission made its original ruling in March 2009. His main argument is that Heathrow and Stansted aiports are serving different types of passengers.
Some of the former bidders for Gatwick are expected to be interested in Stansted. They included a consortium comprising Canadian fund Borealis and Manchester airport, and a group of investors led by Citigroup's infrastructure fund. Previous reports suggested Stansted may sell for £1.2bn but BAA's regulated asset base is now £1.35bn.
LONDON AIRPORTS WILL BE AT BREAKING POINT BY 2030
Evening Standard - 25 August 2011
The capital's three main airports will be at full capacity within the next 20 years, the Government said today. The Department of Transport's latest aviation figures predict that the number of passengers using UK airports will soar from 211million per year in 2010 to 335million by 2030, fuelled by an 80 per cent surge in business travel. By 2030 Heathrow, Gatwick and Stansted will not be able to handle any more passengers.
The coalition Government has ruled out a third runway at Heathrow and the DfT today said that "all further growth beyond 2040 will occur at regional airports".
A spokesman for BAA today said: "Without a credible aviation policy the Government risks handing London's economic growth to our European competitors."
GOVERNMENT ADMITS 'WITHOUT FURTHER ACTION'
FLAGSHIP AVIATION CLIMATE TARGET WILL BE MISSED
Greenpeace UK - 26 August 2011
The government this morning admitted that "without further action" to curb pollution from planes, the flagship aviation climate change target that was adopted and championed by the last government will be missed.
In the Transport Secretary's formal response to the aviation recommendations of the Committee on Climate Change (CCC), the government's independent climate advisers, there is an admission that:
On current levels of airport capacity, and without any additional expansion, the last government's flagship aviation target (of ensuring that aviation emissions return to 2005 levels by 2050) cannot be met - even based on the most optimistic assumptions about efficiency gains and existing available technologies.
"Without further action" the UK will not have any chance of meeting the 2005 target if there is any growth in flying whatsoever.
So far - despite the Prime Minister's commitment to stop new runways in the South East - the government has not re-committed to the Labour target of keeping aviation emissions to 2005 levels by 2050. Greenpeace believes that immediately committing to this target is now an essential test of the government's commitment to curbing carbon dioxide pollution.
Based on the government's own admission today, Greenpeace believes that the only realistic policy solution must be an immediate moratorium on any airport growth anywhere in the UK, including in passenger numbers.
Greenpeace campaigner, Richard George, said: "This refreshingly honest admission shows that for all its bluster the aviation industry is simply unable to bring its pollution levels under control. Ministers must now commit to a moratorium on aviation growth combined with serious investments in affordable clean alternatives to flying."
FAMILIES SHOULD SKIP FOREIGN HOLIDAYS
TO CUT CARBON EMISSIONS, SAYS GOVERNMENT ADVISER
Families should be discouraged from taking holidays abroad if Britain is to meet its climate change targets, a Government commissioned report has said
David Millward, Transport Editor - Daily Telegraph - 30 August 2011
Consultants hired by the Department for Transport have been accused to trying to shame Britons into staying at home. The previous administration set a target of to reduce aviation's CO2 emissions to 2005 levels by 2050. This target is which is currently under review by the Coalition.
Foreign travel was highlighted in the report by EMRC and AEA, the consultants hired by the DfT to draw up proposals for cutting the environmental impact of aviation. "There is a range of potential measures to voluntarily reduce the demand for air travel through the promotion of behavioural change that could be targeted at passengers," ministers were told. "These include increasing awareness of the carbon footprint associated with air travel, encouraging fewer overseas holidays."
The proposals drew a furious reaction from Simon Buck, the chief executive of the British Air Transport Association. "What we are talking about here is the Government shaming people into not flying away on holiday," he said Simon Buck. "Is it right to make people feel guilty for taking an annual sunshine break? Where is it going to stop? Will we be told what car we should drive and how many children we should have."
The report also suggested the targets could be met by other measures including the increased use of biofuels, more efficient aircraft engines and improved air traffic control to cut the time planes spend in the air.
According to figures produced earlier this by ONS, the Government's official statisticians, Britons make 58.6 million overseas trips a year, of which two thirds were holidays. In the decade between 1999 and 2009 the number of percentage of people choosing to fly on holiday in fact fell by 2.1 per cent, with the drop attributed to the increasing popularity of the Channel Tunnel, which saw a 15.5 per cent rise over the same period.
However the recession is believed to have depressed foreign travel, with a poll earlier this year showing that two Britons out of five were planning to forego their holiday overseas to save money.
But while the aviation industry was angered by the consultants' proposals, they did not go far enough for environmental groups. "It's a shame that the Government has not taken this opportunity to set a UK target on aviation emissions," said Jean Leston, Acting Head of Transport Policy at WWF-UK.
"Our efforts to tackle climate change rely on aviation making real reductions. The Government's indecision will only lead to more confusion and allow airport expansion to continue."
However Theresa Villiers, the aviation minister, defended the Government's approach. "We are committed to developing a new policy framework for aviation which supports economic growth while also reflecting the environmental impacts of flying."
LONDON'S LINKS TO WORLD BUSINESS CENTRES
DWARF EUROPEAN 'RIVALS'
Aviation Environment Federation - 2 September 2011
A new report reveals that Heathrow's links to the world's main business centres dwarf those of its European 'rivals'.
'International Air Connectivity for Business' published by AirportWatch shows that Heathrow has 990 departures each week to business destinations in Asia, Latin America, North America and Europe, more than the combined total of its closest rivals, Charles de Gaulle Airport in Paris and Frankfurt Airport.
It also revealed that London airports combined (Heathrow, Gatwick, Stansted) have more than double the number of flights to key business destinations each week compared with Paris, Frankfurt, and Amsterdam.
The report was published just a day after the Government announced its response to the recommendations of the Committee on Climate Change, where it predicted a 2% annual growth in passenger numbers to 2050, significantly lower than the 3.7% growth seen in the past twenty years.
The Government's analysis assumes capacity constraints on UK runways and terminals, which is welcome. But their claim that these constraints could lead to UK passengers switching to Continental airports seems very far-fetched, given the clear lead that London airports already have over their competitors in providing the best business connectivity.
This evidence will help to inform AEF's response to the Department for Transport's Aviation Scoping Document, currently out for consultation (closing 20th October), which stresses the importance to business of good air links from UK airports to key business centres abroad. The scoping document is the first stage in the Government's plans to produce a new aviation policy.
The authors concludes that Heathrow is in a class of its own as far as international business connectivity is concerned. In fact, London as a whole is better connected to the world's business centres than any other European city. Further, most of the flying from Continental airports is not inter-continental but short-haul within Europe, largely for leisure purposes. Even in the UK, only about 20% of passengers are travelling for business.
SHARP FALL IN AIR PASSENGER GROWTH FORECASTS
Mark Odell - Financial Times - 25 August 2011
Projections for air passenger growth at UK airports over the next 20 years have fallen sharply, due to a combination of government policy and economic factors.
Government figures published on Wednesday predict that 335m people will pass through the country's airports in 2030, a drop of 26 per cent on the forecast made in 2009. The government said the fall from the previous figure of 455m was due to a number of factors, including the coalition's decision to ban new runways at the big three airports in the south-east - Heathrow, Gatwick and Stansted.
Other factors expected to hit demand are air passenger taxes; the inclusion of aviation in the European Union emissions trading scheme from next year; the decision to build a high-speed rail line between London, Birmingham, Manchester and Leeds; and the effect of the downturn and rising oil costs.
The biggest single impact on growth is seen on domestic routes, with just 11m return journeys now expected in 2030 - less than half the 23m forecast two years ago. The number of foreign visitors flying into the UK in 2030 is forecast to fall from 48m to 45m.
Julie Southern, chief commercial officer of Virgin Atlantic, said the revised forecasts were of "extreme concern" and that the loss of 3m inbound passengers "will have an alarming impact on the UK economy". She estimated that, with the average spend per visitor of £563, the cost to the UK economy would be £1.7bn.
The revised forecasts were published as part of the government's ongoing consultation over a new aviation policy, which is due to be published next year and is expected to have a heavy focus on the environmental impact of flying. The Labour government made a commitment to return CO2 emissions from aviation to 2005 levels by 2050. The coalition has not yet said whether it will adopt that target.
The Department for Transport said: "We are committed to developing a new policy framework for aviation which supports economic growth while also reflecting the environmental impacts of flying. As part of this process, we are seeking views from the industry on the key issues we need to address and these latest forecasts will be valuable in informing this debate."
PASSENGER SHORTAGE THREATENS HIGHER FLIGHT TAXES
The tax on plane tickets could rise by nearly 25 per cent because the number of people flying is failing to keep up with Government forecasts
David Millward, Transport Editor - Daily Telegraph - 27 August 2011
This has left the Treasury facing a black hole in its finances. Depending on the rate of inflation, the gap could be at least £500 million. But according to the latest figures released earlier this week by the Department for Transport, this will have to be paid by fewer people than previously anticipated.
According to the DfT passenger numbers have been depressed by the economic downturn, while the aviation industry believes that soaring taxes have already priced people off aircraft. But with the Treasury looking to raise £3.6 billion from Air Passenger Duty in 2015-16 - compared with £2.2 billion in the current financial year - the tax will have to rise more sharply than anticipated if the gap is to be plugged.
Last year the Government shelved the annual inflation-linked APD rise pending a review of the tax. But a further respite is considered unlikely this year, meaning that APD should rise in November.
Because of the latest passenger forecasts the Treasury will have to push up the tax by just over 24 per cent by 2015-16 if it is to meet its target.
On current rates this could leave a family of four having to find an extra £57.50 in tax for a trip to New York on top of the £240 they currently pay.
British airline passengers already face the highest flight taxes in the world. While duties on air travel have been scrapped or reduced in a number of countries including Ireland and Holland, there is no respite in prospect for the United Kingdom. It is a further blow to hard-pressed families who, from next year, will also have to pay more for their flights because the European Union's emissions trading scheme. That alone could add at least £10 to the price of a transatlantic ticket.
The Department for Transport now anticipates that around 250 million people will pass through Britain's airports in 2015, 24 per cent less than 315 million it was predicting two years ago. Even though these figures take into account transit passengers who do not pay APD, the revised forecast has raised doubts about the viability of a Government pledge that the tax would only rise in line with inflation, which depended on a steady rise in the number of people flying.
The Government may try to cushion the blow when it announces the result of its consultation into the duty later this year. Options which have been floated include extending the tax to private jets, but the aviation industry believes the amount of cash this would raise is minimal. Other changes such as cutting the tax on long distance flights, while pushing the rate up on flights to Europe is seen as "tinkering around edges" according to one industry source.
While green groups have been pushing for taxes on flights to be maintained, airlines say they are already paying more than their full "environmental cost".
The prospect of steeper rises in APD than previously anticipated was condemned by Simon Buck, the British Air Transport Association's chief executive. "The tax on flying is the highest in the world, costs 25,000 jobs in the tourism industry and deters tourists from coming to the UK. Instead of being increased, the tax should be phased out to encourage tourism and help kick start the economy."
An easyJet spokesman added: "A rise in APD of 24 per cent would hit hard-working British families while also reducing the UK's attractiveness to overseas visitors who would simply choose to fly to other countries. This could also prove a massive own goal if it depresses tourism, which is a vital contributor to the British economy."
British Airways also voiced its concern. "The Government acknowledges that its forecast reduction in air travel growth reflects its decisions to stop runway development and press ahead with huge rises in APD. It is disappointing that the aviation sector in the UK is not allowed to realise its potential in promoting national economic recovery in the way that aviation industries are in competitor countries."
Julie Southern, Virgin Atlantic's chief commercial officer added: "When increasing APD rates are one of the contributing factors to lower passenger forecasts, it would be utterly perverse to increase them even further. What started as a flat rate £10 for long haul economy travel is now as much as £85 for some journeys and it would be very damaging for holidaymakers, businesses travel and the wider economy alike if there was another dramatic rise."
"Both tourism and aviation have fundamental roles to play in the economic recovery and we cannot afford to stifle this contribution. It is crucial that the Government moves to make Air Passenger Duty rates more internationally competitive in its current APD review."
NEW COMMERCIAL DIRECTOR FOR STANSTED AIRPORT
Herts & Essex Observer - 2 September 2011
STANSTED Airport has today (Friday, September 2) announced the appointment of Jonathan Crick as its new commercial director. Mr Crick will join the board from easyBus, where he is currently chief executive. His previous roles include 15 years' experience at Monarch Airlines, including as commercial director and sales and marketing director.
"I am delighted to be joining London Stansted Airport at what is a very exciting as well as challenging time," he said. "I am particularly looking forward to helping Stansted take commercial advantage of its position as London's third largest airport, with significant capacity to grow its business."
"These priorities include growing the number of airlines and passengers; ensuring we have the very best retail facilities; and maximising the commercial opportunities of the on-airport property portfolio, including car parks and other travel services."
Stansted's managing director Nick Barton said: "Jonathan brings with him a wealth of experience of working in commercial environments in the transport sector, particularly aviation, and I have no doubt he will be a major asset to the team."
Mr Crick will take up his appointment in October.
ZAC GOLDSMITH MP: HEATHROW TRIALS
Kingston Informer - 31 August 2011
As residents will know, the Government has announced a new trial at Heathrow where airport operator, BAA, will be able to make use of both runways at times of severe congestion caused for example by bad weather.
Heathrow currently uses one runway for arrivals and one for departures, switching halfway through the day to give local residents a much-needed break from the noise. Although BAA is already permitted to use both runways simultaneously in some circumstances to clear backlogs, the new measures would allow more flexibility.
The new proposal is that more planes will be permitted to use the wrong runway at times of congestion, but it is unclear just how many planes that will involve, which is why the trials this Autumn and next summer are important. Given that the industry was almost certainly looking to introduce the measures soon, and with no trial or consultation, I personally welcome the position taken by Theresa Villiers, the Aviation Minister.
As a local MP, I have spoken repeatedly with her, and have pressed for clarification on how many over-flights there might be in respite periods, how many days a year will be an 'operational freedom day' at Heathrow, and for a precise definition of the trigger mechanisms that would allow the use of the operational freedoms.
I am still awaiting precise answers, but it is clear that the Minister remains committed to protecting runway alternation at the airport, and the trial will demonstrate to her and to us if this commitment is undermined by these measures.
The sensible solution is to find ways - possibly through slot re-allocation - to ensure that BAA does not continue to operate Heathrow at 99% capacity. However that will not happen immediately.
In the meantime, I will continue my campaign for a ban on night flights between 11pm and 6am, and to that end, I recently organised a meeting with the aviation minister and MPs from the constituencies that fall beneath the flight path. There will be follow up meetings in the next few weeks.
ROW DEEPENS OVER ENGLISH PLANNING LAW CHANGES
BBC News - 23 August 2011
Conservationists say the threat to the countryside will grow as the economy recovers
The planning minister has rounded on green charities who claim his proposed planning system overhaul for England seriously threatens the countryside.
Greg Clark accused the National Trust of "misleading" people, and suggested the Campaign to Protect Rural England always "objected to every change".
The groups fear excessive development under a simpler, faster system. A National Trust spokesman said the plans "failed to protect the everyday places that local communities love".
The government's draft streamlines policy that currently weighs in at more than 1,000 pages down to just 52. It aims to transform a system whose "volume and complexity have made planning increasingly inaccessible to all but specialists", says the Department for Communities and Local Government. "If you can square a village voting for 10 new homes with the sprawl of Beverly Hills, I fail to see it" - Greg Clark, Planning Minister.
While encouraging opportunities for growth to boost the economy, the department insists the proposals also offer protection for the natural and historic environment. But the framework's "presumption in favour of sustainable development" - which should make it harder for councils to reject projects - worries the environmentalists.
Speaking out last month, the National Trust said: "The government's planning reforms could lead to unchecked and damaging development in the undesignated countryside on a scale not seen since the 1930s."
And CPRE said: "The government needs to listen and make further improvements or the consequences for the English countryside and the character of our towns and villages will be grave."
In an interview with the Financial Times on Tuesday, Mr Clark hit back. "The National Trust had on their website an aerial shot of Los Angeles in some risible idea that this was the future of Britain," he said. "If you can square a village voting for 10 new homes for its parishioners with the sprawl of Beverly Hills or Santa Monica, I fail to see it."
