Transport Insights

It’s not been a great week for plans to expand Heathrow airport and now we have the head of a major airline group claiming he can’t afford a top-of-the-range Mercedes.

The FT reports that Theo Panagiotoulias, chief executive of Star Alliance, has warned that the new runway and terminal risks pricing out airlines.

The head of a major airline alliance that includes Lufthansa and United has likened Heathrow’s third runway plans to an unaffordable luxury car as he urged the airport to cut back some parts of the “eye-watering” project.
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“I’d love to have a fully specced Mercedes-Benz that’s top of the line. I don’t know if I can necessarily afford it, but I’d like it,” he said. “It’s the same parallel.”

“I’ve seen some numbers thrown around and they’re eye-watering. We’ve got to be able to have conversations to determine what’s the ‘nice to have’ and what are the things we must have,” he told the Aviation Club in London.

According to the FT, Star Alliance’s 26 members account for one in six planes that take off from Heathrow and the FT points out that Panagiotoulias’ intervention is the latest in a “chorus of airlines” warning about the potential cost of building a third runway.

But he still wants it to go ahead in some form so he can pay for that Merc.

The newspaper gives the cost of the project as £33bn, but it could be way higher than that. As I noted here, the Civil Aviation Authority commissioned an independent report that showed the true cost of the scheme is in the range of £33bn-£52bn, excluding public transport improvements.

The cost of the construction is only one part of the cost benefit analysis or net present value, which includes the costs to the environment and people’s health, as well as the benefits.

Last week the Guardian reported that:

The DfT calculates the net present value of the scheme, even if entirely privately financed, to be between -£23.4bn and -£62.5bn.

And that:

documents prepared by the Department for Transport said the runway was expected to boost GDP by only up to 0.05% – 90% less than the 0.5% previously stated.

The quote from the Department for Transport here was hilarious. A spokesperson said:

Net present value is just one part of the overall picture – crucially, an expanded Heathrow could support over 60,000 new local jobs and deliver £40bn of benefits to the UK.

The spokesperson either doesn’t understand net present value or is being Comical Ali disingenuous. The benefits are just one part of net present value, not the other way round.

There is some good news, however. In the climate emergency:

Thunderstorms delay hundreds of Heathrow and Gatwick flights

Obviously, the BBC reports the story from the consumerist angle, carefully avoiding any mention of the climate change that is behind “the UK’s hottest ever June high of 37.3C”.