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Thursday, October 12, 2006

Heathrow and NW Europe

I made another set piece speech today at the Thames Property Forum held at Heathrow. Many of the points made in this speech are drawn from my speech to the British Airports Group on the 4th October but there is less on the environment and more on the position of SE England and Heathrow in relation to NW Europe.

1. In my comments this morning I want to talk about the importance of Heathrow to the region surrounding the airport which includes the Thames Valley and West London. I shall refer to that as the Heathrow region. I think everyone knows that Heathrow is very important to London and to the British economy but it is absolutely vital to the Heathrow region. There are 70,000 jobs on the airport and around 100,000 dependent on it - many of them represented by companies in this room. To put that total figure of 170,000 in perspective it is only slightly less then the number of people employed in the British coal and steel industry before its collapse in the 1980’s. The prosperity of this region is in very large part dependent on Heathrow. Many companies locate here because of Heathrow. I first became concerned about the future of Heathrow in 1999 when I warned in a Parliamentary question that Heathrow could collapse like the London docks unless we addressed the issue of expansion - but expansion in the context of modernisation and greater sustainability. Some people accused me of scare mongering. Now that Munich has overtaken Heathrow in the number of destinations served pushing us into fourth place in Europe people are beginning to pay attention. Soon Milan, Rome and Madrid will overtake us pushing Heathrow into eighth position in Europe. Ten years ago people would not have believed that was possible. When the Dubai international hub gets into its stride Heathrow will be squeezed again. The current security restrictions on Heathrow are pushing increasing numbers of passengers to Amsterdam, Frankfurt and Paris. It will not be easy to get those passengers back again. Currently you can fly to more British regional cities from Amsterdam and Paris then you can from Heathrow. 21 from Amsterdam; 19 from Paris; just 9 from Heathrow. There is a very real struggle to be the premier hub airport for NW Europe and right now Heathrow is in fourth position and slipping. That should be a matter of concern for all of us. 2. Yet people still say the future of Heathrow is safe because of the high volume of passengers. Remember this. In the 1960’s the London docks were beating all previous records in terms of imported tonnage. By 1980 every one of them was closed. Technical and economic change happens very fast. I now want to put this in the context of the rapidly developing global economy and most particularly the region of North West Europe of which we are part. Think of South East England – that region from the Wash round through Oxford to Southampton. There are about 21 million people in that area. One of the most densely populated regions in the world. It is one of the richest regions in Europe and it is a dynamic generator of wealth, prosperity and employment. The Heathrow region within that is critical to its dynamism. Hub airports are like high tech cities. They generate jobs at all levels and drive technological change. If we think of this region in relation to North West Europe then we are part of that equally dynamic and prosperous area which includes northern Germany, northern France, Belgium and Holland. We are on the western edge of that region and that means we need as many of the high tech drivers to locate in this region as possible. Heathrow and air transport are crucial to this regions continuing prosperity. London and the SE of England have many of the characteristics of a mega metropolis but too often we think of London as separate from the south east and the south east as separate from continental Europe. If you want evidence of this look at the various web sites dealing with high speed rail links and airports. I want to quote from just one. It deals with the expansion of Frankfurt airport and its infrastructure. It sums up the challenge we face and how far we are behind in the race to develop a transport infrastructure to service a modern economy serving a global market. This is the section I wish to quote – with apologies for the jargon! 3. “In terms of its transportation and economic significance, Frankfurt Airport has long been more than an airport in the classical sense focused only on air traffic. Two examples highlight this especially:  The development of the airport into an intermodal hub, intelligently networking air traffic with rail and road transportation.  And the gradual expansion of the airport to become a freight and logistics centre, offering complete logistics solutions beyond its core airfreight business. Thus expansion of Frankfurt Airport is not only aimed at the necessary increase in capacity but also has a qualitative dimension: Innovative services in the mobility, logistics, real estate development, facility management and retail fields are developed and offered here, which can be realized only in connection with the existing local airport infrastructure. By networking air and rail traffic Frankfurt Airport has been a trendsetter for many years. The keyword is multi-modal transportation concepts, the technical term for which is intermodality. The Frankfurt airport intermodal transportation hub is connected to all transportation systems: Rail, road, and even waterways. A large share of the fuel needed at Frankfurt airport is brought in via the latter. The airport rail station (today's regional station) went into operation below Terminal 1 as far back as 1972. AIRail Terminal In operation since May 1999, Frankfurt airports new high-speed train station has been trailblazing the future of the Frankfurt intermodal transport hub. The high-speed train station connects our airport directly to the European high-speed rail network. Some 150 inter-city express and long-distance trains serve our main line rail station every day. In 2004, the main line station handled some 4.2 million passengers. In financing the station, we put up some two thirds of the costs – an investment of well over €150 million. The AIRail Terminal is also the starting point for the new inter-city express high-speed line to Cologne, connecting the Rhine-Main region with the Rhine-Ruhr region in about one hour. With the further expansion of the high-speed rail network, Frankfurt Airport 4. will become one of Europe's key integrated transportation complexes.” (Ref: http://www.ausbau.fraport.com/cms/default/rubrik/6/6967.infrastructure@de.htm ) Similar developments are taking place in Amsterdam and Paris not to mention the rapidly expanding emerging global players like China, India and Brazil. Where is our response to such visionary concepts? Are we satisfied with a Heathrow development that is primarily focussed on Terminal Five, Crossrail, Airtrack and a possible third runway? These very important projects are good indicators that we are responding to the needs of the core infrastructure but if we can take a longer view and put Heathrow’s transport infrastructure into the wider national and European context then I think that would help ensure Heathrow’s competitive position in relation to the hub airports of continental Europe and beyond. Terminal Five, Crossrail and Airtrack already give us a pretty big agenda but I don’t think we should rule out other initiatives which have a longer term vision. I am thinking of ARUP’s proposals for a development that would link Heathrow into the high speed rail network and at the same time develop a hub arrival point that is designed to check the expansion of road traffic which is a large part of the problem affecting the area around Heathrow. If we are serious about Heathrow remaining a hub airport well into the 21st century then we not only need a third runway but we urgently need to think about a modern integrated transport system to support it even if the time frame goes beyond our present plans. So part of my aim now is to get the people in this region to see continuing change not as a threat but as an opportunity. 