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Transport / Mass transit

Airport expansion plans in "vastly more expensive than claimed" shocker

Well, this is hilariously predictable. From the Financial Times:

…all options being considered by the government’s independent airports commission will cost billions more than previously estimated.

In its report, the commission estimated that capital and risk costs would be up to 40 per cent higher than put forward by the backers of each proposal. It also said each of the candidates had significantly underestimated the impact on airport charges, compared with its own analysis.

In all, says the BBC, the plan for a second runway at Gatwick would cost £2bn more than the bid from the airport’s authorities had said. The two plans on the table to expand Heathrow would cost £3-4bn more.

This exciting news comes in the document, published by the Airport Commission this morning, which outlines the current state of play in the festival of paperwork that is the battle to be London’s expanded airport.

So how could such a thing happen? There is of course a long and distinguished history of major public works schemes costing a lot more and taking a lot longer (the two are generally connected) than anyone expected. But here there seems to be another factor at work.

Look at the section of the report analysing the proposals for a second runway at Gatwick (paragraph 3.52):

Gatwick’s forecasts show higher passenger numbers at Gatwick than in the Commission’s models in most scenarios… [It]  estimates that the full airport masterplan is deliverable for less money than is set out in the Commission’s analysis…who?  has suggested a lower aero charge [i.e. charge to passengers] is achievable than the Commission’s assessment indicates…

…and so it goes on. The point is that, at every stage, the airport – which is trying to show why it’s the cheapest, most economically beneficial, and just plain loveliest new place to put a runway that you ever did see – errs towards optimism. The commission, meanwhile – whose job it is to get the best possible deal for the taxpayer – errs towards cynicism.

The result is that £2bn gap. The same is going on with Heathrow’s two proposals, too.

What happens next is nearly three months of consultation (“open discussion sessions for local stakeholders”). The final recommendation will be made, conveniently enough for the nation’s leaders, after next year’s general election.

Here’s your cut out and keep guide to the options:

Second runway at Gatwick

Cost: £7.4bn (airport estimate) – £9.3bn (commission estimate).

Pros: Cheapest option, least disruptive, would require relatively little government funding.

Cons: Economic benefits estimated at a relatively titchy £42-127bn.

Third runway at Heathrow

Cost: £14.bn (airport estimate) – £18.6bn (commission estimate); both figures exclude requirement for better transport links.

Pros: Major economic benefits (estimated at up to £112-211bn), and lots of new jobs; provides a major “hub airport”.

Cons: Costs a bomb and means demolishing housing. Also, it’s not actually clear we need a hub airport, because low-cost airlines are growing faster than the full-service ones that are crying out for one.

Extension of existing runway at Heathrow

The odd proposal out – suggested not by the airport itself, but by the independent Heathrow Hub consortium, headed by former Concorde pilot (!) Jock Lowe.

Cost: £10.1bn (consortium estimate) to £13.5bn (commission estimate).

Pros: Major economic benefits here too (£101-214bn).

Cons: Much the same as above. Means more building on greenbelt, rather than in residential areas next to the M4.

 
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