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News - 15 May 2005
Too much expansion, too far, too soon?

Setback for Stanstead

British Airports Authority (BAA) has suffered a setback for its plans to expand Stansted. What does this mean for Gatwick?

The Civil Aviation Authority (CAA) which regulates BAA’s spending has withdrawn approval for £105m of expenditure on planning for the second runway at Stansted, over half of which was earmarked for the purchase of houses affected by the expansion plans.

The approval for this expenditure was withdrawn earlier this year so this isn’t news but now the watchdog has decided it will hold a new six month consultation process because it is worried that it hasn’t capture the views of all the interested parties.

Existing airlines using Stansted are jubilant because they maintain that plans for a new runway and terminal building at the airport are too expensive and will drive up charges. Profits at Stansted are expected to have risen to about £55m from £39m last year when BAA announces the figures later in the week.

BAA’s ambitions for expansion of Stansted, the schedule for which has already slipped from a target of 2011 to 2013, are now mired in the row over how the £4bn cost will be funded.

They have issued a warning that the timetable could slip by several years more unless they are allowed to cross-subsidise the cost with a £1 levy on passengers using Heathrow and Gatwick. This is currently not allowed under CAA guidelines.

Airlines currently using Stansted are appalled at the scale of BAA’s plans and have accused the Authority of ‘gold plating’ the scheme which, they maintain, would be wasted on most of the cost-conscious travellers who pass through the airport.

An additional runway is estimated to cost in the region of £90m but BAA are also proposing taxiways that will cost an additional £420m, a terminal expansion at a cost of £1.2bn and transport improvements that will add £670m.

No frills airlines EasyJet and Ryan Air have threatened to abandon the airport because charges will increase from just under £3 per passenger to as much as £8, which they claim will more than wipe out their average profit of £2.50 per customer. Since they currently represent 80% of Stansted’s traffic their departure would turn the airport into a very expensive white elephant.

ECONOMIC PARTNERSHIP COMMENT

If Stansted is rejected as a suitable airport for expansion it leaves only a few stark choices for the expansion of capacity in the south-east: either build a new airport, which will be highly controversial, hope that Heathrow meets is emission control targets by 2011, which seems increasingly unlikely, or expand Gatwick. Gatwick is a key driver for the south-east economy and its expansion would be good news for Brighton & Hove and the rest of the region. Any cross subsidy of Stansted from Gatwick would not meet with the approval of the business community in the Gatwick/Brighton & Hove area.


Read related items on:
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British Airports Authority
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