5. If we are to hold onto our prosperity in this region then we must make sure that we have a premier position in North West Europe. We have an enormous advantage in that London is and is likely to remain a key international financial centre. We also have the advantage I touched on earlier of a large and well educated population currently with high average incomes. But look at what is happening to the East of London up to the Thames gateway and north to Cambridge. There is a lot of government money and private investment going into that area as the continental economy becomes increasingly important. To the west of London the M4 motorway linking South Wales via Heathrow to London provides a ribbon of investment and prosperity that helps our region to stay ahead of the game. Now think of the South West of England. The rail line doesn’t touch Heathrow and the airports of the South West are deprived of effective links to the capital and to an international hub. That is why places like Exeter and Plymouth are so supportive of a third runway at Heathrow. The problem is made worse because there is no rail link on the South Wales to Paddington line either. Compare this to the situation of Frankfurt quoted above. This is why I refer to the ARUP proposal. I am not a lobbyist for ARUP but if we are to have the type of transport interchange available to Frankfurt and increasingly the other airports of Europe then we need at least to consider whether or not such plans are relevant and realistic for Heathrow. Ideally Heathrow would be linked in to the high speed rail network reaching out to other parts of the UK and to continental Europe. It would also have an arrival point that would ensure good interchange between road, rail and air – taking as much car traffic of the road as we can. Terminal five, Crossrail and Airtrack will all help the type of development I am talking about but let us not rule out at some stage a link into the high speed rail line. 6. It is also very important to create a better first image of Britain for people arriving at Heathrow. Terminal Five will go a long way in meeting that challenge and showing the world that our airports can compete with the best. There is one area of government where Britain lags behind Europe. Not everyone will agree with this but I have long held the view that lack of a regional government structure in Britain has inhibited the development of regions because there is no regional perspective of the type I am trying to describe. The French had no difficulty getting the high speed rail link through to the channel. They threw money at the region and it happened. The high speed train then turned into Puffing Billy when it reached the British coast just like Cinderella’s bad experience at the end of a good night out! Can we in the Heathrow region create a regional structure that helps us modernise and enhance the infrastructure that we all know is vital to continuing success? This is a hard question to answer with any confidence. The South East England Development Agency (SEEDA) provides a meeting point and has many interesting initiatives but stretching as it does from Oxford, via Hampshire to Kent it is hardly the organisation to focus on the need for the modernisation of Heathrow to make it a really attractive and modern hub airport with a the transport infrastructure of Frankfurt. I think one of the issues we in the Heathrow region need to discuss is how we can draw together all the expertise that we have in a way that enables us to modernise Heathrow and the surrounding region. The local authorities are focussed on their immediate area. That doesn’t mean they are totally unaware of the wider picture but it does mean they can’t give it the attention it needs. The same applies to MP’s. We do need the local councillors, MP’s and MEP’s to look at this wider picture. The task we face is too big for any one council or business group. We have to convince government, councils, business and many others that if we don’t make sure Heathrow and the surrounding area is an attractive and progressive investment area then we will loose out to the continental centres that have overtaken us in recent years. I was shaken when I discovered that Amsterdam Schiphol airport was advertising itself as London’s third airport. They 7. are watching us but I’m not sure that we are watching them or learning from their achievements. One other issue I want to raise in this context. The idea of locating a University of Aviation in the Heathrow region has been floated. I think that suggestion deserves very serious attention. It could be another magnate for further investment and it would certainly improve educational opportunities connected to the airport. The local population increasingly understand the importance of the airport to their future prosperity and the educational opportunities offered by a specialist university of the type envisaged would be a very welcome additional attraction. Finally I want to mention the increasingly important issue of climate change and aviation. I have seen climate change as a growing threat for many years. The scientific evidence isn’t absolute but it is now so strong as to tell us that if we were not to proceed on the basis of a need to reduce carbon output then we would be seriously irresponsible. So, as some people say to me how can you support the aviation industry? Precisely because I have been concerned about climate change for some years I came to the conclusion that only a coherent policy involving individuals, business, government and all other sectors of society have to have a common agenda for the reduction of carbon emissions. Lecturing or hectoring people will not work and the danger is that people lurch between apathy when they think the problem is too big for them to address and panic when they are told that we are on the edge of runaway global warming. When people say that aviation is the fastest rising cause of greenhouse gasses – an assumption I don’t wish to challenge here but simply to observe that it might be useful to look at the way we measure and define industries – I know that it is not enough to point out that (particularly for British aviation) it is from a low base in terms of total carbon emissions. UK domestic and international aviation accounted for six per cent of UK man-made CO2 emissions in 2004 and 0.1% of global CO2 emissions. 8. But what I really want to ask them is what they are suggesting we do about it? Are they saying we should stop flying, or ration flying? Are they simply asking for higher taxes even though the evidence that higher taxes, unless truly punitive, would not slow the rate of increase in any significant way? Getting people to change their behaviour is famously difficult. As I understand it most people in the aviation industry would readily agree that climate change is a serious threat. But perhaps because aviation is driven by science and technology they recognise that the last thing we need in the face of such a challenge is panic reactions. We could close down the British aviation industry or seriously restrict it and yet have relatively little effect on the overall problem. Similarly we could close down or severely restrict the motor industry or any other rapidly developing service or manufacturing sector of the economy in the vain hope that we would overcome the problem in that way. We could, as a small minority appear to want to do, return to a preindustrial society. That would be a blind and foolish mistake particularly for the country that played such a key role in the scientific and industrial revolutions. So I want to end on this note. None of us can afford to be complacent about this. It isn’t just aviation that has to find ways of reducing carbon emissions. It is all sectors of industry and commerce as well as in our own private lives. The more we do that the easier it will be to keep Britain in the forefront of aviation. The problems you are addressing at this conference are in part a result of some of the issues I have talked about this morning. They are problems but they are problems which, with vision and determination, contain within them great opportunities. This region has always been a region of dynamic change – let’s keep it that way. Speech to the Thames Valley Property Forum Hilton Hotel, Heathrow 12.10.06