He added: "Last year was the lowest level of housebuilding since World War II, which means the problem is getting worse and worse, causing more misery for more people for as long as this isn't addressed. People do have an interest in the future - to not care shows a degree of nihilistic selfishness which is quite rare."
He also said that it was not possible to make a change to "any element of national planning policy without the CPRE objecting to it". "They have objected to every change in planning policy for as long as I can remember."
In response to the interview, a National trust spokesman said: "We believe strongly that any development must meet the needs of people, the environment as well as the economy. The government has failed to do this in its reforms. It has put short-term financial gain ahead of everything else. It has failed to protect the everyday places that local communities love. It has given the power in planning to the already powerful. Whilst the government is making warm noises about local communities, in practice the dice are heavily loaded to favour development and local people simply won't get enough say."
OUR COMMENT: What about major projects such as expanding airports?
AIRLINES' CHEAP TICKET OFFERS TO BE INVESTIGATED
Practice of flights being displayed at low prices before further charges
are added is to be looked at by European commission
Rebecca Smithers and Mark King - The Guardian - 8 August 2011
The European commission has launched an inquiry into airlines' controversial "add-on" charges that allow them to offer low prices bearing little resemblance to what ticket buyers end up having to pay.
Siim Kallas, a European commission vice-president, who is also the organisation's transport commissioner, said he was concerned about the growing practice of airlines offering attractive, affordable, "headline prices" for flights that are then subject to baggage charges, credit and debit card fees, and airport check-in fees. The practice, already criticised by UK consumer groups, has been under the spotlight for being used, as a matter of course, by budget airlines such as Ryanair. But it is also a feature of scheduled carriers as well as train firms and rail websites.
Amid growing concern that airlines exploit passengers by expanding the list of additional charges - which, at one stage, were routinely included in the basic fare - Kallas revealed that the commission shared his concerns about the confusing practices and admitted that spiralling consumer complaints were difficult to address within current laws.
He has launched a study into whether EU rules need to be amended, which will report this autumn with legislative action expected next year. The inquiry follows pressure from the Labour MEP Brian Simpson, who is chair of the European parliament transport committee. He believes an investigation is long overdue. In a letter to Kallas, he said the "marked trend" of adding charges for basic services was "giving rise to serious concern". He added: "Passengers have a right to receive basic services for their air tickets. It is necessary to ensure price transparency."
He said the situation was similar to what happened with package holiday contracts; in that case, basic rules governing pricing of such holidays were set out in an EU directive.
Simpson said he wanted to see airlines starting with a top price then deducting charges according to passenger choice, rather than starting with rock-bottom prices and adding on. Some carriers, he said, were advertising fares as low as £6 (£5.23). "It is impossible to fly for that. We need clarity," he said.
Simpson said the list of additional charges was growing. Ryanair had introduced an "EU 261 levy", which charges customers a fee to cover any compensation that might have to be paid under EU passenger rights legislation. "It doesn't seem fair or appropriate to ask passengers to help cover the business risks of Ryanair."
The situation has been compounded by the ease of buying tickets online, where people may decline to cancel a transaction at a late stage as the extra charges kick in. Consumers have to agree with carriers' terms and conditions to proceed with the transaction.
In a letter to Simpson in July, Kallas announced the inquiry and said: "According to EU regulation 1008/2008 the final price of air fares should be indicated at all times, including taxes, charges and surcharges and fees, which are unavoidable or foreseeable. Commercial practice has, little by little, segregated specific services that may be avoidable (check-in at the counter, excess baggage weight, checked baggage), but which up to now have formed part of the basic fare. Such a pricing practice that could be defined as price unbundling or 'a la carte' may increase consumer choice but can also create confusion: the final price at the time of payment increasingly differs from the announced price, rendering price comparison impracticable and leading to frustration, and consumer mistrust."
Monique Goyens, director general of the European Consumers' Organisation, said: "It's high time the commission looks into this issue. More and more airlines charge their clients unnecessary high costs for paying by credit or debit card, inflating the price tag of flights advertised as low cost. Accepting card payments to buy a ticket is not a service delivered by a company. Passengers should not be charged for exaggerated and unjustifiable card fees."
"The promotion of e-commerce is a top priority for Europe but consumers will not have trust in online commerce when they feel ripped-off when making a card payment on the internet."
Ryanair has not replied to the Guardian. An easyJet spokesman commented: "As we don't charge for check-in or printing boarding cards, we feel it would be more appropriate for the airlines that do charge for these things to comment instead."
In June the UK's Office of Fair Trading said it would be tackling "rip-off" surcharges levied on debit and credit card transactions by travel companies, particularly airlines, which it said raked in £300m by these means in 2009.
Nick Murton of Kent recently flew by easyJet from Gatwick to Edinburgh, expecting to pay £121 for two return seats.
"My initial anger was that when booking the flight, at the very last second before confirming and clicking 'payment'[the website] came up with a disgusting choice of 'charges' when paying: £8 for a debit card and £12.95 for a credit card.
"Now, I am aware that there has been a lot of recent media debate on this subject and rightly so. It is appalling. Charging customers to pay for their tickets? I think it costs about 30p to process a card payment. I have been in business and have never charged a customer to pay me."
"My anger was then compounded when checking in at 7am in the morning I was told I would have to pay £25 for my baggage. It was only a trolley on wheels - granted too big to take on board - but nonetheless, another outrageous last minute surprise. I then enquired about coming back and lo-and-behold was informed it would be a further £25 to bring my clothes home again. Do airlines honestly expect all their customers to travel away for three to four days and stay in the same set of clothes?"
"So, here I am finding myself with an extra £58 cost on top of my ticket price. Of course the chap at Gatwick explained that it would have been explained on their website, but their pricing structure and website bookings are so complicated and not transparent whatsoever. It was probably very small print, and one would expect to be able to take one case in the hold. I feel totally and utterly ripped off and fleeced by this experience. And now I find it impossible to complain as there is no email address I can see to complain to, only an 0871 telephone number charging 10p per minute - another easyjet rip-off."
MAG LOOKS TO BUDGET AIRLINES TO BOOST NUMBERS
Insider media.com - 11 August 2011
Low-cost air carriers will be "engines of growth" over the coming years for the owner of East Midlands Airport, Insider has been told. Neil Thompson, finance director at Manchester Airports Group (MAG), said it had struck deals with budget airlines including Ryanair and Easyjet in a bid to increase passenger traffic. Thompson's comments came as MAG reported a slight fall in passenger numbers and operating profit in its year-end results.
MAG - which comprises East Midlands, Manchester, Humberside and Bournemouth airports - said overall passenger footfall had dropped by 4.6 per cent in its 2010/2011 financial year. Operating profit fell from £56.1m in the previous year to £51.3m. The group said the result "reflects growth in commercial operations against the backdrop of continuing difficult economic conditions".
The volcanic ash cloud which occurred in 2010 was estimated to have cost the airport group 500,000 passengers and about £5.8m in operating profit.
Despite the drop, revenue increased by 0.4 per cent to £350.2m over the year.
Thompson said: "There's no denying that the economy remains tough, but we're out there trying to beat the market. We've done a number of deals with low cost operators, like Ryanair and Easyjet. We expect some of the low cost carriers will be engines of growth in the coming years. And we have planned growth with Ryanair, Jet2 and Easyjet."
Although an overall drop in passenger numbers was recorded in MAG's year-end results, footfall increased slightly at the East Midlands location towards the end of the year. MAG said it anticipated the trend would continue into the new year. Income and yields for retail and car parking revenue exceeded expectations at the Nottingham-based airport, said MAG.
Plans are also being developed for an on-site bio mass boiler at the airport, and work has started on site for the UK's first BREEAM rated 'Good' four-star hotel, which is due to complete in the autumn of 2011.
Thompson concluded: "It has been a really challenging year - not just for us, but for the whole aviation industry. The volcanic ash cloud which cause the closure of the UK's airspace was pretty unique and it was one of the coldest Decembers on record. Against that backdrop, our trading results have been pretty robust."
JULY 2011 TRAFFIC FIGURES - BAA'S AIRPORTS
Heathrow welcomed more passengers
in July 2011 than in any previous month
BAA Press Statement - 11 August 2011
Heathrow handled a record 6.9 million passengers (up 2.5% on last year) in July. The airport saw its busiest day on record on Sunday 31 July, and seven of Heathrow's top ten days for passenger numbers were recorded during the month. Furthermore, at 84.7%, the proportion of available aircraft seats filled was the most efficient ever achieved. The total number of passengers at Heathrow during the last 12 months exceeded 68.5 million for the first time.
BAA's six airports handled 11 million passengers in July, an increase of 0.8% on July 2010. Across the Group, the strongest performing market was North America, with passenger numbers up 5.6% on last July. Other long-haul routes recorded a collective increase of 3.9% and European scheduled services rose by 0.9%. In contrast, there was a 7.2% drop in domestic traffic.
At Heathrow alone, the drop in domestic traffic was 13.3% as carriers reduced seat capacity by 16.0%. However, increases in North Atlantic (up 5.3%), other long-haul (up 3.2%) and European scheduled (up 3.1%) markets more than compensated for this reduction. The most notable individual country market was Brazil, which experienced an 80.0% year-on-year increase in passengers travelling to and from the country.
Stansted handled 1.9 million passengers, a drop of 7.2%. It achieved its most efficient ever load factor of 88.5%. In addition, Southampton returned to growth with a 2.4% increase versus July 2010.
All three Scottish airports recorded increases in July, with Edinburgh rising 3.3% to just short of one million passengers. Glasgow was up by 0.5% overall, due largely to a 45.7% increase in traffic on scheduled European services. Aberdeen saw growth in domestic traffic and even faster growth in international traffic, which helped it to reach an overall increase of 8.7%.
Across the Group the number of air transport movements was down by 1.8%, with only Heathrow (up 0.4%) and Aberdeen (up 0.3%) recording increases. Cargo tonnage was also lower across the Group (down 2.3%), reflecting global trends.
Colin Matthews, chief executive of BAA, said: "The growth in passenger traffic at Heathrow in July is good news for UK jobs, tourism and growth. Heathrow's unique role in linking the UK to the world's emerging markets is vital to Britain's economic recovery. Heathrow's performance was also good news for the thousands of families setting off on their summer holiday. To make the busy summer getaway easier for parents we introduced dedicated family lanes at security, children's play areas in all terminals, and 'kids eat free' deals in restaurants."
OUR COMMENT: Some good news for Stansted residents. With a higher load factor, flights were relatively fewer. Less noise, though the night/day ratio is still important.
AIRLINE FINED $12,000 FOR LATE LANDING
Dominion Post - 8 August 2011
A Qantas-owned airline has been fined $12,000 for breaching a flight landing curfew at Wellington International Airport.
Jetconnect was sentenced today in Wellington District Court after pleading guilty to breaching curfew restrictions set out in Wellington City Council's district plan. The breach happened on September 18. The international flight had been delayed in Sydney and the plane eventually landed in Wellington 17 minutes past a 30-minute grace-period for disrupted flights, at 1.47am.
Night-flying curfews to prevent aircraft noise affecting nearby residents prohibit international flights landing between 1am and 6am, with disrupted flights allowed 30 minutes' leeway.
Jetconnect argued the breach was because of factors beyond its control. Adverse weather and turbulence made the plane arrive late in Sydney and necessitated an inspection by engineers before it was eventually replaced. The Wellington-bound aircraft was further delayed on the Sydney runway when another aircraft suffered bird strike.
Judge Jan Kelly said there were no aggravating factors in Jetconnect's offending and it had tried to make alternative arrangements at Auckland and Christchurch airports when the pilots realised the flight was unlikely to meet the curfew deadline. "There was a genuine reason for the breach. The flight was disrupted for safety reasons and attempts were made to divert."
But although it could have landed at Christchurch Airport, the pilots decided a "Qantas personnel shortage" meant passengers could not be processed there, so chose to land at Wellington, she said. In this respect the pilots chose to breach Wellington Airport curfew restrictions to avoid significant financial and logistical difficulties that would otherwise have affected the airline. It therefore "did not take all necessary steps to avoid a breach".
Though the council that acknowledged the breach was not premeditated or deliberate, it wanted the airline penalised so the case would act as a deterrent to other carriers. Council officials argued the fine should not be so low that it would be "regarded as being a fee for offending".
Judge Kelly convicted Jetconnect and fined the airline $12,000 plus court costs, taking into account its early guilty plea, lack of prior convictions and full cooperation. The money is to be paid to the council.
OUR COMMENT: An example for the UK to follow? But note that Council officials argued the fine should not be so low that it would be "regarded as being a fee for offending".
OBAMA ANNOUNCES MAJOR INVESTMENT TOWARDS DEVELOPING AVIATION ADVANCED BIOFUELS SECTOR IN THE US
Obama has announced an investment of $510 million over the next 3 years to develop an industry to develop and produce drop-in advanced aviation and marine biofuels for the US defence and commercial sectors. Funding will come from the US Depts of Agriculture, Energy and Navy and will be equalled by finance from the private sector. Without mentioning environmental concerns, the USDA said the partnership aims to increase energy independence & create jobs.
Green Air Online - 16 August 2011
President Obama today announced an investment of $510 million over the next three years towards developing an industry to develop and produce drop-in advanced aviation and marine biofuels for the US defence and commercial sectors. The funding will come from the US Departments of Agriculture (USDA), Energy and Navy and is to be matched equally with finance from the private sector.
Without mentioning environmental concerns, the USDA said the partnership aims to reduce US reliance on foreign oil and create jobs, while positioning American companies and farmers to be global leaders in advanced biofuels production. The United States spends over $300 billion on imported crude each year. To accelerate the production of bio-based jet and diesel fuel for military and commercial purposes, the Secretaries of the three agencies have developed a plan to jointly construct or retrofit several drop-in biofuel plants and refineries.
"Biofuels are an important part of reducing America's dependence on foreign oil and creating jobs here at home," said Obama. "But supporting biofuels cannot be the role of government alone. That's why we're partnering with the private sector to speed development of next-generation biofuels that will help us continue to take steps towards energy independence and strengthen communities across our country."
In an earlier speech in March Obama said: "Competitively-priced drop-in biofuels could help meet the fuel needs of the Navy, as well as the commercial aviation and shipping sectors."
The cross-agency collaboration is being steered by the White House Biofuels Interagency Work Group and Rural Council. Navy Secretary Ray Mabus said long-term national security was dependent on a commercially viable domestic biofuels market. He added the initiative would help advance the biofuels market and ultimately bring down the cost of biofuels for all.
As well as being a national energy security imperative, providing jobs and opportunities for America's rural communities, particularly farmers, is also at the forefront of accelerating the drive to developing a home-grown advanced biofuels sector.
"By building a national biofuels industry, we are creating construction jobs, refinery jobs and economic opportunity in rural communities throughout the country," said Agriculture Secretary Tom Vilsack. "As importantly, every gallon of biofuel consumed near where it is produced cuts transportation costs and, for the military, improves energy security."
Energy Secretary Steven Chu commented: "These pioneer plants will demonstrate advanced technologies to produce infrastructure-compatible drop-in renewable fuels from America?s abundant biomass resources."
In a speech at the Paris Air Show in June Vilsack said: "The USDA is excited about the opportunities presented by the requirement for aviation biofuels as it provides an opportunity for farmers to diversify income, and to take non-productive land which can be used for fuel feedstocks."
At the show, he announced five 'virtual' research centres would be collaborating with universities and the private sector to identify potentially efficient and workable feedstocks.
Update by Green Air Online on Wed 17 Aug 2011:
The announcement has been welcomed by the US aviation industry.
"This initiative is crucial to help turn the promise of advanced aviation biofuels into reality, enhancing America's energy security and reducing greenhouse gas emissions while creating jobs," commented Air Transport Association (ATA) President and CEO Nicholas Calio. "We already know how to produce and safely fly aviation biofuels, so the government investment will help clear the last hurdle and make the fuels commercially viable."
ATA said it remained committed to doing its part through its ongoing initiatives, including the Commercial Aviation Alternative Fuels Initiative (CAAFI), the Strategic Alliance for Alternative Fuels with the US military, and the Farm-to-Fly programme with the USDA and Boeing, to further the development and deployment of sustainable alternative aviation fuels.
