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London’s airports

As a fairly regular user of Heathrow Airport and other UK airports such as Gatwick – the former has suffered all manner of problems due to loss of baggage, massive queues - this, on the face of it, looks a good development, but I have my reservations, as I will explain later:

Aug. 20 (Bloomberg) — BAA Ltd., the owner of London’s Heathrow airport, should be broken up and its Gatwick and Stansted terminals sold off to foster competition in the U.K. capital, antitrust regulators said.

The unit of Spanish builder Grupo Ferrovial SA provides a poor service to airlines and passengers and has shown a lack of initiative in planning for additional capacity, the Competition Commission said today, recommending that the company should also be stripped of either Glasgow or Edinburgh airport in Scotland. BAA said the analysis was “flawed.”

Hmm. The problem partly stems from the fact that when BAA was originally privatised by the former Tory government, it was sold as a monopoly. That is not, in and of itself, a terrible thing so long as there are other competing transportation businesses. But there were not other big airports owned by non-BAA businesses to compete, especially against the crucial hub of Heathrow. In a previous Samizdata posting on the Snafu of the opening of Heathrow’s Terminal Five, one commenter pointed out that one issue that is sometimes overlooked in issues like this is restrictions on new airport builds by the planning authorities. Well indeed. I think there is a good case for building an airport to the eastern side of London, on the flat lands that sit to the north of the Thames (it is not as if this is an area of outstanding natural beauty). It would relieve some of the air traffic now coming over the capital, which would be good for abating noise as well as removing a potential safety and security issue of thousands of aircraft flying into land over the middle of London.

Getting planning permission for a new airport is, under the current system, very difficult. Yes, there are, in the UK, a lot of old, disused military bases left by the RAF and the USAF, such as in Oxfordshire, Lincolnshire, and East Anglia and bits of Kent. However, the trouble is that such bases were deliberately built miles away from major urban centres, to prevent the danger that an attack on such a base would hit a large city. So you have th situation of huge runways turning into rubble in the middle of Suffolk but of no real use to commuters in London. So we would need something a bit closer. Another matter to bear in mind is that southern England is not very large: airspace is at a premium and already crowded, if not quite so bad as during the Cold War, when the UK was covered in airbases.

I am not, as a free market purist, at all happy to see a private business broken up at the behest of a state regulator, but then we should recall that BAA was originally put together as a state business and sold as a monopoly as a matter of state policy. When its current owners, the Spanish firm Ferrovial, bought BAA, they must have known that failure to sort out the problems might have incurred the wrath of the regulator. It would be nice in a total free market not to have to bother about such things, but it would have been failure of basic due diligence for Ferrovial’s lawyers not to have warned their managers that competition issue might arise. Well, it jolly well has arisen at last. We would not, as the old joke about the Irishman giving street directions to a tourist, want to start from here. But here is where we are. If there is a chance of putting a large, competitive fire up the backsides of BAA’s management, there is a chance, however slender, that the experience of coming to and from the UK by air might be a tad more pleasant in future.

8 comments to London’s airports

  • MarkE

    There were comments about the risks of allowing BAA to remain a monopoly when it was privatised, but they were very muted, and remained so until Ferrovial bought the company. I can’t help suspecting that in the MSM there was an attitude that a British monopoly was acceptable but demmit man, it’s Spanish now and that is not.

    Anyone who has read motorcycle magazines from the 50s will have laughed at the euphemism used to say “it’s a total dog, but it’s British and we won’t bite the hand”, but that attitude is still out there.

  • Johnathan Pearce

    MarkE, you are almost certainly right. Another issue that is bound to come up is the fate of the BAA pension plan, which has a big black hole in it. Sorting out that mess is going to be tricky.

  • I am not sure how much of it is nationalism. Some is, certainly. However, I think the “Break BAA up” arguments were fairly audible before the Spanish bought BAA. Some of the reason it has got louder is that British airports have been getting steadily more unpleasant to go through. Part of this is a consequence of sillier and sillier security rules, and BAAs incompetence in implementing them.

