Adding capacity at Heathrow Airport

December 3, 2007 at 3:55 am | Posted in Climate change, Heathrow airport, LHR | 4 Comments

adding capacity at LHRWe just received our Heathrow Consultation package from the Department for Transport including:

Adding capacity at Heathrow airport: Summary (PDF version) (337 kb)

(337 kb)
Published: 22 November 2007 (on this page in multiple languages).

This is being sent to all residents (presumably those of us who live close enough to hear the aircraft through double glazed windows and inhale their fresh emissions) with a cover letter from Jim Fitzpatrick MP Parliamentary Under Secretary of State.

At first glance, his cover letter misses the point: it includes no mention of climate whatsoever. The emphasis is on noise and pollution for residents who live near enough to be bothered by such near-term obvious nuisances.

When will this government start to join the dots and recognise that it is not just local residents who have local concerns, but global residents who have global concerns?

OK. I shall have to read through this before the public exhibitions start on 7th December 2007.

And now it’s time to head to LHR again myself >>>

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  1. Hmmm. Not being British, I have no horse in this race [and in any case, when my wife and I visit UK to see relatives, we avoid LHR and fly through Manchester], but I do have to wonder:
    .
    1) The UK has various predictions of the growth in air travel, and if they are true, then expanding airport capacity is being prudent and sensible, although people might argue whether expanding LHR (in the most difficult location possible) is truly more cost-effective than expanding one of the other London airports, where it looks like one need only buy up a few farms rather than 700 homes, and where the noise issues are more tractable. [Of course I understand *any* airport expansion around London is fought by somebody.]
    .
    2) But, the real question is the accuracy of the estimates of air travel expansion, which depend at least somewhat on the elasticity of demand versus cost.
    .
    The elephant in the living room that I can’t find mentioned is that of Peak Oil [see Wikipedia, or David Strahan's http://www.lastoilshock.com/ for a UK reference.]
    .
    I think jet fuel is about 25% of current costs, although it’s tricky to figure that out.
    .
    It’s hard to believe, that with Peak Oil happening soon (or already), that by 2020, jet fuel hasn’t doubled in price, which means price up by 25% (minus something for better fuel economy, so guess +20%).
    .
    3) Google: air travel demand price elasticity uk
    got me:
    .
    http://www.cfit.gov.uk/docs/2003/aec/research/08.htm
    http://www.dft.gov.uk/pgr/aviation/atf/airtrafficforecastsfortheuni281?page=7
    .
    Anyway, it looks like Figure 2 in the first one [which however comes from Canada] says that elasticities go from -.26 to -1.5, but for simplicity, call it -1, that is a 1% increase in price leads to a 1% decrease in demand.
    .
    If so, a 20% increase in price means a 20% decrease in demand. Then, if one looks at:
    http://www.dft.gov.uk/consultations/open/heathrowconsultation/consultationdocument/annexc.pdf
    .
    It sure looks (Table C1) that if prices were 20% higher in 2020, 605,000 ATMs *.8 = 484,000 ATMs, i.e., not much more than what’s going on now.
    .
    4) Now, these are all back of the envelope, and I could easily have missed a clear analysis that shows Peak Oil has been well-accounted for, but it does make me wonder about *any* infrastructure investments targeted for 2020 whose usage depends on fuel costs. [For instance, I would worry about any major expansions of freeways around here.]
    .
    Anyway, this is not to dismiss climate issues, but climate+peak oil interact, and I think in this case, the peak oil effects will be obvious quicker.
    .
    Any thoughts?

  2. Hi John,
    Thanks for taking the time to highlight this question about projected air travel. Peak oil is something I am only vaguely aware of, so I hope someone reading your comment will chip in with an informed opinion.
    .
    The reason given (by Ruth Kelly?) for expansion of LHR (rather than any other British airport) is that Britain needs to maintain it’s world-class status. Of course, the case for this argument only holds if peak oil and climate issues are ignored.
    .
    There is already too much gratuitous air travel within UK borders and short-haul to the Continent, let alone the recent surge in popularity for weekends spent in the bargain bins of America because the dollar has sunk so low.
    .
    The elephant in the room is increasing emissions while paying someone in another (preferably far-off) country to reduce theirs. Carbon trading and the use of offsets when all other methods of emissions reductions have been used up are not wrong per se. However, the idea that any government can use the economics of carbon trading to argue their case for increased air traffic, while encouraging excessive and ridiculously cheap air travel, foreign holidays and continental or transatlantic shopping trips as normal, seems to me to be insulting intelligence (unless they assume we don’t have any) while encouraging consumption that destroys the atmosphere even further.
    .
    Whatever the economics of fuel pricing and tariffs, transport economics are a total mystery to me. Why should it be that airlines can advertise and offer flights to New York for 200GBP or Reykyakik for 80GBP return (as advertised on the first billboard arriving in London Paddington by train) when it costs more than that to buy a ticket from London to Cardiff by train?
    .
    The government announced increases in rail travel prices last week—saying they are necessary to cover the cost of investment. Duh. Why is it that air travel prices would not be expected to rise accordingly, if there is a massive investment in flight infrastructure at LHR? This is a mystery to me.
    .
    The economics are upside down. They are fine for people who have time and the inclination to shop around for cheap holidays, stag parties in Prague, and so on, but are prohibitively expensive for people who need to get somewhere in a hurry for a meeting or family emergency. In other words, as far as I can see, current pricing encourages frivolous use of transport rather than necessary travel.

  3. 1) Here’s a reasonable description:
    http://en.wikipedia.org/wiki/Peak_oil

    2) Airline pricing is really complicated, given the competitive environment (which encourages a lot of flights on popular routes), and the fact that once you’re sending a plane somewhere, the incremental cost of adding passengers ~= 0, up to the point where you’ve filled every seat. Then, add dynamic operations research algorithms for optimizing yield to the airline, and you get a person sitting next to someone who’s paid 2X, 3X more.

    As best as I can tell, the really cheap flights seem to use other airports, and LHR’s key advantage is the number of international connections, and I can’t blame them for not wanting to lose such business, for example, to Schipol.

    3) One would certainly expect air travel prices to rise at LHR no matter what, just because it is such a well-used hub, compared to the other London airports. I do observe that some big metropolitan areas [like New York, San Francisco Bay Area, Los Angeles] have multiple serious airports, and it sometimes really helps to be able to get to the right area within the larger area.

    4) In the US, given the much larger spread and lower density, air travel is (unfortunately) more required in practice, but it is surprising in the UK. Downtown London -> downtown Paris: we’ve used the Chunnel, and it was less time door-to-door. Trains are generally pretty useful in the UK & the Continent.

  4. Yes well said. I’m also looking at their oil price forecasts – $53 in 2020 is I think officially an out of date forecast already
    James
    ps please see my petition on ads-

    http://petitions.pm.gov.uk/airlines/
    http://richmond.greenparty.org.uk/news


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