Added Calio: "The USDA, the DOE and the Navy are doing what the federal government did in jump-starting the Internet, satellite systems and other backbone infrastructure - working with industry to help make these ventures self-sustaining."
The involvement of the Navy and the emphasis on energy security might suggest the prime objective of the initiative is to supply the US military with advanced biofuels. However, CAAFI Executive Director Richard Altman points out that the Navy represents just 2.5% of the US aviation market compared to the 85-90% share taken by commercial aviation.
"Commercial aviation is in a position to win in a very major way," he said. "The biofuels industry needs 'first of a kind' commercial facilities to attract private investors. This is the key action that will leverage private investment to build capacity. Commercial aviation is among the 'private sector' partners that are being counted upon to make this action a success. We welcome both the opportunity and the responsibility."
The White House announcement also received praise from US environmental group Environmental Defense Fund (EDF) but it came with a sting. EDF said the initiative had the potential both to promote low-carbon options for ships and planes and to help rural economies, but added it would have an even greater impact if the Administration also supported Europe's aviation anti-pollution law. EDF has actively opposed the ATA's European legal suit against the inclusion of US airlines in the EU Emissions Trading Scheme.
"Emissions from aviation and shipping are both accelerating and poorly regulated, so it's welcome to see an investment in efforts to reduce them," said Jennifer Haverkamp, Director of EDF's International Climate Program. "How unfortunate, then, that the Administration is supporting an initiative to stimulate development of advanced biofuels, while at the same time opposing a law in Europe that would reward US airlines for using them. Clearly the Administration could multiply the positive effects of this initiative on rural jobs and green growth by also supporting the EU's Aviation Directive."
OUR COMMENT: Everyone seems to have forgotten that the majority of biofuel crops use land needed for food production. Europe has now recognized this and is introducing restrictions - even these may not be sufficient to prevent even worse food shortages than those now resulting from ever increasing numbers of droughts and floods.
CAN THE EU SAIL THROUGH THE AVIATION STORM?
Roz Bulleid - ENDS Europe - 3 August 2011
Europe faces growing opposition to its inclusion of foreign airlines in the EU emissions trading scheme (ETS). Roz Bulleid considers whether an exemption for countries with "equivalent measures" could provide a solution.
Frustrated by the lack of global action on aviation emissions, the EU made the controversial decision three years ago to extend the ETS to all airlines flying into and out of its airports. Emissions would be capped at 212.9 million tonnes of CO2 in 2012. Three US airlines challenged the legality of the move in late 2009 and a European court ruling is expected around the end of the year. But with the start of the new regime just five months away, a second, political counter-attack is building.
The European Commission has suggested these government-led challenges can be settled through a provision on equivalent measures in the 2008 directive on aviation and the ETS. This allows it to exempt incoming flights from countries with policies that "have an environmental effect at least equivalent to that of [the directive]".
But it is not clear whether this will appease disgruntled foreign countries and provide sufficient stability for a jittery carbon market, or how the system would work in practice.
The US government raised a formal complaint about the inclusion of its airlines in the ETS at a meeting with the EU in June, and a cross-party bill introduced to the House of Representatives on 20 July would ban US airlines from the scheme altogether. What position the government will adopt on this law remains to be seen.
China has raised concerns about the cost of the ETS. It is also worried about the implications for the principle of "common but differentiated responsibility" which allows developing nations to do less than developed ones to tackle climate change. Suggestions that a Chinese order from aircraft maker Airbus might be cancelled in retaliation prompted representatives from the EU aviation industry to write in May to the commission, urging it to exclude flights beyond the EU.
Russia is also unhappy and last week an official in the Indian government said his country would challenge the EU through the World Trade Organization (WTO).
Trade associations representing airlines around the world have welcomed this trend. This week, for instance, Andrew Herdman, director general of the Association of Asia Pacific Airlines (APAA), said that the EU had to accept it had "over-reached its authority, and must now fundamentally rethink its position".
The eventual outcome of these political threats will depend to some extent on the opinion of the European Court of Justice. If it agrees the ETS is an extra-territorial and illegal tax, the commission will be forced to look again at the scheme. The court may instead back the commission's view, which is that participation in the ETS is a condition of entry to EU airports and not a tax. But even if this is the case, the EU will not be shielded from challenges through the International Civil Aviation Authority (ICAO) or WTO, or retaliations against EU airlines.
Legal challenges will take some time, allowing the ETS to begin in the meantime, but the airlines have until April 2013 before they need to submit any carbon allowances, notes David Henderson of the Association of European Airlines (AEA). The trade association is urging the commission to find a solution as quickly as possible, warning that its members would bear the brunt of any trade war.
The section of the 2008 directive covering equivalent measures is only three paragraphs long and says nothing about judging or approving equivalent measures proposed by third-country governments, or how their performance would be tracked. The commission says this is deliberate. It does not want to dictate what other countries come up with and will consider any suggestions.
Bill Hemmings, of green group T&E, also thinks this is the right approach: "The wording is a bit vague, but I do not think you would want it too restrictive either." But for the US government, MEPs, and airline associations the lack of detail is a sticking point. "There has been no indication as to how such equivalence might be determined, or indeed the processes involved," says Mr Herdman at the APAA. "In any case, there is a danger that the potential proliferation of national measures would only add further complexity, without being environmentally effective."
The potential success of the equivalent measures approach depends very much on the country in question. China is already aiming to reduce carbon emissions from its airlines by 20% by 2020 and has introduced a set of guidelines to this end. It also has the advantage of a relatively new, and therefore efficient, fleet. The commission has written to the Chinese government asking for more details regarding its plans and thinks an agreement might be reached. ENDS understands negotiations may also be under way with the United Arab Emirates.
But the US looks unlikely to follow this route. It would be hard for any measures to win approval when the House of Representatives is expected to vote in favour of an anti-EU ETS bill. American airlines, and indeed the International Air Transport Association (IATA), also remain wedded to an international approach.
The debate about equivalent measures is "not helpful", says IATA spokesman Chris Goater. If the EU were to wait for international action, there would be no need for such measures, he argues. "Why haven't [EU officials] defined what they are looking for and made it clear? They seem to have been getting themselves into a muddle."
The US has held discussions with the EU on equivalent measures, an official at the state department, which leads negotiations with the EU, told ENDS. But the country still has many questions and she refused to speculate on its future course of action. The official also reiterated the US government's general dissatisfaction with the EU approach: "The US objects on both legal and policy grounds to this attempt to unilaterally impose its aviation policy on the rest of the world."
Some observers think the US government will decide to do nothing. Being seen to bow to industry lobbying would be embarrassing for the Obama administration and may hamper its efforts to create a single global emissions trading scheme.
No easy fix
Whatever the outcome of ongoing talks, equivalent measures are unlikely to please all parties involved. By leaving outgoing flights in the ETS, they may not satisfy foreign airlines. There may also be debate about the real environmental benefits. Mr Hemmings at T&E says the inclusion of all inbound flights in any equivalent measure also seems to limit what would count. Attempts to update national fleets would probably not qualify, for example, as they would only affect domestic airlines.
"In theory the equivalent measures provision should allow for an adult debate between countries. But the current debate is not grown-up - it is a simple case of using all means to overturn the legislation," he argues.
Damian Ryan of the Climate Group also thinks it may be hard to find truly equivalent measures. "The commission might have to agree, for political reasons, to measures that are above and beyond what countries are doing right now, but are not as much as the EU is trying to achieve with a physical cap," he says.
The EU executive might also find it hard to monitor progress in countries such as China which are wary of sharing detailed data, warns Mr Ryan.
But whatever the outcome of the legal and political wrangles, they are in themselves useful, he believes. "This is valuable in that it is forcing discussions to take place." And even the airlines taking legal action are measuring their emissions and adopting new strategies, he says. "This is good as it is all about learning by doing."
CAA LAUNCHES REVIEW OF PRICE AND SERVICE
QUALITY REGULATION AT HEATHROW, GATWICK
AND STANSTED AIRPORTS
CAA Report - 29 July 2011
The UK Civil Aviation Authority (CAA) has today published its first consultation on the future of price and service quality regulation at Heathrow, Gatwick and Stansted airports. Informed by extensive discussions with airlines, airports, investors and other stakeholders, 'Setting the Scene for Q6' sets out the CAA's initial views on how it plans to approach its review and the key issues that will shape the agenda for the work.
The document is being published against the backdrop of the Government's intention to reform the framework for airport economic regulation by introducing a new primary duty for the CAA that unambiguously puts passengers' interests first. The legislation will also introduce a new licence regime for airports with substantial market power, backed up by financial penalties, in line with other economic regulators. These measures should allow regulation to be tailored better to meet the requirements of passengers at individual airports.
Commenting on the announcement, Andrew Haines, CAA Chief Executive, said: "The CAA's aim is to put passengers' interests at the heart of our economic regulation and we are keen to ensure that our reviews at Heathrow, Gatwick and Stansted reflect the unique position of each airport. Given the importance of the reviews for the future of these airports, it is vital that everyone with an interest has an opportunity to engage with our review and have their voice heard. This will help deliver a regulatory regime that supports improvements to the passenger experience and efficient collaboration between airports and airlines, and maintain the confidence of investors."
Under existing legislation, every five years the CAA is required to set the maximum price levels that the three airports can charge airlines, as well as imposing service quality standards, backed up by rebates to airlines if the airport fails to meet them. Today's document is the first stage in the process to set the price and service quality levels after April 2014.
1. The CAA's full document can be found here.
2. The CAA is the UK's specialist aviation regulator. Its activities include: making sure that the aviation industry meets the highest technical and operational safety standards; preventing holidaymakers from being stranded abroad or losing money because of tour operator insolvency; planning and regulating all UK airspace; and regulating airports, air traffic services and airlines and providing advice on aviation policy from an economic standpoint.
3. Q6, the period covered by the new regulatory arrangement, will begin for all three airports in April 2014. In March 2011 CAA extended the current price and service quality control period at Heathrow and Gatwick (known as Q5) to run until 2014, which will align with the expiry of Q5 at Stansted.
4. The Government expects to introduce the legislation to implement their reform proposals early in the Second Session of the current Parliament. However, without being certain of the final shape of the reforms and that they will successfully pass through Parliament the CAA cannot start to develop Q6 as it would if the new arrangements were certain. As such, extending the current controls was the best way to try and maximise the chance of aligning the next ones with the expected new legislation while minimising upfront cost and risks for stakeholders.
Post Bag - Dunmow Broadcast - 21 July 2011
THERE will be no tears shed by the local community when Air Asia X moves its flights from Stansted Airport to Gatwick later this summer.
With its old under-powered Airbus, which takes much longer to reach cruising altitude than most modern aircraft, the airline has been the source of 50 per cent of noise complaints registered by people living close to the flight path. BAA allowed the aircraft to fly late at night, thereby depriving large swathes of the community of valuable sleep time. We really feel sorry for those residents living close to Gatwick who will now have their sleep disturbed by this unwanted intruder.
The departure of Air Asia X also illustrates another point. Stansted Airport was never intended to be a longhaul destination airport. Originally used mostly for charter flights, it became the preserve of the cut-price airlines and a fierce battle ensued to keep costs low. Unfortunately, we have ended up with unreliable schedules on the part of airlines that are no longer transparent in their ticketing practices and prone to cutting services at the slightest economic provocation.
What we really need at Stansted are scheduled airlines with realistic air fares operating in a sustainable economic environment and aimed at servicing the needs of East Anglia's population. I am not against a small sustainable airport, what I object to is the fight to fill aircraft seats at any cost. Luring passengers from Manchester and cities further north, with the threat of a second-rate Heathrow emerging in our midst, is not a sustainable way forward.
The aviation industry at Stansted, and elsewhere, should instead be looking to reduce its carbon footprint and establish a viable operation within a socially acceptable environment and more sustainable economic framework. I wonder if this latest development over Air Asia X will bring some realism to the operators of Stansted Airport.
Post Bag - Dunmow Broadcast - 28 July 2011
I WISH to comment on the letter from Keith Vine (Postbag, July 21).
I am a little confused exactly what Mr Vine point is. Firstly, Air Asia X is transferring flights because the new owners who took over from BAA have given better terms than BAA at Stansted. In addition, Air Asia X states that the connections to central London from Gatwick are better and cheaper than from Stansted. Nor are they the first airline to withdraw services from Stansted recently. Air Berlin have transferred Hannover and Hamburg flights to Gatwick .
As regard the "old under powered Airbus" that Air Asia X use, this is in fact the Airbus A340- 300 that is still very much in production. There are plenty of older types that are no longer in production that use Stansted such as the MD11 of FedEx.
It must be noted that all aircraft that fly within Europe have to fulfill strict noise and emission requirements. Also, as the Air Asia X flight arrives at night and takes off the next morning, I cannot see how people can complain of the noise impact at night.
On the more general comments about low cost airlines, they are at the end of the day schedule airlines flying to a specific timetable. There are IT airlines that use Stansted like Thomas Cook Airline and Thompson TUI but nowhere near the amount that use Luton or Gatwick.
The concept that Stansted is trying to encourage people to travel down from Manchester to fly from there is ludicrous as the two lost cost airlines that predominately fly from Stansted, ie Ryanair and easyjet also fly from Manchester.
In fact now that the Government has ordered the sale of Stansted, the Manchester Airport Group look to be the prime customer for this airport. They have stated that they are concerned that 90 per cent of the traffic at Stansted is low cost and that 70 per cent is one carrier, and if they are successful they will be looking to attract a broader use of the airport. This could be a case of better the devil you know.
Finally, all airlines and aircraft operators are under pressure to reduce their carbon footprint and some airlines have already flown aircraft using bio fuel. I think that Mr Vines maybe worrying about the wrong things.
Merton Place, Littlebury
TRY LIVING WITH IT
Post Bag - Dunmow Broadcast - 4 August 2011
I WOULD like to correct a point which appeared in the 'Confusing claims' letter which you published last week.
In fact, the current Air Asia X schedule has aircraft arriving at 15:55 or 21:45 and departing at 17:25 or 23:15 - not arriving at night and taking- off the next morning as printed.
The European noise requirements referred to, meanwhile, are those laid down by DfT and only check the noise at a single point and on take-off only.
Very few aircraft infringe these DfT noise levels yet in 2010 Air Asia X was the main culprit for transgressions, despite accounting for just a tiny percentage of total flights.
If your correspondent lived near or under the Clacton route, as many residents do in this area, he may have had a very different view on the carpet of noise laid across Essex by the Air Asia X aircraft which climb very slowly and have a high 'quota count' noise rating.
Stop Stansted Expansion
SMOOTH OPERATOR AT HELM OF A NATIONAL DISGRACE
Colin Matthews sold Gatwick to fend off the Competition Commission. Now it wants him to sell two more airports. It looks as if BAA must shrink further.
Andrew Davidson - The Sunday Times - 24 July 2011
The boss of BAA, Britain's biggest airport operator, is being forced to sell Stansted and either Glasgow or Edinburgh airport. He has already sold Gatwick. Slowly BAA's empire is being sliced away.
And he knows he will get little sympathy. "My arguments sound a bit technical and I know it's clear the public and therefore politicians have said they want to see change; they have had enough." He frowns. The truth is, nobody is listening. Tuesday's announcement that BAA had lost its final appeal against a Competition Commission ruling that it must sell two more airports came as little surprise.
Matthews argues that the situation has changed since the original ruling was made - that Stansted and Heathrow are so dissimilar that there are no competition issues involved in owning both - but he is wasting his breath. BAA, in some people's eyes, is still being punished for allowing Heathrow, Europe's busiest airport, to become a national embarrassment: shoddy and inefficient. For an accomplished operator like Matthews, brought in to improve performance three years ago, it's frustrating.
Tall and genial, he looks like a ruffled ostrich, and is an eloquent arguer for BAA. But on anything beyond business he becomes uneasy. "There was a deficit of investment in Heathrow, and I suspect it goes back to public ownership 20 years ago, but we have been investing £1 billion a year for the last five years. Terminal 5 is open, over there you can see the new Terminal 2 going up, opening in 2014." He gestures at the cranes visible from his Heathrow office. "My ambition is that we can always say we are better today than we were yesterday, because we do have challenges: we are full at Heathrow, we are not perfect, aviation is not yet immune to volcanic ash or thunderstorms."
