Airport, You've Got a Frowning Face
Over the last 6 years I’ve done quite a lot of travelling between my home in Scotland and London, and the most frequent method of doing this has been by plane. My preferred method of transport is the train, however, since it provides a much more relaxed atmosphere, and means that, should I want to, I could work throughout the entire journey. The downside is that it takes a while, generally most of a day. As a result, in the pursuit of a quicker journey I think I’ve racked up about 100,000 air miles flying up and down, which doesn’t sound like a lot, but is the same as going around the equator 4 times. That gives you a lot of time to reflect on the good, and bad, aspects of air travel! Given the focus of this edition of LAPF Investments, I thought I would put down some thoughts on airport infrastructure, based on my experiences as a regular user of London’s main airports – Heathrow, Gatwick and London City – and as a regular resident in the city.
In my view, there are four critical features of using any particular airport – the cost of flying to/from it, travel links to your destination, the time it takes to check in and clear security, and the frequency with which flights are delayed. In terms of my three ‘favourite’ London airports, none of them score well in all areas, which is annoying:
London City: Expensive to fly to/from; good travel links to London; very short check-in and security times; flight delays in late autumn/early spring (mainly due to fog)
London Gatwick: Affordable to fly to/from; reasonable travel links to London; fairly convoluted check in process for the North Terminal; occasional delays
London Heathrow: Affordable to fly to/from; reasonable travel links to London; short check-in and security times (Terminal 5); regular delays
So, in my view each airport has something going for it, but each also has one or more negatives. Since I don’t use Luton or Stansted, I haven’t included them in my comments. But sometimes it’s easy to forget that London is served by 5 airports, and still no one has managed to create the perfect airport experience!
One aspect of air travel that seems to me to be overlooked on many occasions is the experience of the people living on the ground. When in London, you can’t help but fail to notice the number of planes in the air over the city. An unavoidable part of visiting a major city you might say – but a daily nuisance for many of the 8 million Londoners. I also get to directly experience that aspect of air travel, as when I’m in London I stay in Wimbledon which is under Heathrow’s flight path, depending on the wind direction. Having planes taking off at 11pm is not a nice experience when you’re trying to sleep!
Many readers will be aware of the on-going debate regarding airport capacity in London. Statistics vary depending on source but, under current arrangements, two of the three airports mentioned are running at, or close to, capacity – with Heathrow operating at approximately 99% capacity and Gatwick >95%. London City is running at 60% capacity, which I suspect has something to do with the relatively short runway, which limits the type of aircraft that can land, and the number of passengers they can hold.
The debate about London airport expansion has gone on for years, with the problem being limited or no expansion room for Heathrow and Gatwick without markedly impacting the lives of the people living next to those airports. But Government continues to look at the issue, and in May of this year, the Commons Select Committee on Transport published its first report on aviation strategy. The Committee was tasked with looking at what Government objectives should be with regards aviation policy, amongst other things. In its initial findings the Committee rejected the idea of creating a new hub airport, and instead it’s main recommendation was for the creation of a third runway at Heathrow.
I think they’ve made the wrong recommendation, and really missed a trick.
Given the fact that Britain’s two largest airports, Heathrow and Gatwick, are operating at capacity and surrounded by homes, businesses and roads, it seems a no-brainer to me to go for a new airport hub, with one option being proposed that it be built somewhere in the Thames estuary. By taking such an approach, an airport could be built with sufficient capacity to meet expected future demand for many years to come, with the added benefit of reducing the impact that airports have on the lives of the majority of ordinary people in the London area. Whilst there are undoubtedly many challenges to taking such an approach – the same fog that affects London City, dealing with local wildlife, preventing bird strikes on planes using such an airport, preparing for rising sea levels from climate change, and creating transport links to and from Central London – it seems to me to be the best proposal from a bad lot. If we, as people, are going to continue to use planes to travel as much as we seems to want/need to, then surely the time has come for some bold thinking?
It’s very hard planning for the future when technology changes so quickly, and it’s hard to believe than in just over 100 years the human race has gone from making the first powered heavier-than-air flight by Orville Wright, to viewing the transfer of 500 people on a 580 tonne Airbus A380 from the other side of the world as a normal, everyday occurrence. It seems unlikely to me, however, that either personal jetpacks or Star Trek inspired ‘transporters’ are around the corner, and as a result using commercial airlines for most of our long distance travel needs is likely to remain an important mode of transport for many years to come.
A new hub in the Thames Estuary would seem to me to be a good infrastructure investment for institutional investors such as pension funds. Given the mix of investor capital out there looking for a reasonable return, a need for increased airport capacity in the South East , and a Government desperate for some big ticket infrastructure projects to help pull the UK out of recession, I don’t much in the way of a headwind in pursuing such an airport expansion strategy.
One of the main problems with large infrastructure projects, or indeed any major building work, is the impact of ‘nimbyism’. No one really wants a huge power station at the bottom of their garden, a train line running past their village, a wind farm spoiling the view from their multi-million pound Links golf course, or an airport plonked in a river estuary. But many of these things are deemed ‘necessary’ if we want to continue to live our lives the way we currently do, and we rely on the Government of the day to help make those decisions. Sadly, they don’t always get it right, and come up with some real turkeys. HS2 has the potential to be another one, but that’s a whole other article….
It’s to all of our detriment that both the current and previous Government have dithered over many key infrastructure decisions, with policies and pronouncements that seem less than joined up. As a result, we’re running out of time to introduce some new capacity in some of the key infrastructure requirements that this country has – including airport capacity. When I worked at the Strathclyde Pension Fund, I met with Nilly Sikorsky, MD Europe of Capital International in 2006, as part of a manager monitoring meeting. When we asked her to give us her views on future investment themes, she talked for some time on ‘infrastructure’, and listed all of the key infrastructure elements that developed nations would need to replace or renew in the near future. Hindsight suggests she was spot on, as she highlighted airports and power stations amongst other items. I think it’s fair to say our Government of the day also shared those views, but could not, or did not, come up with some ideas on how to do this. Big change is politically difficult, but isn’t making big decisions what we ‘pay’ them for?
As part of the LGPS merger debate, much has been made of a pooled LGPS being a key infrastructure investor. I think that’s just convenient posturing to help justify the pro-merger argument. In my experience, it isn’t that LGPS Funds won’t invest in infrastructure, it’s that there aren’t currently many suitable infrastructure projects out there in which they can invest. Whilst your Fund might not be keen to get involved in things like HS2 (if it were seeking private financing – watch this space?), you might be more interested in any potential plans to increase the UK’s air passenger capacity, to return it to the top of the airline hub league, and help ensure the country’s continued economic success and position as one of the leading business destinations in the world. As China, Brazil and other ‘emerging markets’ continue to emerge, it’s essential that travel to and from such destinations is permissible from the UK, and easily achieved at that.
Hopefully in my working lifetime I’ll be able to stop complaining about airport delays, and enjoy a smooth and quick flight from Edinburgh to the London Thames Hub, reach Central London on a quick train link from the airport, and sleep soundly in West London along with millions of other Londoners. Or maybe the Star Trek transporter will mean I can travel to and from London in an instant, as long as I can afford the small power station needed to run it!
First published August 2014