    This was of course the failing of most of the Thatcher government’s privatisations. Breaking state sector enterprises up before privatising them and then letting them compete with each other would have led to more competitive markets and better outcomes for consumers, but would have been harder to do and would have raised less money for the treasury. So, instead, we got the model of organisations being privatised largely intact with supposedly strong government regulators to theoretically protect the rights of consumers. (As a bonus, this model made bureaucrats and politicians feel important, these regulators could prevent supposed market failures).

    What is so silly about London airports, is that privatising in pieces wouldn’t have been hard. There were three airports, and selling them separately was surely one of the easier decisions to make, particularly given that airports was the industry in which barriers to entry were perhaps higher than any other and competition was not lilely to develop. But no.

    As the years have gone by, in some industries the monopolies have broken down and we do have competition, and in others the privatised company and the regulator have settled down into a situation of mutual beneficial symbiosis. Airports seems to have been one of the second.

  • James R

    As a former resident of one of those old East Anglia airbases (RAF Bentwaters via USAF, 1987-1989), I wonder to what good use the old (and obviously rural) airfield may be put.

    How I wish I could visit the ol’ sod again… (I said that correctly, didn’t I?)

  • Alice

    But if British authorities make flying into/out of the UK nicer, more people will fly — and Global Warming will destroy the planet.

    Come on now, people! The warming clock is at one minute to midnight, children are dying, the polar bear is almost extinct — and you want to encourage people to fly? Next thing you will be wanting to cut some of the outrageous taxes on petrol. Get with the narrative!

  • Daveon

    Building more London Airports in different locations _sounds_ nice but the practicalities of offering a service customers want makes it pointless.

    Having had to do a LHR > LGW transfer recently, it was just a nightmare, Stansted is as bad and without a truly stunning public transport investment putting something on the other side of London unless you’re going to effectively move all LHR operations would be another waste of time.

    Frankly, to compete LHR needs to be larger and holiday/charter traffic needs to be moved to the 2 other airports. If London wants to be a prime business hub, it needs an airport that’s easy to access from Central London and can easily and efficiently handle passenger and flight volume for people coming into and out of Europe on route to the rest of the world.

    If it can’t do that, then one of the other European hubs is ultimately going to take over as the premier airport on the continent and that won’t be good for London.

    If a bunch of nimby’s[1] don’t want expansion at Heathrow then, perhaps, the best thing, is a newer, purpose built airport somewhere to the East which can handle the load.

    [1] Owning a flat in Ealing I would have a say in this process if I was actually still living in the UK.

  • Midwesterner

    The funny looking lollipop sort of shape on the upper west side of Chicago is O’Hare airport (ORD). At the time it was built at the site of the former Orchard Field, it was waay out in the country. Midway, the city’s previous major airport is a tiny x-runwayed block in the city. If you have every flown in and out of there, you know what I mean when I say it is an ‘interesting’ experience.

    Wouldn’t the highest benefit solution involve a high-volume TGV/Bullet corridor to one of those under/unutilized airports within 100 miles or so? The difficulty with airport building and expansion is in the land acquisition. Placing the principle airport for England/Wales farther north at the site of an existing field seems to make a lot of sense. I have spent longer idling in traffic jams at airport terminals than the time a high speed rail trip to one of those other airport sites would take.

  • Daveon

    Midwesterner,

    The real problem is you’d hit as many problems building that 100 miles of track as you would finding a decent location within 100 miles of London. That covers an awful lot of the most densely populated parts of the UK and where it isn’t densely populated there’s people rich enough to mount a serious blocking play.

    RAF Lyneham is closing soon and they’ve lots of space – it’s about an hour’s drive West of London, probably about 60 miles and halfway to Bristol with good existing rail connections. Might work.