Matthews, 55, is a formidably bright engineer who is regularly frustrated by the illogical. Tall and genial, he looks like a ruffled ostrich, and is an eloquent arguer for BAA's cause. Move on to anything beyond business, however, and he becomes uneasy. When I ask how many children he has, or where he sails in Cornwall, or what his four siblings do, he says he won't tell me. The personal is absolutely off limits.
Which is fine, whatever the Facebook generation may think, and doubtless the result of BAA's continual bad press. Last December, as snow closed Heathrow, the knives came out for Matthews amid reports that the company was ill-prepared. Some felt he was slow to react. British Airways' Willie Walsh was in front of the cameras in a flash. When eventually Matthews did appear, he was "shamed" - according to one tabloid - into promising he wouldn't take that year's bonus. Don't ask him how much it was. "I'm not going to answer that. It was the only thing journalists were interested in talking about, so I said I wouldn't take it."
And Heathrow never ran out of de-icer, as reported. "We made some mistakes in substance, also in communication. But what we need is better triggers, better antennae implanted in airlines, air traffic control, ground handlers so we pick up early signs of problems and react together. We have to collaborate a lot more closely." Matthews knows how to run a team - his career has taken him round the world working for Lucas Girling, the brake maker, Bain, the consultancy, GE, BA, Transco, Hays and Severn Trent. That BA experience is key. He was technical director when relations with BAA were fraught.
But his aviation background was just one reason why Sir Nigel Rudd, BAA chairman, appointed him. Familiarity with regulators and debt reduction were others. BAA, bought by Ferrovial, the Spanish conglomerate, in 2006, still owed £10 billion when Matthews joined. And what can Ferrovial think now? The erosion of its investment hasn't ceased. Matthews says BAA's owner remains calm. "They bought it with a 30- to 40-year timeframe, not for a five-year return. It's too soon to call judgment. I am going down there next week to talk to the board, and that's the first time I've been in three years. They are fantastic."
Top of the list for discussion will be the possibility of a judicial review. BAA could yet force the Competition Commission back to the courts. Matthews' body language suggests he would rather focus on running the airports he has - Heathrow, Southampton, Aberdeen and whichever of Glasgow and Edinburgh he keeps.
But logic argues for a fight. Owning both Stansted and Heathrow is not anti-competitive, he says. They are different beasts. Vociferous critics such as Ryanair's Michael O'Leary, who regularly derides "monopolist BAA", are just wrong.
"We love Ryanair," says Matthews tightly. "But they are also very powerful and they have a choice. They can make requirements and move if we don't meet them. Does that sound like a monopoly?" Maybe not, but airlines say BAA has doubled Stansted's fees in five years. "Yes, but the regulator sets the maximum we can charge and when Stansted was in development we had to charge less and when it started to fill up we began to charge nearer the maximum to repay the investment."
At Heathrow, Matthews' problems are different. It had its busiest ever day on Tuesday - 1,386 flights landing and taking off - but its antiquated layout means it will soon fall behind European rivals. Passenger transfers between planes can take 90 minutes. At Amsterdam's Schiphol the average time is 45. New terminals will help, but they won't address why the airport is prone to backlogs and delays.
Matthews is hoping to use both of Heathrow's runways for take off for longer periods on days when there is disruption. The airport currently switches departures from one to the other at 3pm to reduce the effect on nearby communities. "People will be anxious, and if they don't trust us to have an honest discussion, then they are not going to do a deal." Do people trust BAA? "That's a binary question," he smiles. "I think we lost trust for a period of time. Noise is a big issue. We used to write people long letters. If people complain now, we call them up."
And selling more airports doesn't make sense. The very fact easyJet is moving flights from Stansted to Southend shows that real competition exists, he says. As for the money raised by any sale, he shrugs. The company refinanced its debt two years ago and a forced sale in a depressed economy puts the vendor at a terrible disadvantage. "I'm more interested in running things than financial transactions. If I go home pleased it's because I've oiled some wheel that stops squeaking."
After me, he is having coffee in Terminal 5 with a passenger who complained about being body-scanned last time she flew from Heathrow. "I told her to let me know next time she was here, and I would walk her and her husband through." So off he goes, stiffly but sincerely. Don't bet against BAA taking the Competition Commission to judicial review. Matthews clearly feels he has right on his side.
RYANAIR TO SUE BAA FOR STANSTED 'OVER-CHARGING'
Ryanair picked a fresh fight with airports operator BAA as it shrugged
off a 49pc jump to €427m (£377m) in fuel costs to post marginally
higher first-quarter profits
Alistair Osborne - Daily Telegraph - 26 July 2011
Michael O'Leary, chief executive, said the airline was poised to "launch legal proceedings against BAA Stansted", seeking the recovery of £35m a year in excess charges over "a number of years". He claimed BAA's Spanish owner Ferrovial was overcharging at Stansted to fund Heathrow" - its main UK airport.
Mr O'Leary claimed Stansted's £1.35bn regulated asset base - on which its maximum charges are based - would be closer to £600m-£700m but for systemic overcharging. He highlighted a £194m uplift for the costs of buying houses around the site of a planned second runway at Stansted, which has not been built and £70m of unexplained "intra-group costs".
"Why should the airlines be paying for the monumental balls-up of buying houses around a runway that was never built," he said.
He pointed out that in 2007, when Stansted handled 24m passengers, it had £188m revenues and £155m costs. By 2011, passengers had dropped to 18.3m but revenues were up to £220m and costs to £180m. "How does traffic decline by 25pc but costs go up 16pc. Only a regulated monopoly could get away with it," Mr O'Leary said.
A BAA spokesman said: "We refute Ryanair's suggestion that BAA has artificially inflated costs. Our costs and revenues are scrutinised by our regulator, the Civil Aviation Authority, which also sets the amount we can charge airlines. Ryanair has no case for legal action."
Ryanair said profits before exceptional items and tax rose 1pc to €157m in the three months to June 30 on revenues up 29pc to €1.16bn. Passengers - up 18pc to 21.3m - and sales were flattered by last time's Icelandic volcano disruption, which cost the carrier €32.7m. Ryanair shares fell 8 cents to €3.40.
CAN 'NO FRILLS' WORK FOR LONGER FLIGHTS?
Saira Syed, Business Reporter - BBC News, Singapore - 27 July 2011
While it's common to pay a cheap fare for a short flight to a holiday destination, the thought of forgoing leg room, hot meals and other "frills" for more than a few hours may not sound as appealing.
Yet some airlines are trying to bring the successful short-haul budget model to longer flights, with the latest entrant in South East Asia being Singapore Airlines (SIA). Whether this model will work is one of the hot debates raging in the world of aviation.
The move towards low-cost airlines in Asia has picked up pace in recent months, with a number of full service airlines trying to attract frugal flyers. Japan's Peach Aviation starts operation between Osaka and domestic cities and Incheon airport in South Korea next year. Earlier this year, Japan's All Nippon Airways (ANA) launched Peach Aviation, a short-haul low-cost carrier based in Osaka. It is expected to start flights in March 2012. A Thai Airways budget airline is also expected late next year. The trend coincides with a forecast of a rise in air travel globally, lead by the Asia Pacific region.
The International Air Transport Association (Iata) estimates that by 2014 there will be 3.3 billion more air passenger journeys across all regions, up 800 million from 2009. Of that 800 million, 45% will travel on Asia Pacific routes. And budget airlines look set to capture the lion's share of that passenger growth.
Singapore-based low-cost Jetstar Asia increased its passenger numbers by 44% (from 1.8 million to 2.6 million) last year, whereas Singapore Airlines increased passengers by 1.8% (from 16.6 million from 16.3 million), according to Aviation Week, an industry publication. "Going that extra distance you open up a whole lot of new markets".
And to facilitate all those extra passengers, budget carriers are racing to expand their fleets. At the Paris Air show in June, India's Indigo placed an order for 180 new aircraft from Airbus.
Malaysia-based budget carrier Air Asia trumped that with a record purchase of 200 Airbus A320neo jets at a list price of $18bn (£11bn).
"Aviation is far from reaching a saturation point in Asia," according to Tony Fernandes, group chief executive of Air Asia. "There is definitely space for new players and for the expansion of existing ones."
In the case of Air Asia, that expansion is well under way. It recently announced a partnership with ANA to start a budget airline in Japan called Air Asia Japan, to be based out of Narita Airport, near Tokyo. It has similar joint ventures in south-east Asia, including Thailand, the Philippines and Vietnam. As low-cost carriers expand, they are setting their sights further and further.
Air Asia, as part of their aggressive marketing campaign, sponsored the British Grand Prix this year. Air Asia already has a long-haul budget airlines called Air Asia X which flies to London and Paris from Kuala Lumpur. But to be profitable while offering cheap flights on longer distances is no easy task.
Oasis, which used to fly from Hong Kong to London at low prices, went into liquidation and ceased operation in 2008, a mere 18 months after it was established. "The [long-haul] business structure has an unproven track record, whereas short-haul has been successful," says Mark Webb, aviation analyst for HSBC in Hong Kong. Mr Webb says the ways in which budget carriers save on costs on short-haul routes are largely not applicable for airlines on longer routes.
He says meal services and in-flight entertainment are examples of features that cannot be sacrificed on longer flights. Even if you charge for in-flight entertainment and food, you still need to provide those services and that adds complexity to your business model," he says.
The flights will also be less frequent, which means costs cannot be spread out over many flights back and forth each day - something short-haul carriers are able to do. And then there is the added expense of keeping staff overnight at a destination.
But others say there is enough demand and that people are willing to put up with no frills on flights that are between five and eight hours long.
"[From Singapore] to Tokyo, Beijing, Shanghai and many destination in India, that will work," says Leithen Francis, Asia editor for Aviation Week.
"We're not really talking about long-haul, we're talking about the next step beyond short-haul. But going that extra distance, you open up a whole lot of new markets." That would allow Singapore Airlines to attract price conscious consumers such as students, pensioners, backpackers and small businesses.
But profitability aside, it is also about marking your territory. "Another reason for setting up low-cost carriers is for defensive reasons, to stop an aggressive competitor from getting those routes," says Mark Webb. "The key to success in low-cost carriers is route dominance," he adds.
Air Asia announced a joint venture with Japan's All Nippon Airways increasing its reach in Asia. Singapore Airlines is confident the long-haul budget airline will make them money. "The decision to launch this new airline came after a lot of review and analysis," says spokesman Nicholas Ionides. "We wouldn't be getting into this business if we didn't think it could be profitable for the SIA group."
The airlines' shifting focus towards its investment in the budget carrier sector is underlined by its involvement in the grounding of Tiger Airways.
Australian authorities grounded Tiger Airways' entire fleet in Australia this month on safety concerns. SIA owns more than 30% of the low-cost carrier. And although SIA insists it is not involved in the management of Tiger Airways, immediately after the grounding Chin Yau Seng, the former chief executive of SIA's regional carrier Silk Air, was appointed as Tiger Airways' acting chief executive officer. The way SIA handled the recent troubles facing Tiger Airways shows the growing importance of budget carriers in the Asian skies.
'CHEAP FLIGHTS ERA OVER' WARNS IAG BOSS WILLIE WALSH
The days of cheap air travel are over as the aviation industry adjusts to an oil price of $120 a barrel, the boss of International Airlines Group has warned. IAG yesterday said it expected its total fuel bill for the year to reach $5.2bn (£4.6bn) after a first half that saw a near-35pc increase in fuel costs to $2.44bn.
Alistair Osborne, Business Editor - Daily Telegraph - 30 July 2011
Willie Walsh, the chief executive of the company formed by the merger of British Airways and Spain's Iberia, said consumers must get used to higher ticket prices. Arguing there had been a "structural shift in the price of oil", Mr Walsh said: "The industry is going to have to price in $120 oil. As a percentage of our cost base, it's 32pc. For the low-cost guys it's more like 50pc. It is such a big part of an airline's costs that fares will have to go up."
IAG yesterday said it expected its total fuel bill for the year to reach $5.2bn (£4.6bn) after a first half that saw a near-35pc increase in fuel costs to $2.44bn. The company, which is 50pc hedged for the next 12 months at about $93 per barrel against a current spot price of around $117, managed to recover 50pc of the first-half increase in fuel costs through "revenue initiatives". However, IAG said such recovery "becomes progressively harder through the year".
Despite these headwinds, IAG reversed last time's half-year losses of €419m to post a pre-tax profit of €39m on total revenues up 17.9pc to €7.77bn. Passenger revenue growth of 18.6pc was flattered by the disruption caused last time by the Icelandic volcano and BA strikes. Underlying growth was closer to 11pc to 12pc.
Boosted by ongoing recovery in first and business class traffic, strong cost controls and a 7.2pc increase in yields - broadly revenue per seat - Mr Walsh said he expected "significant growth in operating profit this year". Analysts are expecting £400m pre-tax profits this year.
Mr Walsh said premium traffic was "just getting back" to its 1997 peak, before the credit crunch, with the tie-up with American Airlines reaping dividends on the transatlantic routes, where traffic rose 16pc. Describing London as a "strong market", Mr Walsh said: "We are doing better than Air France and Lufthansa. Our performance on the transatlantic is clearly better than the competition."
He said he had seen "no evidence" of any recent slowdown on the North American routes caused by the US debt crisis but confirmed a €90m-€100m hit from the Japanese tsunami and political upheaval in North Africa and the Middle East.
Mr Walsh added IAG was interested in the possible purchase of Portugal's TAP airline, which the new government is considering privatising. "You should expect us to look at what's on offer. But we've not had any discussions or done any analysis of it yet," he said.
The shares rose 4.7 to 237.3p but analysts were cautious about potential turbulence ahead. "We remain sceptical that through-the-cycle profitability is improving and continue to rate the stock a hold with some downside risk," said Charles Stanley analyst Douglas McNeill.
RYANAIR SEES SMALL AIRLINES GOING BUST ON HIGH OIL
Jean-Paul Pelissier - Reuters - 26 July 2011
Oil prices above $110 a barrel could force small regional European carriers to go bankrupt this winter, the chief executive of Europe's largest low-cost airline Ryanair (RYA.I) said on Tuesday.
Michael O'Leary predicted consolidation in the airline industry, though he ruled out any interest by Ryanair in making acquisitions. "With the possible exception of Aer Lingus (AERL.I), I don't think there are any airlines Ryanair would be interested in acquiring," O'Leary told reporters in Rome, where the company announced plans for seven new flight routes into the city's Ciampino airport.
Ryanair has been rebuffed in two hostile bids for its Irish rival Aer Lingus. "I do think there will be further consolidation and further bankruptcies this winter if oil remains up at around over $110 a barrel," he said. "There's undoubtedly a second or third tier of small, regional and not so low-fare airlines in Europe, particularly in Spain and central Europe and some in the UK, that will go bust this winter if oil remains above $110 a barrel."
Ryanair on Monday said a 50 percent surge in fuel prices had pushed first-quarter profit below market expectations, but said higher summer sales would keep it on track to meet earnings targets this year.
FOSTER'S £50BN THAMES AIRPORT
Lord Foster plans new transport hub with four runways, capacity for 150m passengers and a power supply from the tidal energy of the North Sea
Karl West and Mark Hookham - Sunday Times - 31 July 2011
Lord Foster, the architect, has drawn up plans for a giant four-runway airport to be built in the Thames estuary and powered by the tidal energy of the North Sea. With capacity for 150m passengers, it would be the biggest in the world, capable of handling more than twice Heathrow's 66m annual traffic.
This weekend the project, which would cost up to £50 billion, was described as "exciting" by Boris Johnson, the mayor of London, who plans to raise it with George Osborne, the chancellor.
Supporters of the Foster scheme say it could become a leading transport hub by 2030, linking the southeast's ports, rail, road and air traffic.
It would be built on the Isle of Grain, beside the Medway, in north Kent. Aircraft would land and take off over water, enabling flights to operate around the clock and, it is claimed, affecting far fewer people than the 245,000 who suffer "significant noise" from Heathrow.
Foster and Partners designed Chek Lap Kok airport in Hong Kong - built on an island reclaimed from the sea - and terminal 3 at Beijing Capital international airport. It is working jointly with Halcrow, which provided planning and engineering services for the Abu Dhabi international, Toronto and Athens international airports.
