Warning on airport expansion costs
Runway expansion plans could be far more expensive than those bidding to operate them have estimated, the Whitehall-appointed Airports Commission said today.
A new runway to the north-west of Heathrow would cost around £18.6 billion as opposed to Heathrow Airport Ltd's estimate of £14.8 billion, the commission said.
A new runway at Gatwick, estimated by Gatwick Airport Ltd to cost £7.4 billion, would cost an estimated £9.3 billion, the commission added.
And the third option shortlisted by the commission - an extension of the existing northern runway at Heathrow - would cost an estimated £13.5 billion, the commission said.
This is higher than the £10.1 billion estimated by the scheme's promoters, Heathrow Hub, a consortium which includes former Concorde pilot Jock Lowe.
The commission also estimated that the increases to airport costs, based on the cost per passenger, would be higher as the result of each scheme than those forecast by the bidders.
The cost estimates from the commission came as it published, for public consultation, its latest assessments of the three schemes.
The commission, chaired by Sir Howard Davies, is due to make its recommendation on which scheme should go ahead when it delivers its final report in summer 2015.
Speaking on the BBC Breakfast programme today, Sir Howard said: "On the costs, we are cautious people and we have applied a margin for luck if you like, in that the experience of large infrastructure projects tells us that there is always a degree of optimism bias in the plans put for forward by the proposers.
"Now that may not always be their fault, it's just that you come across obstacles you didn't expect to find once you start to construct a big project.
"So part of the difference, it's not that we are fundamentally disagreeing with the way that they have put together their budgets, but we just think the reality is that they are likely to become rather more expensive."
Launching the consultation today Sir Howard said: "Since our interim report last year we have undertaken a huge amount of work. We have carried out a thorough assessment, across a comprehensive range of subjects, looking at the benefits and impacts of each proposal.
"We have not yet taken a view on which proposal strikes the most effective balance between the assessment criteria. It is important first that we provide an opportunity for this evidence to be examined, challenged and improved. This consultation gives everyone with an interest in the issue of airport expansion that opportunity."
The plan put forward by Heathrow Airport Ltd envisages a 3,500m runway to the north-west of the airport which could mean the estimated number of passengers rising to between 132 million and 149 million a year by 2050.
The commission said 784 homes might have to be demolished and there could be further housing loss. Aircraft movements would rise from the current 480,000 a year to 740,000.
Expansion could lead to as many as 112,400 more jobs in the area by 2030 than at present but the estimated 70,800 new homes that might be needed to accommodate the extra workers could present challenges to local authorities.
The commission said there would be noise and air quality problems with the new runway while expansion would have a negative impact on landscape, heritage, biodiversity and water.
The commission also expressed concerns at the financial implications for Heathrow of such an investment.
But the commission concluded: "Expansion at Heathrow is likely to result in improvements in quality of life at national level, due to the improved connectivity and its attendant economic and social benefits."
On the Gatwick scheme, put forward by Gatwick Airport Ltd, the commission said the plan "may produce a worse passenger experience than is currently the norm at Gatwick" due to the intention to deliver the runway first with a new terminal and associated infrastructure being delivered as demand required.
The new runway would be built south of the present runway, and there would be a new terminal building between the two runways with a capacity of about 50 million passengers a year, slightly higher than the combined capacity of 45 million of the current North and South terminals.
A total of 168 homes would probably have to be demolished and further residential properties could also be lost, the commission said.
The commission said: "The delivery risks associated with the Gatwick scheme are assessed as relatively low and the commission considers an opening date of 2025 is achievable."
Expansion would mean an increase in annual flights from 280,000 at present to 560,000.
On the Heathrow Hub plan, the commission said it assumed that the hub scheme would be purchased, delivered and financed by Heathrow Airport Ltd, with the commission listing the same financial concerns as it in its assessment today of Heathrow's own north-western runway scheme.
The commission said delivery risks associated with an extended runway at Heathrow were "substantial" but "could be managed".
The Hub plan would see the number of annual flights going up from 480,000 to 700,000.