Dear Lord Soley,

I just read in today's Sunday Times of the Arup idea to extend the new St. Pancras high speed line westward to Heathrow. As a seasoned Heathrow traveller I was so struck by this idea that I have just this minute penned an email to Number 10 encouraging the Prime Minister to pick up this project immediately. I Googled the subject and came up with your article. It seems to me that, unless you are stuck in the BAA 3rd runway thinking groove, that this Arup concept is very clearly the way to go. Your speech above is an excellent situation analysis. Doing nothing is not an option and it is unclear that the 3rd runway at Heathrow will work. We have reached the time when we need to re-engineer the transport paradigm.
The Arup concept which includes the notion of extending high speed lines northwards to Birmingham and Scotland would indeed transform Heathrow into a true multi-mode transport hub with the North and West of England as a natural hinterland. The project has very green credentials, would create lots of jobs, would maintain the St. Pancras momentum and would give Heathrow a clear strategy framework for its future operations. If the St. Pancas high speed line is simultaneously extended North along the East Coast then the entire nation would effectively be re-wired with a 21st century transport network. Importantly, Britain would have a symbolic, visionary and practical project which would unite us and cement our links with Europe with no loss of connectivity wih the US or the old Empire. Washington to Gare du Nord in more or less the same time as flying via Roissy Charles de Gaulle would be no contest!

This is an exciting prospect!

More power to your elbow

best regards
Paul Padley

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