Business leaders have grown increasingly frustrated at the limitations of Heathrow, which is operating at 98% capacity. It has direct flights to only 157 destinations, compared with 224 from Charles de Gaulle airport in Paris and 235 from Frankfurt. "This move would greatly improve the quality of life for Londoners by reducing pollution and improving security," said Foster. "It would also allow London to compete with rapidly expanding airports in Europe and the Middle East."
He wants to harness the power of the North Sea with a three-mile tidal energy barrage slung across the Thames estuary between the north shore of the airport in Kent and near Southend-on-Sea on the Essex shore. The barrage would consist of 1,000 submerged generators. Ben Hamer, director of Europe at Halcrow, estimates they could produce about 1,300 gigawatt hours a year - enough electricity to power the entire airport plus 120,000 homes.
"The beauty of the tide is that it's entirely predictable. It generates energy for 18 hours a day, with no peaks," he said.
The scheme includes a new flood protection barrier almost two miles long further inland, near Tilbury dock, which could eventually replace the existing Thames barrier. A rail tunnel under the Thames at the same point would link a new London gateway port in Kent with the container ports of Tilbury in Essex and Felixstowe in Suffolk. It would be joined to the west coast main line via a rail spur around north London.
Hamer estimates the total cost of the project at between £40 billion and £50 billion. Tim Clark, president of Emirates, one of the world's fastest growing airlines, said selling land currently used by Heathrow could provide a large part of the funding.
The proposals will provoke strong opposition from environmentalists, because the Isle of Grain is rich in wildlife, even though it is the site of a former BP oil refinery. A study two years ago by the charity Buglife found it was home to 258 species of invertebrates, birds and reptiles, with 11 of them considered rare and 13 threatened with extinction, including the white eye-stripe hoverfly. Nearby bird reserves, which are run by the RSPB, are home to wildfowl and wading birds, including avocet, dunlin and redshank. The society said the airport scheme would cause "massive damage".
Johnson has previously championed a proposal to build an airport on two artificial islands in the Thames estuary, but the coalition government has so far ruled out building more runways in the southeast of England.
There is a single reason why this will never be approved: The risk of bird strikes. People should stop indulging this fantasy of an estuary airport. It would be too expensive and what do they think will happen to all the jobs at Heathrow? Boris has wasted enough money commissioning feasibility studies. Someone should hold him to account for wasting money on something that will never happen.
LONDON MAYOR BACKS FOSTER'S NEW THAMES AIRPORT PLAN
Aaron Morby - Construction Enquirer - 1 August 2011
Boris Johnson is planning to take Lord Foster's proposals for a new four-runway airport on the Isle of Grain in Kent to the Treasury.
The London Mayor previously called for an airport to be built on man-made islands in the Thames Estuary, near Whitstable. Foster + Partners and consultants Halcrow have now come up with a new plan after collaborating on a self-funded £100,000 study to produce a detailed vision for a Heathrow replacement airport to be called The Thames Hub. Details of the plan, which could cost £40bn - £50bn, are due to be unveiled next month.
The airport hub plan would bring together rail freight connections between the UK's main sea ports. At its centre would be a 150 million passenger airport powered by a tidal energy barrage and a new flood protection barrier. Johnson said: "I am grateful to Lord Foster for spelling out the potential for a new airport, properly rooted in a broader vision for the Thames estuary, where it would make a vital contribution to economic growth.
I believe this is vital not only so London remains in the premier league of aviation, but also to generate jobs and opportunities for decades."
Lord Foster said: "These visionary proposals are far from future fantasy. They are both essential and down to earth. When you look at the eastwards thrust of London's infrastructure, with the Channel Tunnel and the Olympics, you can see how it would be possible to create a 24-hour airport."
He said: "This move would greatly improve the quality of life for Londoners by reducing pollution and improving security. It would also allow London to compete with rapidly expanding airports in Europe and the Middle East. The arguments are extraordinarily persuasive and the precedents are also compelling. More than 10 years ago Hong Kong built what was then the world's largest airport at Chek Lap Kok, an island reclaimed from the sea - in just four years."
Halcrow group board director, David Kerr said: "The Thames Hub would provide a major economic boost for Kent and Essex, with the creation of hundreds of thousands of jobs over a number of years and provide noise and air pollution relief for London's population. The proposals would make a significant contribution to the UK's commitment to reduce carbon emissions. If the UK is to remain globally competitive, these proposals need to be seriously considered."
AIRPORT HAS £50,000 TO GIVE TO COMMUNITY
Cambridge News - 3 August 2011
Trustees of a community fund have launched a campaign to give £50,000 to a project which will leave a "lasting legacy". Stansted Community Fund is seeking applications from projects within 40 miles of Stansted Airport linked to education, environment and employment.
The one-off grant, which comes from the airport's owner BAA, could be used for a variety of community projects, from installing new equipment in a play area to providing a sports pavilion at a recreation ground.
Marcella M'Rabety, corporate social responsibility manager at the airport, said: "We're launching this campaign to tell charities and organisations there's £50,000 out there up for grabs. We haven't had many applications from the Cambridge area and this is a life-changing sum of money for organisations to kick start something. The key thing is for this money to benefit the community for many years to come. It's important because at the moment there's not a lot of funding around and there's a lot of need out there."
The money can be used as a "catalyst" Ms M'Rabety said to aid other funding options but cannot be used for capital projects. For information email firstname.lastname@example.org and to apply go to www.stanstedairport.com/community. The closing date is September 2.
GOVERNMENTS AND NGOS FIGHT EU CASE
FOR AIRLINE EMISSIONS TRADING
Transport and Environment Bulletin - 20 July 2011
The lawsuit brought by three American airlines against aviation's introduction into the EU's Emissions Trading Scheme has come to court, with a preliminary judgement expected on 6 October.
The EU's institutions - backed up by five member states, Norway and the coalition of environmental NGOs led by T&E - defended the EU's position in a one-day hearing at the European Court of Justice earlier this month. The EU strongly rejects the legal action from Continental, American and United airlines, which says aviation emissions can only be tackled by the International Civil Aviation Organisation and thus the EU's decision regarding air travel to emissions trading is illegal.
T&E programme officer Bill Hemmings said: "The American airlines have a long history of actively seeking to disrupt any and all measures to cut climate changing emissions. This case is another cynical attempt to derail a modest and cost-effective climate initiative that would add little more than €6 to the price of a transatlantic flight. Introducing aviation into the ETS is a welcome first step towards dealing with aviation's growing climate impact, but it is only a first step."
The EU's action has been supported in an editorial by the Washington Post newspaper. Under the headline 'The EU has the right idea in regulating greenhouse gases from airplanes', the paper says: 'The Obama administration should agree, and press others to agree, that the Europeans have good reason to want to account for the pollution of all aircraft servicing their market.'
The court's Advocate General will give her opinion on 6 October. The final judgement will follow later, but opinions from the Advocate General have often proved to be a reliable indication of final judgements.
WATCHDOG ORDERS STANSTED AIRPORT MUST BE SOLD
Herts & Essex Observer - 19 July 2011
STANSTED Airport is set to go on sale in just three months time - or even sooner - the Competition Commission (CC) confirmed today (Tuesday, July 19).
The monopolies watchdog has rejected BAA's claim that there have been "material changes in circumstances" since it provisionally ordered the auction of its Essex hub in March - and has now concluded the deal must go ahead.
Despite a series of legal challenges, the CC still insists that the sale of the airport is "fully justified" and that passengers and airlines would still benefit from greater competition with the airports under separate ownership - despite the current Government's decision to rule out new runways at any of the London airports.
Chairman of the BAA Remedies Implementation Group, Peter Freeman, said: "We hope that the sales can now proceed without delay so that passengers and airlines can start to enjoy the benefits of greater competition. Our report has been challenged, reviewed and upheld and it is clear that the original decision to require BAA to divest three airports remains the right one for customers. It has been a long process whilst BAA has challenged the decision - quite understandably given its significance. However, both we and the courts have now exhaustively re-examined the case for the sales and found it to be sound so there are no grounds for delaying further."
He added: "The introduction of new ownership at Gatwick, whilst too recent for us to draw any firm conclusions, has given a foretaste of the benefits competition can bring. We think that these benefits will be all the greater once Stansted, Gatwick and Heathrow are all in competition with each other."
The CC has also confirmed BAA must sell either Edinburgh or Glasgow in Scotland - with Stansted under the hammer first.
BAA LOSES FINAL COMPETITION COMMISSION SELL-OFF RULING
BAA chief executive Colin Matthews:
"This decision is a draconian one. A damaging one"
BBC News - 19 July 2011
Airport operator BAA must sell Stansted and either Glasgow or Edinburgh airports, the Competition Commission has said in its final ruling.
In March 2009, the commission told BAA to sell Gatwick and Stansted airports and either Edinburgh or Glasgow. BAA has already sold Gatwick but challenged the decision to sell the other ones. BAA said it was dismayed at the decision and would now consider a judicial review. Spanish-owned BAA operates Heathrow, Southampton and Aberdeen, as well as Stansted, Glasgow and Edinburgh.
The Competition Commission said in its report that the sales process for Stansted would start in three months' time, and would be followed by the sale of one of the Scottish airports. BAA had challenged the commission's initial ruling, but in October last year, the Court of Appeal ruled against the airport operator. Earlier this year, the Supreme Court refused BAA permission to appeal further.
Richard Scott Transport correspondent, BBC News comments: "In many respects this decision sends us back to 2009. The ruling is the same - BAA must sell Stansted and either Edinburgh or Glasgow. The response is the same too - BAA isn't happy and will almost certainly launch a legal challenge.
Its last legal challenge successfully delayed the sale process by two years, and it is possible that a new challenge could have a similar effect.
By the time any new challenge is concluded, it's not inconceivable that the Competition Commission could feel its original decision is out of date - and the whole process begins again."
"Our report has been challenged, reviewed and upheld and it is clear that the original decision to require BAA to divest three airports remains the right one for customers," said Peter Freeman from the Competition Commission. The commission said its decision was "fully justified" and passengers and airlines "would still benefit from greater competition with the airports under separate ownership, despite the current government's decision to rule out new runways at any of the London airports".
But BAA chief executive Colin Matthews called the decision "an unreasonably draconian demand". "The world has changed since that [initial] report more than two years ago. It's more clear than ever that Heathrow does not serve the same market as Stansted," he told BBC Radio 4's Today programme. Any reasonable and legal way that we have to protect the company which has invested £5bn in UK jobs, we will do."
Budget airline Ryanair accused BAA of "using delay tactics to maximise the amount it can raise for the inevitable sale". "This is a cynical move which will damage London tourism and traffic and keep costs high for passengers," a spokesperson for the airline said.
Financial Times - 19 July 2011
The Competition Commission's decision is final - at least for now. Ever since Spanish infrastructure group Ferrovial bought a controlling stake in UK airports operator BAA at the top of the market in 2006, the deal has been beset by setbacks. The Office of Fair Trading referred the airport market to the commission in March 2007.
Two years later, the commission ruled that BAA must sell London's Stansted airport along with either Glasgow or Edinburgh. Now, after two years of legal hassle, the commission has stuck to its ruling. It is not over yet: BAA can call for a judicial review. But, like Gabriel García Márquez's novella Chronicle of a Death Foretold, a Stansted disposal has an ineluctable inevitability about it. Everyone is just going through the motions.
No one should be surprised by the ruling. Five years ago, not even Ferrovial can have believed that BAA's UK airports monopoly would endure forever. If something looks too good to be true, it generally is. Ferrovial hoped it would get away with selling only Gatwick, but the commission wants a more radical break-up, even without a guarantee that this is in the public interest. It found that Gatwick's passenger services had improved, but charges to airlines have increased.
Ferrovial's shares rose 1.8 per cent, outpacing the market, suggesting investors considered the disposals inevitable - and not unhealthy. The proceeds would bring welcome relief to Ferrovial's ?19.6bn debt burden, almost three-quarters BAA-related. But a judicial review could put the kibosh on disposals, and progress is still slow on Ferrovial's plan to reduce its 56 per cent BAA stake by 10 percentage points so as to deconsolidate its BAA debt.
With Spain's economy sluggish and no near-term catalysts for its share price, Ferrovial investors should not get ahead of themselves in their rush to trade out of Spanish financials.
BAA RULING WILL DETER INVESTMENT
Jonathan Guthrie - Financial Times - 19 July 2011
The UK has stitched up Ferrovial like a kipper. The hapless Spanish infrastructure company bought control of BAA, our proud nation's dominant airports operator, via a 2006 consortium takeover at £10.3bn, a 30 per cent premium to regulated assets. An antitrust investigation was already in its early stages. The final result, announced on Tuesday, is that BAA must sell Stansted and either Edinburgh or Glasgow airport. The group has pre-emptively ditched Gatwick.
The disposals are likely to be at a steep implied loss to their acquisition price. The UK economy is weak and a mooted two-year deadline will give the auction the acrid whiff of a fire sale. Ferrovial, bearing debt more than triple its market capitalisation, can expect to lose a further packet on the 10 per cent stake in BAA it aims to sell by Christmas.
Scoffers say Ferrovial should have expected tough antitrust measures, given that BAA airports carried 60 per cent of UK passengers. But the UK's complex competition rules, which slice and dice markets to taste, had long sanctioned the arrangement. Political pressure in the wake of customer complaints prodded the trust busters into action. BAA, still hanging grimly on to Heathrow, will seek a judicial review, but with scant hope of success.
It is right that there should be more competition between UK airports. It is wrong that market rules are so subjective. UK antitrust investigations are a competition lawyer's meal ticket of graphs, tables and weaselspeak. The marginal distortions introduced by simple market concentration ceilings would be preferable to the uncertainties that the antitrust system create. Cases such as this flip the "Open for Business" sign on the UK's front door to display another message: "Regulatory Risk - Investors Keep Out".
BAA VOWS TO CHALLENGE SELL-OFF RULING
The airports operator says it will continue to resist demands that
it sell London Stansted and one of Scotland's main airports
Mark Odell and Robert Wright - Financial Times - 19 July 2011
BAA is considering seeking a judicial review after the competition watchdog confirmed an earlier finding that the airport operator must reduce its market dominance by selling London Stansted and one of Scotland's two main airports.
Colin Matthews, chief executive of BAA, which is controlled by a consortium led by Spain's Ferrovial, said he was "dismayed" by the Competition Commission's final decision in the case which started in 2007 after a referral by the Office of Fair Trading.
Mr Matthews said the Competition Commission had not recognised both the world and BAA had changed since its original decision to force the company to dispose of some of its airports in March 2009. "We have a responsibility to protect our shareholders' investment and we will now consider a judicial review of the Competition Commission's decision," he said. Competition lawyers said BAA, which also owns London's Heathrow airport, has two months to challenge the decision.
Peter Freeman, who headed up the Competition Commission investigation into BAA, said he saw no reason for any further delay. "Our report has been challenged, reviewed and upheld and it is clear that the original decision to require BAA to dispose of three airports remains the right one... so there are no grounds for delaying further."
Mike Pullen, European head of antitrust and trade at DLA Piper, said BAA may have grounds for a judicial review but pointed out any victory would see a referral back to the Commission. "Given that the Commission has been adamantly of this view for some time, all you'd be doing is buying time. So BAA really have to ask themselves what benefit would there be in bringing a judicial review?"
The ruling requires BAA to start the sale process of Stansted, within three months, followed by either Edinburgh or Glasgow airport. Mr Matthews would not be drawn on would-be buyers but said he did not think a sale in current market conditions would reflect the value of the assets when BAA was bought by the Ferrovial-led consortium in 2006.
BAA sold London Gatwick for £1.5bn in December 2009 to a consortium led by Global Infrastructure Partners, a process it started before the competition watchdog's original ruling in an attempt to pre-empt the outcome. Since then, the ruling to dispose of two more airports has been delayed by a series of legal challenges. Tuesday's ruling confirmed the findings of a provisional report in March this year.
BAA had argued that there had been fundamental changes to the airport market since the March 2009 decision. It said the coalition government's decision to overturn the previous, Labour government's approval of a third runway at Heathrow and low-cost airlines' increasing focus on European markets outside the UK rendered the original report obsolete.
