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Runway debate: The Commission’s analysis and the direction of travel

11 Nov 14 All three proposals being considered by the Airports Commission to increase runway capacity in the southeast have significantly underestimated their costs to build.

That’s according to the Airports Commission’s latest consultation document, published today.

Here we present a few key extracts from today’s report that might offer clues to what final recommendation the Commission might make next summer.

We also add our own interpretation…

Heathrow Airport North West Runway

The Heathrow Airport North West Runway scheme, put forward by Heathrow Airport Ltd, proposes the building of a new full length (3,500m) runway to the north west of the current northern runway at Heathrow.

Key comments from the Airport Commission’s assessment:

“The scheme is estimated to cost c. £18.6 billion including construction of the new runway, a new terminal and all other required airport facilities. This is higher than Heathrow Airport Ltd’s estimate of £14.8 billion (excluding £800m of surface access costs), reflecting in large part differing views of optimism bias and differing construction profiles. These costs are higher than for either of the other schemes, mainly because of higher land acquisition and transit system costs.

“One key area where detailed planning would be needed is the proposed removal and replacement of the waste energy plant. The planning and construction of a waste energy plant is a substantial exercise in its own right, whose timescales are not substantially shorter than the delivery of new runway airport infrastructure. The tunnelling of the M25 will also provide a substantial engineering challenge, although the Commission’s current analysis suggests that it is deliverable in the timescales available.”

“The proposed extension would largely impact four villages in the Heathrow Villages ward of Hillingdon, to the north and west of the current airport. The Colnbrook with Poyle ward of Slough, situated to the west, would also be affected. A total of 783 residential properties in Harmondsworth, Longford and Sipson and are likely to need to be demolished. Additional residential properties could also be lost depending on detailed route and construction design of surface areas. Other properties will become much closer to the revised airport boundary. The main ingredient of Heathrow Airport Ltd’s proposed mitigation is compensation, with compensation for homes lost at 25% above un-blighted market value, as well as an extension of the current community investment programme and re-provision of community services. Despite these mitigations, at the very local level it is difficult to see any existing community cohesion being maintained, unless entire communities and their facilities could be moved en masse at the same time.”

The Construction Index says: The ‘fat cigar’ option – bugger the cost, bugger the community, pay off the little people, big is best. Political poison.

Heathrow Extended Northern Runway option

The Heathrow Airport Extended Northern Runway scheme proposes an extension of the existing northern runway to the west, as proposed by Heathrow Hub Ltd. This will result in two northern runways, each 3,000m in length, with a 650m safety area in between, enabling it to be operated as two separate runways.

Key comments from the Airport Commission’s assessment:

“The scheme is estimated to cost c. £13.5 billion, including the runway extension, a new terminal and all other required airport facilities. This is higher than Heathrow Hub Ltd’s estimate of c. £10.1 billion, reflecting in large part differing views of optimism bias and differing construction profiles. These costs are lower than for the Heathrow North West Runway scheme but still substantially higher than those of the Gatwick Second Runway scheme.

“The delivery risks associated with an extended runway at Heathrow Airport are substantial, but could be managed.

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“An issue the Commission has considered carefully given the novelty of the proposed runway design relates to any concerns that may arise in relation to the safety of the scheme. On the basis of the available evidence, the Commission believes that the proposed runway option can be operated, and proven to be operable, in a safe manner.

“Heathrow Hub Ltd has not included areas of land within the airport boundary for commercial development. The Commission considers that the expansion of the airport is likely to drive the need for more commercial development locally for those business that most value ease of access to the airport. If this space is not within the airport boundary it could either limit the opportunities for these businesses to develop, or this development will occur elsewhere in the local vicinity, with possible negative environmental and community impacts. Heathrow Hub Ltd believes that any such constraint is positive, encouraging the area to move up the value chain by incentivising lower GVA businesses to locate away from the airport.

“Many nearby local authorities strongly oppose expansion, as do a number of community organisations, although regional business groups are supportive.

The Construction Index says:  Possibly too radical but could come through as the compromise option. Would stand a better chance if Heathrow Airport Ltd dropped its own proposal and swung behind it.

Gatwick Airport Second Runway

A proposal to build a new runway south of, and parallel to, the current runway.

“The Airports Commission’s view of the total cost of building the airport infrastructure to be capable of handling up to 95 million passengers is £9.3 billion with risk and mitigated optimism bias applied. However, in scenarios seeing lower levels of demand, it is possible that there would not be sufficient passenger growth before 2050 to require the construction of the final phase of infrastructure. In these scenarios, the cost to build to 2050 would be £7.4 billion, with risk and mitigated optimism bias applied, though this price would increase if subsequent demand growth over the course of the appraisal period justified the completion of the new infrastructure.”

“The construction of a second runway at Gatwick, together with a third terminal and all associated infrastructure, is estimated to cost up to £9.3 billion. This is higher than Gatwick Airport Ltd’s estimate of £7.4 billion, reflecting in large part differing views of optimism bias and differing construction profiles. These costs are, however, significantly lower than those of either of the Heathrow expansion schemes, both in quantum and in terms of cost per additional ATM of capacity.

“The Gatwick Airport Second Runway scheme has been designed in such a way that the supporting infrastructure can be constructed in phases in line with increases in passenger demand. This spreads the cost over a longer period and allows for flexibility to manage differing levels of demand. In the Commission’s lower end scenarios, the final phase of construction may not be required to accommodate passenger demand before 2050. This would reduce the cost over this period by just under £2 billion.

“The delivery risks associated with the Gatwick scheme are assessed as relatively low, and the Commission considers an opening date in 2025 achievable.”

“Gatwick Airport Ltd’s approach involves phasing the delivery of the scheme, with the runway being delivered first and the terminal and associated infrastructure being delivered as demand requires. The Commission considers the remote pier facility built as part of the intermediate phase of this plan may produce a worse passenger experience than is currently the norm at Gatwick. Gatwick believe that passenger experience can be maintained in the remote facility.”

“Local opinion appears to be mixed with opposition from local community organisations and some local authorities, but support from others, subject to the provision of adequate environmental mitigation, and from regional business organisations.

The Construction Index says:   Combination of lowest cost and least political opposition count strongly in its favour, despite the prospect of Gatwick becoming even more grim for passengers. Who said air travel had to be enjoyable?

To make your own mind up, download the Airport Commission's detailed assessments at https://www.gov.uk/government/consultations/increasing-the-uks-long-term-aviation-capacity

Got a story? Email news@theconstructionindex.co.uk

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