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UK election aviation impact: Heathrow runway prospects improve; questions over Scotland, regions

The surprise UK General Election result, giving the conservative party an absolute majority, augurs well for Heathrow’s runway proposals but poses more questions than it answers about Scotland and the English regions.

This report outlines the 7-May-2015 result and its likely implications for aviation in the UK. The Conservative Party's outright victory came at the expense of the Labour and Liberal Democrat parties, both of whose leaders immediately resigned. The result means that the Conservatives will probably be able to govern with a slender overall majority for another five years.

Meanwhile, in Scotland, the three main ‘English’ parties were annihilated, with almost every seat going to the left leaning Scottish Nationalist Party (SNP). While it is still early days we conclude that the vote will be a much-needed fillip for Heathrow Airport’s hopes of building a third runway while Scotland might consider that starting to build its own unique aviation system as Ireland has done might be better than continuing its support for Heathrow as it edges closer to independence.

An expanded report on this topic is available at - UK election 2015 aviation impact: Extended 5,000 word report

The Conservatives are now confronted with making a decision on the merits, with no political excuses

The Conservative overall majority is just 12 seats out of 650 but should see the government scrape through another fixed five year term of office.

Fundamentally, the result means that the "party of business" is back in power, unhindered by any coalition partners with other objectives. Business and financial/forex markets reacted rapidly and positively to the result.

All pre-election polls suggested the UK was heading for deadlock and stalemate with a hung parliament. CAPA reports published during the last 12 months accordingly suggested that the outcome of the long running debate on airport capacity, and particularly the location of an additional runway in the southeast of England, would render pointless the efforts of the Airports Commission.

The actual election result has simplified the options if only because with just eight seats in the new parliament the Liberal Democrat party (Lib Dems) that was part of the previous coalition now has no power whatsoever. The Lib Dems had made clear their opposition to any ‘net increase in runways in the UK’ during their time in office.

With only 232 seats the shell-shocked opposition Labour Party is in disarray. Labour had promised to “make a swift decision on expanding airport capacity in London and the southeast, balancing the need for growth and the environmental impact.”

The other party notable for its opposition to any extra runways is the Green Party. Its manifesto had declared simply ‘stop airport expansion.’ But it ended election night with just the one MP it already had.

Another national party that failed to make inroads was the right wing United Kingdom Independence Party (UKIP) and for the same reason as the Greens: a vote (much larger than the Greens) that was too thinly spread to register under the first-past-the-post system. UKIP also ended up with just one seat.

UKIP had vacillated between supporting Heathrow and the recently closed Manston Airport in Kent. It now looks like the prospects for Manston are dead, despite some support from the Conservatives very late in the day.

Heathrow remains the runway favourite but there is no commitment from new government

So with all these various influences removed there is no reason whatsoever why the newly installed Conservative government should not take onboard the Airport Commission’s recommendations when they come, and move to implement them. However, the Conservative Party’s manifesto committed to absolutely nothing beyond that it would "consider" the Commission’s final report.

We have always said that Heathrow is a ‘no brainer’ when it comes to that choice, being supported inter alia by the airlines, their alliances, a lot of (if not all) politicians, big business, and also many of the UK’s regions because of its promises of greater connectivity in the future via a route development fund and what its CEO describes incessantly as ‘Britain’s only hub.’

On the other hand, Gatwick Airport, since it was selected as one of the three options in the Commission’s Interim Report, has produced an admirable proposal if its own. It must be a huge headache for Commission Chairman Sir Howard Davies to come to a decision and there has been a growing suspicion latterly that he might even propose that both Heathrow and Gatwick should be given the go-ahead and be allowed to get on with it in an openly competitive environment.

A late complication for the Commission is a Supreme Court ruling concerning air quality around Heathrow, one that prompted the Commission to launch yet another public consultation.

Even so, in CAPA's view Heathrow remains the favourite to win what has become known as ‘Tar Wars.’ But there are always caveats. This is politics after all, the discipline for which "a week is a long time".