Additional reporting by Caroline Binham
MANCHESTER AIRPORT GROUP COOLS ON BAA AIRPORTS
Manchester Evening News - 19 July 2011
Manchester Airports Group has cooled its interest in buying Stansted, Glasgow or Edinburgh airports, the M.E.N has learned. Competition chiefs were today set to confirm airports operator BAA has to sell two of its sites, having previously been forced to dispose of Gatwick.
MAG, which already owns East Midlands, Humberside and Bournemouth airports as well as Manchester, has previously expressed an interest in swooping for BAA's assets. Speculation it was poised to make a bid was fuelled further when it secured a five-year £280m refinancing deal in January.
However, while MAG is not completely ruling out making a move, it is understood to have cooled its interest substantially. Led by chief executive Charlie Cornish, the organisation is instead prioritising its £650m Airport City scheme and stimulating further growth at Manchester, including attracting more low-cost routes to the north west.
Mr Cornish is understood to be reluctant to incur the costs of preparing and submitting a bid unless it had a strong chance of being successful.
A MAG spokesman said: "We are currently focused on growing our four airports, developing the multi-million pound Airport City at Manchester and on embedding our long-term strategy. However, the decision by the Competition Commission means that we may look in more detail at these airports if we can be confident that an acquisition will add value for our shareholders."
Today's anticipated ruling by the Competition Commission will end two years of hiatus since an original decision in 2009. At the time, it ruled BAA would have to sell Gatwick and Stansted airports, as well as either Edinburgh or Glasgow airport. But there were a series of legal challenges by BAA, which ended with the Commission's findings being upheld.
In a provisional ruling in March this year, the Commission said the sale of the airports was still fully justified. It said passengers and airlines would benefit from greater competition with the sites under separate ownership. In late 2009, BAA sold Gatwick to US-based investment fund Global Infrastructure Partners for around £1.5bn. The Commission said the sale of Gatwick had done nothing to change its view that Stansted, then either Edinburgh or Glasgow should also be sold.
Can someone explain how the so-called Competition Commission works, please? It says that no one company can own too many airports - right, airports are fairly important in the life of the nation. Much more important, though, is broadcasting, especially television. Here one company - the BBC - has almost a monopoly. Every home in the country has to pay a compulsory poll tax to the BBC (craftily called a "licence") or face being sent to jail. If I don't like Stanstead, which I don't, then I can fly from another airport - Manchester is convenient and all right. But I don't have to pay a "licence" to Stanstead whether I use it or not. To the politicians of the Competition Commission, I say, "What about the BBC?"
Does this mean that they'll put up the parking charges again? Or find some innovative new way to rip us off?
DEFIANT BAA ORDERED TO SELL AIRPORTS
BAA vowed not to concede defeat after the Competition Committee's
James Glossop, David Robertson, Alex Spence - The Times - 20 July 2011
BAA vowed not to concede defeat yesterday after the Competition Commission stuck to its ruling that the company must sell Stansted and either Glasgow or Edinburgh airports. Under the ruling the airports operator must begin the disposal process for Stansted in three months and complete the sale within about two years. However, the chief executive Colin Matthews said: "This decision is unreasonable and draconian and we have an obligation to take whatever steps necessary to minimise the damage."
The Competition Commission ruled in 2009 that BAA's ownership of Heathrow, Gatwick and Stansted as well as Edinburgh, Glasgow and Aberdeen had led to a poor service for passengers and airlines and that the company should be broken up. BAA, which is owned by Ferrovial, the Spanish infrastructure company, later sold Gatwick for £1.5 billion but appealed against the commission's ruling. It exhausted the appeals process this year.
Ryanair, Stansted's largest operator, welcomed the ruling and accused BAA of profiteering at the airport. The budget carrier said that it would sue BAA for allegedly overcharging airlines to use the airport. Its chief executive Michael O'Leary said: "We believe that BAA is an abusive airport monopoly, which engages in significant overcharging and monopoly profiteering at Stansted to fund Ferrovial's acquisition and operation of Heathrow airport." Mr Matthews rejected Ryanair's accusations of profiteering and said that Stansted's landing charges were set by the Civil Aviation Authority.
When BAA exhausted its appeals process at the start of this year, the commission re-examined its findings because of the time that had elapsed since the first ruling in 2009. In submissions to the review, BAA said that the competition environment had changed and that the ruling should therefore be amended. It said that the recession and collapse in Stansted's passenger numbers and profitability, as well as Heathrow's standing as a global hub, meant that the airports were not in the same market as before. BAA also said that the decision by Ryanair and easyJet to move some of their Stansted-based aircraft to other European airports showed that competition did exist in the market.
The commission ruled that the environment had not changed materially and the break-up order would stand. Peter Freeman, chairman of the commission's BAA group, said: "We hope that the sales can now proceed without delay so that passengers and airlines can start to enjoy the benefits of greater competition. Our report has been challenged, reviewed and upheld and it is clear that the original decision to require BAA to divest three airports remains the right one for customers."
BAA did not oppose the commission's ruling that one of its Scottish airports should be sold, although it did ask that this should be carried out before a sale of Stansted. Analysts believe that BAA will want to dispose of Glasgow rather than Edinburgh in a sale that could raise up to £500 million.
EasyJet said: "The sale of Stansted and either Glasgow or Edinburgh should encourage more timely, well designed and cost-effective investment, which will improve service quality and lower charges."
Every ticket for a flight from Heathrow includes a surcharge of £12.50 which goes to BAA - why? I don't pay extra to use a railway station or a bus stop; what's so special about an airport? Doesn't BAA generate enough income through landing fees and rents on the mostly unwanted shops in the departure areas? Security? No, there is a separate charge for this which generates tens of thousands of pounds daily.
The decision was taken to sell BAA as an entity to a foreign owner. Did we seriously expect Ferrovial to continue to run the company as an extension of the 'civil service' with a similar corporate mentality and culture as BA? So, when they got stuck into making the whole thing work better despite the awkwardness of the key airlines, the inefficiencies of NATS and two successive governments that can't spell 'Integrated transport policy', let alone implement one, it suddenly occurs to someone that their monopoly is unacceptable and they must sell-off some bits to allow competition.
Firstly, the concept of competition, from a passenger's point of view, between Stanstead, Heathrow and Gatwick is a false one. Likewise between Glasgow and Edinburgh. This is the same 'ideal' of competition that says that a choice must be available, whether for an airline, a hospital or a surgeon. Absolute codswallop. Secondly, the idea that a company can be forced to sell its assets after it has made a significant investment, is clearly preposterous. Little wonder that BAA is seeking a judicial review. I am surprised that they gave up LGW so easily. It may serve us right if Ferrovial threw in the towel and put the whole thing up for sale or, at least, restricted current investment plans for Heathrow.
I have no brief for BAA nor for Ferrovial, but I do not believe that anyone or any entity should be compelled to sell its lawfully-owned assets. That smacks of expropriation and it also recalls too much of old-style Socialism that I had thought was dead and buried in Europe.
Welcome to the "new style" socialism; centralise, tax and regulate (anything and everything).
MICHAEL O'LEARY FACTOR CASTS SHADOW
Ryanair has a market share of 67 per cent at Stansted
Richard Cannon and David Robertson - The Times - 20 July 2011
Regulators value Stansted at £1.3 billion, but if BAA has to sell within two years it is unlikely to realise that much. Passenger numbers have fallen dramatically since 2007, when 24 million people used the airport. The forecast for this year is about 17.5 million - a decline of 27 per cent in four years. A potential buyer will be concerned by this drop, which has been driven by the continued weakness in consumer spending.
Stansted is a base for low-cost carriers and holiday operators and has suffered more than Heathrow, where passenger numbers have risen with the recovery of business and international travel. Another issue is the dominance of only two customers at Stansted: Ryanair and easyJet. They have a market share of 67 per cent and 22 per cent respectively.
Any buyer would be concerned that the balance of power lay with the purchaser of the airport's services rather than the supplier, particularly as Ryanair is notorious for driving hard deals. This is such a problem that potential bidders have referred to the "O'Leary discount" in reference to the airline's chief executive, Michael O?Leary.
Analysts believe that the combination of factors could cut the price of Stansted to £700 million or £800 million. It is little surprise, therefore, that BAA is desperate to avoid a firesale.
STANSTED COULD SOAR UNDER NEW OWNERSHIP
Stansted relies on easyJet and Ryanair for 89 per cent of its business
Ian King, Business, Editor's Commentary - The Times - 20 July 2011
Colin Matthews, the BAA chief executive, has made a good fist of resisting the Competition Commission's ruling that it must sell Stansted and either Edinburgh or Glasgow Airports. But his central argument, that Heathrow and Stansted are different airports serving different customers, stacks up rather less easily than the aircraft waiting to land at the former.
By arguing the two do different things, BAA is admitting, in effect, that they do not compete with each other. As the commission points out, a new owner of Stansted could well seek to widen its appeal, raising competition. This has certainly been the experience at Gatwick which, under its new owners, is now trying to attract flights from Heathrow. There is no reason why this could not work for Stansted which, staggeringly, relies on easyJet and Ryanair for 89 per cent of its business. Trying to appeal to as wide a customer base as possible has not hurt, for example, Manchester Airport.
BAA's other argument, that the world has changed since the commission's original ruling, also cuts no ice. Yes, Stansted has suffered during the past four years, but any other company faced with a 27 per cent drop in passenger numbers would respond by cutting its prices. BAA's response has been to more than double landing charges at Stansted.
Arguably, the main reason Stansted has struggled so much is because BAA has devoted so much time to Heathrow that it has neglected its other assets. This, at least, will leave the latter better equipped to compete when Stansted does get a new owner.
MAY I CHECK MY HUSBAND AND TWO BAGS PLEASE?
Sarah Vine - The Times - 20 July 2011
Exciting news: BAA is to sell off Stansted, plus one of its Scottish airports, by order of the Competition Commission. Apparently it's in the best interests of passengers and airlines. I'll say: Britain may be a 21st-century economy (supposedly) but our airports are trapped in the 20th.
Visitors to this fair isle arrive expecting a dynamic cultural experience but instead get postwar architecture, Ikea-style customer service, immigration officers trained in client liaison by Vicky Pollard, and Soviet-bloc catering. Who knows, perhaps they think they've alighted in some bizarre 1980s theme park; or maybe they just assume that it's something to do with our British sense of humour. Either way, it's not good.
In the days when you could check in an hour before departure and still have time to pick up a paper and a packet of cough sweets, it didn't matter that our airports were so shoddy. But now that you practically have to arrive the day before, it matters a lot. Choice of airport is almost as important as choice of hotel. After all, you're going to be spending almost as much time there.
With this in mind, I have a few small requests to make to whoever ends up buying Stansted. I believe they could make all the difference.
An end to the expectation that if you have hand luggage you are in any way able to carry it. Families with children will be familiar with this problem. You step off the plane after a long and not entirely enjoyable in-flight experience. Your youngest, having howled his/her way through the entire flight, has fallen asleep like an angel during the descent. You are carrying him under one arm, while in the other you have a handbag, several coats, assorted teddies/dolls/amorphous bits of well-worn fabric, the passports, half a sandwich, a dirty nappy. You are, it's fair to say, a bit worn out. Would it be too much to ask for a few trolleys to be positioned at the entrance to the terminal?
A special lane for husbands. Or, if we're really going blue-sky thinking with this one, a special terminal for husbands. It's a fact that all husbands hate flying with their families. For some reason the combination of overexcited offspring, fractious spouses, time pressure and lots of heavy luggage makes them grumpy. So much easier if they could just be checked in alongside the luggage. I picture mine, trundling happily off on a conveyor belt, nose buried in a book, not to be seen again until take-off. Of course, if you were going Ryanair that naughty Mr O'Leary would make you pay a special husband surcharge. But it would be worth it.
No more pretend pubs serving smelly beer and unidentifiable fish bits in breadcrumbs. Face it: an airport is not an idyllic Cotswolds village. It does not require a jovial landlord and a local strain of beer. You're not kidding anyone with your green awnings. Go away.
Instead of announcements and boards, a text message to say your plane is about to board/be delayed. There are more mobile phones than people in the UK: how hard can it be?
Drinking-water fountains. That way you won't have to pay through the nose for a bottle of water that just ends up in the security queue's bin of shame.
An over-18s lounge where all the hens/stags/people without kids can go to wear bunny ears and look good in cut-off shorts without making the rest of us feel sad and old (this would obviously have to be kept well away from the husband terminal).
A soft-play area for children, so they can: a) work off some energy before the flight ; and b) not cost you a small fortune in WH Smith.
A small, soundproof booth at every security checkpoint where you can express, without fear of recrimination, your true feelings on the self-important little twerp who has just made you remove half your clothing before frisking your six-year-old for Semtex.
ACTION PLAN CREATES NOISES ON BOTH SIDES
OF THE STANSTED AIRPORT DIVIDE
PLANNERS at Stansted Airport have been accused of "totally ignoring" responses to a 16-week public consultation on how to tackle airport noise over the next five years.
Nick Thompson - Saffron Walden Reporter - 7 July 2011
Members of the Stop Stansted Expansion group are "appalled at the inadequacies" of an action plan, which contains 20 new measures, released this week by owners BAA. However, the airport's head of health safety and environment, Dr Andy Jefferson, has defended the company and said they are "setting benchmarks" for airports in the UK.
The Noise Action Plan has been approved by DEFRA and the DfT and contains measures to improve the lives of residents living around the hub, including:
* An increase in the use of modern aircraft, whilst phasing out the old by 2015.
* Fines doubled for all off track flying (eg. £500 to £1,000 for night infringements).
* Further safeguarding of towns such as Stansted Mountfitchet, Bishop's Stortford and Sawbridgeworth.
The plan also makes a commitment to urge airlines into a new way of landing and taking off which both involve a continuous descent or ascent.
Dr Jefferson explains: "It is more efficient and aircraft will be at higher points over towns. Already 90 per cent of our aircraft employ this technique. It is quieter because the engine settings are much lower. A continuous climb at take off is a bit like a train passing you at a station. It is better for residents because the aircraft can reach cruising altitude quicker."
But Carol Barbone, SSE's campaign director, launched a stinging attack: "Having reviewed the contents, after a two year wait since the consultation, we are appalled. It will come as a great disappointment to those who contributed to the consultation in the hope that the eventual plan would lead to positive action for the future to reduce noise impact. BAA's proposals will make little difference and as such the document is not worthy of the name action plan."
Mrs Barbone cited that half of respondents asked for an independent noise monitoring operation - but she said BAA had ignored them, acting as "judge, jury and policeman". SSE said the plan ignores helicopter noise and called for a ban on using reverse thrust unless in an emergency or exceptional weather. "Other airports do both of these, like Copenhagen - so why not Stansted?" Mrs Barbone said.
Dr Jefferson understands the doubts and admits that the public find it hard to trust airport data, but added: "Uttlesford District Council used to audit all of the complaints and noise data. Now, we have set up a new working group to deal directly with environmental issues. It includes parish and town councillors. Residents can make issues known through those channels and get action progressed. We look forward to continuing this work with the community. For over a decade Stansted has been at the forefront of pro-actively monitoring and working with airlines to tackle noise, regularly going beyond the requirements and best practise."
Since 2005 the number of noise complaints has declined by over 15,000 per year, but SSE said that is because simply "people are giving up".
WHAT do you think? E-mail us at email@example.com
GOVERNMENT ENDORSES STANSTED AIRPORT NOISE PLAN
Web Reporter - BAA Online - 5 July 2011
MEASURES to minimise noise at Stansted Airport have been given the Government's stamp of approval this week. The Department for Environment Food and Rural Affairs (DEFRA) and the Department for Transport (DfT) have approved the five-year blueprint containing nearly 60 stringent measures to manage the problem.
The airport was required to publish the Noise Action Plan as part of EU and UK environmental regulations. In 2009, an extensive 16-week public consultation on the proposals took place, including eight exhibitions in local towns and villages. The feedback was then analysed and used to develop the plan.
Highlights of the strategy include: championing the use of the world's most modern, clean and efficient aircraft by encouraging the phase out of older, noisier planes by 2015; heavier fines for off track flying and noisy aircraft; safeguarding no-fly zones over the towns nearest the airport; proposing new landing techniques to reduce noise from arriving aircraft; and working with the industry to pioneer new technologies to further improve aircraft performance.
