- By Region
Ambitious plans for a new hub airport in the Thames estuary could be achieved without forcing airlines to fund the project through steep increases in user fees, according to proposals by Lord Foster, the architect behind the project.
Among the many objections to an estuary airport, the £20bn-plus price tag looms large, with industry insiders concerned that airlines would face a trebling of landing charges at the site as its owners tried to recoup their investment. That, in turn, could result in higher air fares and undermine the airport’s competitive appeal.
But the designers and consultants working with Lord Foster, who last year unveiled a master plan for a four-runway airport 30 miles east of London, have devised a funding model they claim would avoid any significant increase in the landing charges currently paid by airlines at capacity-constrained Heathrow.
Lord Foster’s team has identified a means of raising £33bn to pay for the estuary airport – principally money secured through landing charges and the closure and redevelopment of Heathrow.
However, this funding model would hinge on the support of the government and regulators, plus the co-operation of the consortium that owns Heathrow, led by Spain’s Ferrovial.
David Cameron, prime minister, last month hinted his previous enthusiasm for an estuary airport was cooling, and that the Conservatives could drop their opposition to a third runway at Heathrow.
But Lord Foster said: “A third Heathrow runway is not a long-term solution – [it’s] more in the band-aid tradition. A new airport would take the same time to get planning permission, but would give us the capacity we need for decades to come.”
Lord Foster’s team said the new estuary airport would cost £20bn to build, and a further £3bn would be needed for a rail link connecting the site to the high speed line between the Channel tunnel and St Pancras station, taking the total bill to £23bn.
In identifying up to £33bn to pay for the estuary airport, Lord Foster’s team is proposing to take £8bn from the landing charges levied on airlines using Heathrow between 2018 and 2028. A further £11bn would be raised through landing charges levied at the new airport during the decade after its opening, which is earmarked for 2028.
Meanwhile, the closure and redevelopment of Heathrow would secure £10bn for the estuary airport. Finally, £4bn would be obtained from the development of land around the new airport for facilities needed to support it.
Mike Forster, a former executive at BAA, Heathrow’s operator, who is now working with Foster + Partners, said if the government swung its support behind an estuary airport, landing charges could be frozen at 2018 levels plus inflation because Heathrow would require minimal investment thereafter.
While this funding model would appear to deprive Heathrow’s owner of the returns it is due, Lord Foster’s team believes the problem could be overcome by giving the Ferrovial-led consortium the opportunity to take a controlling equity stake in the estuary airport.
Mr Forster says a special-purpose vehicle created to build the new airport could raise its own funds – with some of the risk underwritten by government – and be reimbursed principally from the money secured from landing charges and the closure and redevelopment of Heathrow.
He stressed the £33bn that has been identified to pay for the airport was based on estimates and assumptions that could be revised, but said the funding model was viable and would avoid big increases in landing charges.
Lord Foster’s team has put the funding model for the estuary airport to airlines, BAA, which is owned by the Ferrovial-led consortium, and the Civil Aviation Authority.
The CAA said it welcomed Lord Foster’s input, but warned: “Given the many challenges of delivering aviation capacity, it is important to generate broad agreement about long-term objectives before focusing in-depth on specific projects.”
The government is due to publish an aviation strategy document this summer, but internal tensions inside the coalition mean ministers may not reach any decisions about the UK’s hub airport capacity crunch before the next election.
Huw Thomas, a partner at Lord Foster’s firm, said potential foreign investors in an estuary airport saw it as a “phenomenal opportunity”, but added that they had also told him: “The government’s useless; come back and talk to us again when you know that politicians are capable of making a decision.”
Ministers should allow planning permission for both a third and fourth runway at Heathrow, according to an influential group of Conservative MPs who suggest this is the only way to preserve London’s position as a world business hub, Helen Warrell reports.
The proposal is to be unveiled on Monday in a report by the Free Enterprise Group, a modernising collective of 39 MPs including Sajid Javid, an aide to chancellor George Osborne, and Matthew Hancock, Mr Osborne’s former chief of staff.
While the coalition agreement expressly rules out a third runway at Heathrow, Downing Street has recently indicated that it may be reconsidering the idea and could pursue it as a 2015 election campaign issue separately from the Liberal Democrats, who are vehemently opposed to expanding the west London airport.
Tory backbenchers Elizabeth Truss and Kwasi Kwarteng, who are among the authors of the Free Enterprise Group paper, argue that there is already private funding, industry support and existing infrastructure for developing Heathrow, but that the government should consider a more ambitious plan.
“Britain needs in the order of at least three new runways to accommodate demand,” the report reads. “Concentrating these runways in the same location allows the facility to enjoy the benefits of a hub airport.”
Another proposal put forward as part of the group’s seven solutions to boosting UK growth is the development of a “Ministry of Infrastructure”, responsible for identifying strategic infrastructure projects and arranging finance for them.