Economic

Please refer to the objections document that can be downloaded here: Link

  1. The Luton airport proposal is based on exaggerated and out of date forecasts for flight numbers.  According to UK Civil Aviation Authority Data, London Luton Airport passenger numbers for the first nine months of 2020 were 9.1 million compared to 18.0 million for the same period in 2019. Total UK passenger numbers for the first nine months of 2020 were 132.8 million compared to 296.9 million for the same period in 2019.[1]
  2. UK flight forecasts have long been found to be based on simple trend projections which stretch the imagination, as shown in G. Riddington’s 2006 paper “Long Range Air Traffic Forecasts for the UK: A Critique” (Journal of Transport Economics and Policy Vol. 40, No. 2 (May, 2006)).
  3. The forecast for passenger numbers depends on the Luton Airport expansion plan being allowed. This is not a given, due to legal and environmental considerations. Those hurdles should be cleared first before any further planning is undertaken.  
  4. Luton airport is one of 27 regional airports which have published plans for expansion.[2] The rush to expand is based on greed and fear. Greed, in that local authorities want to approve plans to obtain tax revenues and grow local employment. Fear, in that plans may be derailed by the Supreme Court judgement on Heathrow Runway 3, and that competing regional airports may ‘win’ the extra passengers and therefore revenues.  
  5. In fact, there are several good economic reasons to believe that overall UK passenger numbers will not grow as fast in future, eliminating or postponing the economic and therefore the technical & safety reasons given for justifying the expansion.
    1. Until Covid-19 vaccinations and immunity are achieved globally, regular lockdowns and transport disruption are a near certainty.  This does not only have to affect Luton airport and its catchment area; every destination airport to which passengers might fly from Luton is in a potential lock-down area. Furthermore, it is reasonable to expect a number of people to decide not to fly, or to fly less, as a consequence of the pandemic, due to health anxiety. This may take several years to overcome.
    2. Consumers are becoming more environmentally conscious. They are increasingly aware of the contribution aviation makes to Greenhouse Gas (GHG) emissions. The lure of low-cost aviation can be tempered by this.  Governments are also increasingly reacting to aviation’s emissions, for instance with aircraft being included in the EU’s emission trading scheme. Expansion of carbon taxation schemes, which is increasingly expected, could affect the low-price airline busines model and increase tourism costs to levels at which passenger growth figures decline. We are at the inflection point of this policy change, making forecasts of passenger numbers based on historic numbers less reliable.
    3. Business travellers have become increasingly used to video-conferencing. Lockdowns during 2020 have shown them that they can be more productive co-operating at a distance than spending time transiting to airports, wating in airports, flying overseas, transiting to meetings, and doing all that in reverse. Meanwhile employers have noticed the benefit to their bottom line of not having staff flying on expensive, flexible business class tickets as regularly. Airlines do not expect business travel to return to pre-Covid levels for several years. Indeed, the recovery may be even slower.  Business class travel subsidises low-cost tourist travel.
    4. The business model for aviation will be different post-Covid. Travel data company, Cirium, found that 43 commercial airlines failed between January and September 2020, compared to 46 in the whole of 2019 and 56 in all of 2018. A failed airline is one that has completely ceased or suspended operations, according to Cirium’s definition. The goal for airlines now is to “survive at any cost” and see if the summer of 2021 brings solutions or higher demand. “With demand recovery in most regions stalled and airlines still struggling with revenue generation and cash outflow, we expect to see more failures in the final quarter of 2020 and first quarter of 2021 at least,” say Cirium.[3]  Experience has shown that passenger numbers grow in response to available seats, rather as passenger vehicle numbers grow in response to road building. Therefore, a reduction even in the growth rate, let alone negative growth in the availability of seats will reduce passenger growth forecasts. No less a business personality than Bill Gates, founder of Microsoft and one of the world’s richest men, recently wrote that busines travel will fall by 50% after Covid19. 
    5. Forecasts from aviation consultancy and technology company Eurocontrol show a 50 per cent fall in flight numbers lasting into 2021, with a longer and deeper Covid effect on travel. Consequently, passenger numbers will take longer to recover to pre-Covid levels, reducing long-term passenger number forecasts.
    6. On 2 December 2020, the All-Party Parliamentary Select Committee on Transport is to begin hearing evidence about transport demand in the UK in preparation for its forthcoming report, “Reforming Public Transport after the Pandemic.” The committee’s Chairman Huw Merriman (Con., Bexhill & Battle) told the Observer newspaper on 29 November 2020 that the pandemic had led to big changes in behaviour and attitudes to work, commuting and lifestyles that could have a permanent impact on demand for different types of public transport. “Transport investment is at a pivotal moment. The pandemic has changed the way we travel,” Merriman said. “For meaningful numbers of us, it could change it for good. Our climate change commitments require us to shift away from diesel towards greener forms of energy. Changes to the way we appraise capital spending projects mean that the government no longer has to use value for money as the sole indicator….With so much uncertainty, pressing the accelerator too early could lead to vast transport infrastructure projects which are either not needed or are sited in the wrong parts of the country to level up.”[1]
    7.  The Supreme Court judgement on LHR Runway Three may be negative for other airport expansion plans. It may be that the economic case for expansion at Luton is undermined by allowed expansions at London Heathrow.

[1] https://www.theguardian.com/uk-news/2020/nov/29/questions-over-hs2-and-new-roads-as-coronavirus-prompts-transport-inquiry?CMP=twt_a-environment_b-gdneco&fbclid=IwAR1fEJL0m1G3MWtNygSVgVNZyqPz1B9QbmJzrGhqSAC5Gi2fqDw8f4iNqHs


[1] https://www.caa.co.uk/Data-and-analysis/UK-aviation-market/Airports/Datasets/UK-Airport-data/Airport-data-2020-09/

[2]  https://airqualitynews.com/2020/02/18/revealed-every-uk-airport-has-plans-to-expand/

[3] https://www.cnbc.com/2020/10/08/over-40-airlines-have-failed-in-2020-so-far-and-more-are-set-to-come.html

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