Stansted Airport's head of health safety and environment, Dr Andy Jefferson, said: "We are delighted that the Government has adopted our Noise Action Plan. I'd like to thank all those in the community who helped us shape it, particularly members of our independent monitoring body - the Noise and Track Keeping Working Group. It is by working together that we can achieve the best results, and we all look forward very much to continuing this important work with the community in the years ahead."
"For over a decade Stansted has been at the forefront of pro-actively monitoring and working with our airlines to tackle noise issues, regularly going beyond the requirements and best practise. Since 2005 we have reduced the number of noise complaints received by over 15,000 a year and the areas worst affected by noise has decreased significantly in size. The publication of today's plan is all about building upon our solid foundations and renewing our commitment to drive for even higher standards of operations as we work to protect our community from the impacts of noise."
The money from fines funds local community projects via the Stansted Community Trust.
Stansted's Noise Action Plan is available online at www.stanstedairport.com/corporateresponsibility
GREEN GROUPS WARN GOVERNMENT
OVER AVIATION CO2 EMISSIONS
Government must retain current UK aviation CO2 target and adopt
Committee on Climate Change recommended flight limits in full
"Back door" airport expansion via planning system needs to be
stopped right away until new UK-wide aviation policy in place
Press Release - AirportWatch - 8 July 2011
A major new report from AirportWatch, the UK umbrella alliance of green and community groups campaigning for sustainable aviation policies, entitled Aviation and Climate Change Policy in the UK is published today, setting out a sophisticated policy mix of tough measures to control and reduce UK aviation's growing carbon footprint that endorses the seminal December 2009 Committee on Climate Change report "Meeting the UK Aviation Target".
AirportWatch would like to see the following actions implemented immediately:
* Clear confirmation that absolute UK aviation CO2 emissions to be no higher than 2005 levels in 2050, a total of 37.5 MtCO2 (as a minimum requirement)
* Strengthen this target by setting interim goals: average UK aviation emissions not to exceed 37.5 MtCO2 in any 5 year period through to 2050
* Mandatory 5 yearly assessments of aircraft fuel efficiency and CO2 performance improvements to check new aviation technology is delivering the industry's promises
* Set tough mandatory sustainability criteria for all aviation biofuels at Government level: today's voluntary standards are unacceptable and open to abuse.
* All future airport development must obviously now fit within the CCC 37.5 MtCO2 limit
* There must be mandatory regular updates on the non-CO2 impacts of aviation - NOx, condensation trails and cloud formation - which are known to be at least double the climate impact of CO2 alone. The 2050 target must be adjusted in the light of evolving atmospheric/climate change scientific knowledge
* A review of the impact of aviation's inclusion in the EU's ETS scheme and of Air Passenger Duty, in order to better understand the role taxes and charges play and at what level they might need to be to help achieve the 2050 aviation target.
Tim Johnson, Director of the Aviation Environment Federation (AEF), part of the AirportWatch network said: "Today's report reminds the coalition Government that the CCC is their climate watchdog with a legal obligation to ensure our national climate targets are on track. The Government has already set a tough CO2 emissions target for UK air transport which must be retained and strengthened. The Government needs, however, to endorse the findings of the CCC and challenge industry to deliver its "aspirational" technology and efficiency goals as a major contribution towards meeting the 2050 target.
"We would like to see the Government's response to the CCC, due next week, (w/c11th July 2011) go further. Two of our key recommendations are:
a) A mandatory 5 year assessment of whether or not improved technology and new aircraft purchases are actually happening, and at what rates, as we strive to implement the 37.5 MtCO2 emissions limit, and
b) Interim goal-setting to ensure average UK aviation emissions do not exceed 37.5 MtCO2 in any 5 year period through to 2050.
"We need this kind of thorough analysis to track exactly where aviation emissions are going - guesswork and industry promises alone are not good enough."
Jeff Gazzard (AEF) added: "We will see next week if the coalition Government is prepared to accept binding limits on UK aviation emissions that reinforce their welcome decision to say a resounding "NO" to damaging runway construction at Heathrow and elsewhere. UK aviation can still grow from approximately 220 million passengers today to around 370 over time, with flights to and from the UK rising to 2.4 million, all within the CCC's 2050 37.5 million tonnes CO2 target."
"And if the industry ever manages to move beyond the sector's current 1% p.a. efficiency gains - as its vague promises of technology advancement perpetually claim it might! - then it may be possible to squeeze some more flights in within the target over the next 40 years."
"We hope to see a consistent approach from the coalition Government that gives the CCC aviation report a gold star and, in so doing, reinforces their - and our! - desire to curb rising CO2 emissions from aviation. Avoiding damaging climate change impacts in particular were, after all, a powerful cornerstone of their "NO" to a 3rd runway at Heathrow policy. There can be no going back."
The Department for Transport is required to make its response to the CCC's 2009 report, on how aviation growth can be compatible with climate change targets, by July 2011.
AIRLINES FEAR BACKLASH OVER CARBON COSTS
US carriers have begun legal action
David Robertson - The Times - 7 July 2011
British airlines have urged the European Union to water down proposals for a new carbon trading scheme amid fears that it will spark retaliation from other countries. The airlines hope that the scope of the scheme will be reduced to cover flights within the EU, rather than all flights through European airspace.
American carriers began legal action at the European Court of Justice this week in an attempt to block the introduction of the emissions trading scheme (ETS) next year. The Chinese have also threatened legal action and could refuse to pay for pollution permits.
Russia is said to be considering an increase in the charges that European airlines pay for flying over its territory in retaliation for Europe imposing the scheme on its airlines.
The ETS, which covers 11,000 European power generators, factories and other industrial enterprises, is designed to encourage companies to reduce their carbon emissions.
Aviation will be included in the scheme from next January and international airlines will be required to buy permits to cover the carbon emitted while in European airspace.
Several international carriers have argued that the system is unfair because they will be taxed by Europe despite having to pay carbon mitigation taxes in their own countries.
The Air Transport Association of America told the European Court in Luxembourg that applying the European ETS to US carriers also breaches the Kyoto Protocol and the Chicago Convention on airspace sovereignty.
European carriers, meanwhile, are concerned that the financial burden of carbon trading will make them uncompetitive compared with international rivals, damaging an already weak industry.
One idea being floated in Europe, including by some British carriers, is that the ETS should initially only cover intra-European flights. It could then be expanded when a global trading scheme is devised.
A spokesman for Virgin Atlantic said: "We believe that ETS is a valid tax that should drive positive behaviours in reducing carbon usage. However, there must be a level playing field to ensure that UK airlines remain competitive."
Standard & Poor's has estimated that the ETS could add between ?4.60 (£4.10) and ?39.60 to air fares in Europe. UBS has forecast that the scheme could add ?300 million in costs for the airline industry in its first year, rising to ?600 million by 2014.
Ashley Steel, global chairman for transport and infrastructure at KPMG, said: "The debate will continue as to whether including aviation in the EU Emissions Trading Scheme is the right thing. However, we can be sure that additional costs on the aviation industry, an industry which is essential to continued UK economic strength, will not be helpful whatever form these costs take. This makes the reaction of China and the US to being required to join the ETS most interesting. It takes the debate beyond the additional cost considerations of the ETS to rights of access to our respective skies and international airports. This can be of benefit to no one."
EU DEFENDS US AIRLINES' INCLUSION IN ETS
ENDS Europe DAILY - 5 July 2011
North American airlines are wrong to claim their inclusion in
Europe's emissions trading scheme (ETS) breaches international law
and the alternatives they suggest would be discriminatory, EU
officials told the European Court of Justice (ECJ) on Tuesday.
The hearing was for a case brought by the Air Transport Association
of America (ATA) and American, Continental and United Airlines in the
UK in 2009. The case was later referred to the ECJ
in Luxembourg by a British high court.
All flights into and out of EU airports will have to pay for their
carbon emissions from 2012. The US airlines have registered with the
scheme despite their challenge.
The airlines claim that Europe is breaching several international
laws and treaties, and "customary" international law, by effectively
requiring non-EU airlines to have a licence to operate in areas
outside European jurisdiction.
They cite in particular the 1944 Chicago convention on aviation which
forbids national governments to impose taxes, duties and charges on
This convention gives nations sovereignty over flights operating
overhead and aviation body ICAO responsibility for flights over
oceans. The EU is also breaching the Kyoto protocol which requires
aviation emission cuts through the ICAO, the airlines claim. And it
is acting contrary to the US-EU Open Skies Agreement.
An official speaking on behalf of the ATA said the organisation was
not opposed to emission cuts but "unilateral and piecemeal measures
can only result in chaos". The ETS counts as a tax because operators
will be charged for each missing allowance, he said.
"The ETS does and will regulate conduct outside the EU," he
continued. It admits this in the preamble to a 2008 directive
by stating the need to "avoid double regulation".
The International Air Transport Association (IATA) and National
Airlines Council of Canada spoke jointly in support of the US
position at the Luxembourg hearing, adding that the EU's actions
could slow international action on climate change.
Representatives of the EU's three institutions and a group of NGOs
spoke in defence of the EU. Their central arguments were that the ETS
does not impose requirements on airlines outside the EU and is
instead a requirement placed on airlines flying in and out of
European airports, and that it is not a tax, charge or levy.
The information submitted by airlines on fuel consumption and
distances travelled will only be used as a parameter to work out how
many carbon allowances they need, a European Commission lawyer told
the court. Allowances are assets with no fixed price conferring
rights on the holder to emit CO2, he pointed out.
To only include EU airlines in the ETS scheme would be discriminatory
and it is equally discriminatory to let aviation emissions continue
to grow while other European industries are forced to take action,
the lawyer told the court.
The EU also believes the airlines were wrong to assume they could
rely on international laws to contest its legislation. It is not a
signatory to the Chicago convention and even if it were, this should
not be used as grounds for appeal.
An ECJ court opinion is due on 6 October, with a possible final
ruling by the end of the year. Dr Lorand Bartels, an expert on
international and trade law at Cambridge University, told ENDS that
even if the EU wins the debate over jurisdiction, it may run into
trouble over rules set by the World Trade Organization (WTO).
There is a caveat exempting Chicago convention measures from the WTO
rules, but if the ETS is not covered by the convention, this would
China has also criticised the ETS in recent months, claiming it will add to operators' costs. The IATA has also encouraged Russia to lobby against the scheme. The EU's aviation industry fears expanding the scheme could prompt a tit-for-tat trade war.
AIRLINE CHIEF: WE NEED MAYOR'S AIRPORT
TO COMPETE WITH EUROPE
Flybe boss: Jim French warns London is in need of a new airport
Peter Dominiczak, City Hall Correspondent - This is London - 1 July 2011
An airline boss today backed Boris Johnson's scheme for a new London airport and attacked the Government for scrapping plans for a third runway at Heathrow.
Flybe chief Jim French warned that the capital must build a new airport or Britain will lose billions of pounds of business to the rest of Europe. His comments come after British Airways conceded that the third runway project at Heathrow is now "dead".
Willie Walsh, chief executive of BA's parent company, International Airlines Group, publicly acknowledged for the first time two weeks ago that a new runway will never be built at the airport because of the Government's decision last year to cancel expansion.
Mr French today said that the Government's decision to scrap plans for a third runway at Heathrow "delighted" rivals in Europe. He told the Sun: "I was with Air France the day the Heathrow decision was made. They were showing me where the fifth runway was going at Charles de Gaulle, and the sixth. Every-one in Europe is absolutely delighted with what our Government has done - they are loving it. They believe they can take traffic away from us. We can't look at the next five or 10 years. We have to look at where we'll be in the next 50 years. We have to put London back on the map."
In recent weeks Mr Johnson has challenged the Government over approving his £40 billion Thames Estuary airport project. The Mayor said such a scheme would be "the most powerful single statement we could make about the ambition of this country".
Mr Johnson's favoured solution is an airport built on two platforms in the estuary connected to London by high-speed rail links. Planes would take off and land over the sea, solving the blight of noise from engines and allowing the airport to operate around the clock. His plans have been dismissed as unworkable by environmentalists.
Thomson Airways today announced that a passenger service from Birmingham to Palma, Majorca, this month will be the country's first commercial biofuel flight - powered by cooking oil used to cook chips in US restaurants. The fuel will be a mixture of used cooking oil and paraffin. Thomson said it could be better for the environment than normal jet fuel and has called on the Government and the EU to provide financial incentives for investment in large scale production.
Why do we have to compete with Europe, as a "hub" I suppose? It is just pointless. Do we need endless people arriving just for a coffee then getting on the next plane out? Or do we need to expand the horror just for the sake of employment?
Michael, Kensington, UK, 01/07/2011
I'm not sure we need a third runway at Heathrow. What we do need is for Luton and Stansted to up their game as currently the destinations/flight times are so limited you have no choice but to use Heathrow.
Lone Gunman, Anywhere but Here, 01/07/2011
"They were showing me where the fifth runway was going at Charles de Gaulle, and the sixth"
Hardly surprising! France is nearly three times the area of the UK and has much more space available for this sort of development, far away from built up areas. Another runway at Heathrow would allow more passengers just to come to London to change plane, with no benefits for anyone apart the BAA's shopping malls.
John Smith, London, EUSSR, 01/07/2011
"Every-one in Europe is absolutely delighted with what our Government has done - they are loving it."
Rubbish. Plenty of people living throughout Europe will share Londoners' concerns about airport noise, air pollution and contribution to global climate change (don't kid yourselves that a bit of chip fat is going to really help here). And let's not forget that Heathrow is not a British asset - is now owned by a Spanish property development consortium, the Quebec pension fund and the Singaporean government. I haven't heard squeals of outrage from them, not that we should take much notice of propaganda from the self-interested aviation industry and its blinkered supporters.
Arfur Towcrate, Staffycher, 01/07/2011
Well the rest of Europe should be delighted with themselves. They were and are clever enough not to have tens of thousands of flights over their major cities. Hence there is not the outcry that there is here. Why should we be listening to a Flybe boss whose company is loss making and subsidised to the hilt by the taxpayer? Quality of life for Londoners should be the priority.
Darren, Newham, 01/07/2011
THE TRUE COST OF AIR TRAVEL
Europe is right to include aviation emissions in its carbon-trading scheme
Keith Allott - Wall Street Journal - 5 July 2011
The European Court of Justice today will hear a case challenging the inclusion of aviation in Europe's Emission Trading Scheme (ETS). A group of U.S. airlines and their trade body, the Air Transport Association of America, are bringing forth the case, which is part of a recent wave of growing opposition to air-emissions regulation. At talks in Oslo last week, U.S. officials voiced their concerns about the legality of including airline emissions in the ETS. One diplomat branded the proposal "the wrong way to pursue the right objective."
The U.S. airlines say they would prefer a global agreement. But the talks intended to establish such worldwide agreement, through the International Civil Aviation Organization, have been stalled for 14 years. Meanwhile, emissions from the sector continue to grow at an alarming rate, doubling every decade.
The U.S. airline association's two main objections to including aviation in the ETS are that doing so would constitute an "unlawful tax" on airlines, and would contravene the sovereignty of non-EU countries. In fact, the ETS does neither of these things. Rather than imposing a charge or tax on airlines, it would simply use carbon trading as a way to control aviation emissions. Though it would apply to all flights to and from EU countries regardless of an airline's nationality, it constitutes a market-based environmental measure and has no extra-territorial application beyond EU member states.
European airlines have been broadly supportive of the scheme, though some are now wobbling in the face of overblown press reports. Airbus CEO Tom Enders recently joined other industry officials in warning EU Climate Action Commissioner Connie Hedegaard that it was "madness to risk retaliation" from players such as China on the issue of air emissions. However, the Chinese purchase of 88 Airbus planes last week suggests that Mr. Enders's concerns are groundless.
Ms. Hedegaard, meanwhile, is standing firm against the clamor, and has pointed out that the original legislation including aviation in the ETS was supported by all 27 EU member states and a broad majority in the European Parliament.