Air Passenger Duty will remain contentious for Engand's regional airports near Scotland

In the aftermath of the Scottish Independence referendum of Sep-2014 a government commission recommended new powers should be granted to the Scottish Parliament, including the ability to set its own level of the widely detested Air Passenger Duty, the UK-wide tax (already adjusted in Northern Ireland) that is reputed to be the highest in the world. The Scottish Parliament intends to do just that, though it is yet to decide whether to reduce APD by 50% or even eradicate it altogether.

Even a 50% Scottish APD reduction would put some northern English airports at a disadvantage, with the prospect of diverting traffic across the border.

One thing is for sure: Chancellor Osborne is not going to eradicate it in England, despite a recent concession on payment by children.

As Scotland moves towards independence will it set out to create its own aviation industry?

Prior to the election Scottish airports and business generally favoured the expansion of Heathrow on the basis of improved connectivity. But on 07-May the SNP took almost total political control of Scotland as well as gaining 56 MPs (of 59 available) at Westminster.

Under such a scenario can such tacit support for Heathrow realistically continue? Will an aspiring independent nation not prefer that it might be better off trying to establish an international hub of its own in Scotland, possibly even supported by a new national airline and try to replicate the dramatic rise of Dublin Airport in Ireland which is fast becoming an alternative ‘UK’ hub airport?

English regional airports will be waiting to see what happens next

Regional airports, notably those in northern England, may fare better because of the government’s proposed ‘Northern Economic Powerhouse’ (NEP) initiative and especially as its instigator, George Osborne, remains as Chancellor in the new government. Whatever the Commission proposes for the English southeast it is unlikely to square with a government programme to improve the economic lot of another part of the country so it can compete head on with London, which is where the Commission intends to locate its runway solution.

If there are further delays to the decision on the additional runway in the southeast, the English regions can collectively offer an extra 35 million ppa in passenger capacity immediately - without any infrastructure requirement.

Events in Scotland have triggered an increase in the likelihood of the creation of an English Parliament for English affairs. At the same time there is a growing sense of English regionalism.

The prospect of regional English assemblies with powers over air transport is unlikely during this Parliament, but the administration of surface transport (bus/train/tram) has already been devolved in one case, in Manchester, and some other city-regions wish to do the same.

A ‘Brexit’ from the EU draws nearer, as a referendum must be held in this Parliament

The possibility of Britain’s exit (Brexit) from Europe increased as a result of the election. Prime Minister Cameron is committed to an in/out referendum and will be pushed to deliver by the end of 2017 (possibly sooner) by the right wing of his party and by UKIP, which most political analysts expect to continue to grow in support for this very reason.

Already some City (financial) companies are threatening to quit in the - relatively unlikely event - the UK the referendum result favours leaving Europe, something that could cast doubt on future prospects for London City Airport.

If Britain were to quit the EU most of the traffic forecast data on which the Commission’s decision will be based will be at best questionable. Surprisingly the Commission did not take this into account in its Interim Report. The final report may do so.

Britain’s shrinking role in world affairs casts doubt on its aviation role - and protestors may return

Another important policy implication arising from the election result concerns the withdrawal from international affairs by the Conservative Government in the last two years. There is no indication that policy will be reversed. Britain’s role in the world is shrinking and will continue to do so. Should Prime Minister Cameron choose to perpetuate this "Little England" policy it could isolate the country more than a Brexit and would have implications for international governmental activities, trade and, consequently travel.

Britain is more divided by the election result than it has been in its recent history. A protest against the election result has already resulted in a riot and an attempt to storm Downing Street.

Events of this nature would inevitably encourage the return of the anti-airport expansion protesters who have recently been lying low. Whether it is Heathrow or Gatwick that gets the Commission’s and the government’s stamp of approval, very long and very loud protests should be expected, quite possibly to the extent that they become unmanageable projects.

This is another reason the Commission may yet be forced to revisit solutions to the airport runway conundrum that it had previously discarded.

 

(The author, CAPA’s Chief Airports Analyst, stood as a candidate in the 2010 British General Election, but is no longer actively involved in politics)

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