They're not alone. My organization - the U.K. branch of the World Wildlife Fund - as well as the London-based Aviation Environment Federation, the Brussels-based European Federation for Transport and Environment, and the U.S.-based Environmental Defense Fund and Earthjustice organization, have filed as interveners in the court case. We support the EU's position that the aviation sector cannot continue to be exempted from moves to tackle the menace of climate change, and that Brussels is acting within its powers by bringing all flights to and from Europe within the ETS.
Indeed, the EU's move is today the only multi-country attempt to reduce aviation emissions. WWF sees the ETS as an important stepping stone towards a future international agreement?but we can't afford to wait. U.S. airlines are the world's largest emitters of aviation emissions. In failing to face up to the U.S. airline association on this issue, Obama administration officials are missing the chance to live up to the U.S. president's vocal commitment to tackle climate change.
Given that the U.S. for years has levied a $16.30 (?11.22) international-transportation tax on all passengers arriving in or departing from America, perhaps it should not be complaining about unilateral taxes. What's more, emissions trading will only add marginal costs to air travel. The U.K. government estimates that the average price of a return flight within the EU would rise between ?1.80-?9 if airline emissions are included in the ETS, while a return ticket from New York to Europe would rise by ?5-?40, depending on carbon prices and how much of their additional costs airlines choose to pass on to consumers.
These costs seem small for the aviation sector to bear. But including aviation in the ETS would potentially provide much-needed funds to help developing countries adapt to climate change, curb deforestation and accelerate investments in clean energy. Here, the EU itself needs to raise its game and encourage member countries to use ETS revenues for these purposes.
It seems clear that the voices criticizing the inclusion of aviation in the ETS are doing so for their own ends. The EU should maintain a robust position, take the moral high ground and preserve the integrity of a scheme that sets out to fairly ensure that industry starts to pay for its contribution to climate change.
Including aviation within the ETS should also encourage more jurisdictions to develop their own carbon-reduction schemes for aviation. If non-EU countries introduce schemes equivalent to Europe's ETS in terms of carbon-reduction levels and timing, then EU rules say that airlines from these jurisdictions can be exempted. In other words, if U.S. airlines really want out of Europe's ETS, all the U.S. needs to do is start its own system for reducing aviation emissions and raise funds for action on climate change.
The U.S. has failed to tackle climate change again and again; it would be madness to do nothing in the face of a rapidly warming planet. Here's hoping the European Court of Justice considers that when it hears arguments today.
Mr. Allott is head of climate change at WWF-U.K.
DEFRA NO2 (NITROGEN DIOXIDE) CONSULTATION
Airport Watch - 1 July 2011
DEFRA are holding a consultation on measures to control nitrogen dioxide, in which it is stated: 'The EU Ambient Air Quality Directive (2008/50/EC) sets limits for major air pollutants including nitrogen dioxide (NO2) with the aim of protecting human health and the environment.'
It studiously avoids mentioning air traffic and you wonder where the joined up thinking is when the Greenest Government Ever is considering raising the motorway speed limit to 80mph. More of interest here: uk-air.defra.gov.uk/documents/What_are_the_causes_of_Air_Pollution.pdf and uk-air.defra.gov.uk/air-pollution
This piece, published nearly twenty years ago, focuses on RF (the effects of aircraft emissions during flights at higher altitudes) but is nonetheless important and very relevant today when RF is being discounted.
Nature 355, 69 - 71 (02 January 1992); doi:10.1038/355069a0
Impact of aircraft and surface emissions of nitrogen oxides on tropospheric ozone and global warming
COLIN JOHNSON*, JIM HENSHAW* & GORDON MCLNNES?
* Modelling and Assessments Group AEA Environment and Energy, Harwell Laboratory, Didcot, Oxfordshire, 0X11 ORA, UK
? Air Pollution Division, Warren Spring Laboratory, Gunnels Wood Road, Stevenage, Hertfordshire, SG1 2BX, UK
ACTUAL and potential increases in aircraft traffic are causing concern about the effects of aircraft exhaust emission on atmospheric chemistry. Model results1-3 and measurements4-6 in the Northern Hemisphere have shown that growth in surface emissions of nitrogen oxides and hydrocarbons leads to increases in concentration of tropospheric ozone. Tropospheric ozone is toxic to plants, humans and other organisms, and it is a greenhouse gas7-9. The radiative forcing of surface temperature is most sensitive to changes in tropospheric ozone at a height of 12 km (ref. 8), where aircraft emissions of nitrogen oxides are at a maximum and where the model sensitivity of ozone to nitrogen oxide emissions is enhanced. Our model results show that the radiative forcing of surface temperature is about thirty times more sensitive to aircraft emissions of nitrogen oxides than to surface emissions. We also find that the impact on global warming of increases in tropospheric ozone caused by increases in surface emissions of nitrogen oxides has previously been overestimated by a factor of five1,10, owing to an error in the calculation of the ozone budget.
OUR COMMENT: The concerns of residents round airports about air pollution from both aircraft and increased road traffic emissiomns are most relevant in relation to this consultation. What is the situation round your airport? Are present statutory levels of NO2 being exceeded? Have your say and respond to the consultation! Remember that nitrogen oxides are irritant gases and can have adverse effects on asthmatics and others who suffer from chronic chest complaints.
AIRLINES POISED TO BACK COALITION NATS PLAN
Mark Odell and Andrew Parker - Financial Times - 7 July 2011
The airlines that control National Air Traffic Services look poised to back the government's plans to sell down its stake in the company by agreeing to dispose of enough of their own holding to give any buyer majority control. But the consortium of seven UK airlines urged the government to keep at least a 25 per cent stake in Nats to ensure that the UK retains its influence at the European level, where momentum is building to streamline traffic management across the continent.
The Airline Group, which includes British Airways, EasyJet and Virgin Atlantic, owns a 42 per cent stake and has had management control of Nats since its part-privatisation in 2001.
Richard Deakin, chief executive of Nats, said on Thursday the government should retain a "visible interest" in the company. This could involve a reduced stake, a golden share or some form of regulatory oversight. He added: "It is vital the government maintains an interest in Nats in what is often a highly politicised debate across Europe."
The state kept a 49 per cent stake under the sell-off by the Labour government, which was controversial at the time. The remainder is split between BAA, the airport operator, with 4 per cent and Nats staff with 5 per cent. Nats, which is responsible for all commercial en-route air traffic over the UK and a large part of the Atlantic, handled 2.2m flights in the 12 months to the end of March. It made a pre-tax profit of £106m, up from £78.3m a year earlier,on turnover of £777m.
The airlines have said they would veto any sale of a majority stake to a buyer whose interests were "not aligned with those of Nats' core business," according to one insider who pointed to the poor performance of BAA under the ownership of Spain's Ferrovial.
At least seven companies have expressed an interest in bidding for Nats, including Serco, the services group which already competes with it in some areas of air traffic control; Lockheed Martin, the US defence group which makes air traffic control equipment; and Global Infrastructure Partners, owner of Gatwick airport.
The government is also considering an initial public offering for its stake in Nats, which is a rarity among the world's air traffic control organisations, most of which are state-owned. The Treasury had favoured a complete sell-off of the government shareholding, which could raise £500m but the government is thought to have bowed to pressure from the airlines and Prospect, the air traffic controllers' union, to maintain a sizeable stake.
"The government has accepted the 'place at the table' argument," said one airline executive. Any move by the government to reduce its stake is unlikely to happen before the end of the year at the earliest, according to insiders involved in the process.
AIR TRAFFIC CONTROL SALE PUT ON THE BACK BURNER
Proposed sale of the Government's stake in National Air Traffic Services
has been delayed until the end of next year
David Robertson - The Times - 1 July 2011
The proposed sale of the Government's stake in National Air Traffic Services has been delayed until the end of next year as it considers its options.
NATS executives are understood to be promoting an initial public offering as one possibility. However, this idea has found little support and if the Government does sell its 49 per cent holding in the £1 billion-pound company, it is likely to go to a trade buyer. Serco, Lockheed Martin and Global Infrastructure Partners, which owns Gatwick, are all understood to be monitoring the situation.
George Osborne said in his March Budget that the Government wanted to reduce its stake. Shareholders were told this week that a deal would not be possible before the third or fourth quarter of next year. A decision on whether to sell or float is likely to be taken by the end of this year.
NATS is responsible for air traffic control over Britain as well as the eastern half of the Atlantic from the Azores to Iceland. It handled 2.2 million flights last year and will report financial results today. The company is run as a public private partnership between seven airlines and the Government.
The Airline Group, which includes British Airways, bmi British Midland, Virgin Atlantic, Thomson Airways, Monarch, easyJet and Thomas Cook Group, owns 42 per cent with the remainder held by NATS staff. The Airline Group has urged the Government not to sell its full holding before 2015, when Europe?s various air traffic control services are due to be merged.
The airlines want the Government to remain involved so that Britain keeps a voice in these "single skies" negotiations. The situation is complicated further by the desire of some members of the Airline Group to sell their shares.
"The Government does seem to have taken on board the need to retain a holding so it has a voice in Europe," an insider said. "If the Government cut its holding to 25 per cent it might only receive a couple of hundred million pounds, which is chicken feed. So, there is little pressure to hurry."
Other government assets likely to be sold include the Dartford Crossing, the Channel Tunnel rail link and the Queen Elizabeth II Conference Centre.
AIRLINE-AIRPORT COALITION NAMED
The new coalition of the UK's biggest airlines and airport operators
is understood to be called the Aviation Foundation
The Independent - 3 July 2011
Virgin Atlantic, British Airways, the Manchester Airports Group and Heathrow owner BAA have said that they are in early talks to set up the group, but it seems they have already given the potential organisation a name. The four aviation companies aim to demonstrate the social and economic benefits of the industry. One ambition is to show that airport expansion is of benefit to the wider economy, though BA boss Willie Walsh recently said that he did not believe a third runway would ever be built at Heathrow.
RYANAIR CHIEF MICHAEL O'LEARY
ON BUSINESS FORTUNE AND FAMILY
Graham Hiscott - Daily Mirror - 6 July 2011
HE'S the business world's answer to Marmite... the boss you love or hate.
But even his enemies, and there are many, concede Michael O'Leary has helped pioneer a revolution in air travel. For while it's easy to dismiss Ryanair's maverick chief executive as a motormouth, his quest to drive down fares across Europe by taking on bloated rivals and slashing costs has brought cheap air travel to the masses.
From humble beginnings, Ryanair has grown to become Europe's biggest low-fares airline, carrying more than 70 million passengers this year.
But with outlandish suggestions such as standing on flights to get more people on board, and charging to use the toilet, controversy is O'Leary's constant, seemingly much-loved, companion.
He's talked about ditching co-pilots, and training up a flight attendant for emergencies. When Germany beat England at last year's World Cup, O'Leary dressed up in a German football shirt. Ryanair's profits may have risen 27% to £390million in the year to April, but from last month until September the charge for checking luggage into the hold has gone up from £15 to £20 for the first bag and from £35 to £40 for the second.
Which is perfect timing for the school summer holidays, when families will be pouring on to his flights.
The 50 year-old - born in Dublin and one of six children - studied business at Trinity College, then trained as an accountant but left to launch a newsagent chain. He's been chief executive of Ryanair since 1994. O'Leary, said to be worth around £345million, married Anita Farrell, a former Citigroup banker in 2003, and they have four children under the age of six.
We caught up with him for a frank interview at his no-frills Dublin offices. It's a bumpy one so you'd better strap yourself in - and watch out for some low-flying insults:
Graham Hiscott: Is it better for young people to go to university or straight to work instead?
Michael O'Leary: University is the best couple of years of your life. Nowhere else can you drink and chase as many birds.
GH: How do you succeed in business?
MOL: When you look at the number of stupid people who have succeeded in business, you clearly don't have to be very bright. Business is all about getting your sales up and your costs down, the bit in the middle is profit.
GH: What's your view of security checks at airports?
MOL: Utter nonsense and hopelessly ineffective. The last two attacks in London were on the Underground which still doesn't have any security checks and carries far more people than airlines do. Are we really saying the terrorists haven't worked out how to carry explosives in a tube of less than 100ml? It's all about giving the impression that politicians are doing something.
GH: What's your take on politicians?
MOL: You come across the occasional good one but on the whole they're not much use.
GH: And what about the Coalition?
MOL: It's spineless. There is too much touchy-feely nonsense and not enough leadership.
GH: Is there anything you wouldn't charge for?
MOL: I don't think so.
GH: What about your idea to make passengers pay to use the lavatories on planes?
MOL: I'm deadly serious. If we could take out the two rear loos, we could put in six extra seats. That would reduce all fares by 5%. On an hour-long flight, one loo is more than adequate. We have to find a way to get people to use the airport loos and charging is the way to do that.
GH: Your decision to increase the checked-in baggage fee this summer has been labelled anti-family.
MOL: It's no more anti-family than BA's high fares. We make no bones about it, we want to discourage people from travelling with excess checked-in luggage. Generally speaking only 20% of passengers check in luggage but during the four summer months it rises to 40%. We just want people to think carefully about how they pack and take fewer bags.
GH: You've cut costs to the bone.
MOL: No way. It's like peeling an onion - once you take back one layer of costs, another layer shows up. For example, if we got rid of baggage handlers we could get rid of airport terminals. Passengers could arrive at the airport with their luggage and go straight to the plane.
You could do that by reducing the size of the checked-in bag. You could park the aircraft at the edge of the car park and say: "There you go." All you'd need is security at the bottom of the steps and passport control would be automated.
GH: But surely that's never going to happen, is it?
MOL: Why not? People would spend 20 minutes at the airport, rather than two-and-a-half hours.
GH: You haven't got much time for air traffic controllers.
MOL: They're vastly overpaid, massively under-worked and even then they b****r off on strike every Friday and Monday.
GH: What is your motivation?
MOL: I came into business to make money, I make no apology for that. I wanted to make a lot of money but after the first £50million or £100million, it became less about making money and more about having fun. You make enough money and after that it's Play-Doh. I have more money now than I am ever going to need. If it was about money, I'd be off being some playboy. Financially, I'm fine for the next couple of hundred years.
GH: You were inspired by your dad.
MOL: He was very good at setting up businesses, but not very good at running them. He made a lot of money, then lost it all, then made it again. But the bits that stay with you are the downs. I remember when we had no money and the bank was calling. Why didn't I go out and save the world? It didn't pay well enough.
GH: I hear that your website - Ryanair.com - was set up by a couple of students for £15,000 when IT firms were quoting £3million.
MOL: Actually it was £5,000. If you want to get a job done, get a student.
GH: You're always talking about stepping down - will you make it to 20 years in charge?
MOL: I genuinely hope I will be gone in the next two to three years.
GH: What's it like as a dad-of-four?
MOL: It's a great incentive to work long hours. I limit the holiday to two weeks and then get the hell back to the office. If I had my choice I wouldn't take holidays but my wife insists on time with the kids. That's enough. Prior to getting married I never took a holiday.
GH: Do you enjoy having kids?
MOL: No, I enjoy having sex.
GH: Do you like The Apprentice?
MOL: Yes, it's good. We need more people to go into business and fewer wasting our lives becoming bureaucrats and civil servants. If you're going to watch television, it's better than Big Brother.
GH: But one of your cabin crew, Brian Dowling, was a contestant on Big Brother.
MOL: We milked it for all it was worth but what does it do for mankind? Nothing.
GH: You've got a reputation for only wearing jeans, a shirt and trainers.
MOL: It was intentional at first but I'm a bit of a (Jeremy) Clarkson now, an old b****** in faded denim. Our rule is wear whatever you like and if you're a female and you wear a short skirt, so much the better. We don't have a uniform code for pilots but it's very strict for cabin crew.
GH: Could pilots turn up in jeans?
MOL: No problem, I don't care.
GH: Ryanair has published calendars full of scantily clad cabin crew. Are looks important when you hire stewardesses?
MOL: It's a combination of looks, personality and people who want to work hard. If you arrive here and you're a great-looking girl but thick as a brick, you won't get the job. Not all of our cabin crew are calendar models, they're not all size eights or 10s. I'm sure that there are some size 16s, although I would hope not too many.
And on that weighty bombshell it was back to the airport for the Ryanair flight home in O'Leary's taxi. In true style, he registered his chauffeur-driven car as a cab so it can use Dublin's bus lane, hence saving time and money. Which is nothing less than you'd expect from Michael O'Leary. Shame the flight was late though...
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