PAPER I An expanded Gatwick Airport could be the UK Governments ‘White Elephant’ There is no business case for expansion and the taxpayer’s bill for essential off airport infrastructure would run into billions, whilst an expanded Gatwick would destroy prosperous commercial and agricultural areas of the South East.

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Gatwick Airport said: "The Davies Commission work was based on a set of traffic forecasts that saw Gatwick get to 40 million passengers in 2024. We repeatedly said to the Commission 'We're there already, your forecasts are nearly 10 years out”.* ��� The independent and expert Airports Commission considered this and strongly disagreed, stating that Gatwick’s argument was of “limited relevance”. It requires increased air traffic movements to justify a new runway and according to the CAA Gatwick saw only a 0.5% increase in 2015. Heathrow, which was apparently already full, also saw an increase in passenger numbers in the same period. It may therefore be concluded that aircraft are getting larger and thus fewer runway movements are necessary. Larger planes mean that less CO2 is produced, which is better for both the planet and the aviation industry. In making its case, GAL also focuses on individual figures rather than looking at long-term trends. For example, it refers to the 2.7 million increases in passenger numbers seen in 2014 to support its argument that an expanded Gatwick would grow faster than we have forecast. In fact, the 2014 increase in passenger numbers at Gatwick was unusual. The previous year, for example, passenger numbers increased by just 1.2 million and average growth between 2004 and 2014, even with spare capacity available, was less than 0.7 million a year. In the 13 years between 2000 and 2013, passenger numbers grew by an average of just 260,000 per year, less than one percent. Only in 2014 and 2015 did traffic growth increase significantly at Gatwick, but this is more likely a result of (a) constraint at Heathrow, (b) low fuel prices and (c) strong UK economic growth.

2000 32,068 2001 31,181 2002 29,627 2003 30,005 2004 31,466 2005 32,775 2006 34,163 2007 35,216

2008 34,205 2009 32,392 2010 31,375 2011 33,674 2012 34,235 2013 35,444 2014 38,103 2015 40,261

Similarly, the differences between the Commission’s and GAL’s short term estimates of passenger numbers are of limited relevance, as both see the airport’s single runway reaching capacity before 2020, with Stansted still not full. Moreover, Gatwick has achieved significant growth in one year in benign economic conditions (UK growth + low unit fuel costs). Over the long term, it hasn’t been as successful, particularly during years of downturn. In the last recession, passenger numbers at Gatwick dipped by 11% and took 6 years to recover. By contrast, Heathrow’s numbers dipped by 3% and took 4 years to recover. Gatwick is not recession proof and is the risky option given the uncertain economic times ahead as it is reliant upon spare money the consumer has to spend on holidays.

An expansion forecast published by the Davies Commission suggested that by 2050 Heathrow would serve 133 long-haul routes compared with 131 at Gatwick. "It really doesn't matter if you expand Heathrow or Gatwick, the UK will massively benefit from a connections point of view," Said Mr Wingate, CEO of Gatwick. ������ This is not true. The Airports Commission forecasts that at most, Gatwick could serve 21 daily long haul destinations (the majority of which were leisure routes). Heathrow, by contrast, would serve 75 daily long haul destinations. (Table 6.1) More importantly, the Airports Commission estimates that at most Gatwick will see a growth of 3 million long haul seats by 2040, whereas Heathrow would see a growth of 16 million. (Figure 6.2). The Airports Commission final report is the most detailed study into airport capacity in history. It was independent; it employed experts in every field who travelled the world looking at best practice; it had a £20m budget of taxpayer’s money and it took three years to complete. The Commissions conclusion was unambiguous and unanimous, and yet Gatwick continues with the same spin that the Commission considered and dismissed. Gatwick, the commission said, “was well placed to cater for intra-European leisure flying, but is unlikely to provide as much of the type of capacity which is most urgently required: long-haul destinations in new markets”. Gatwick flights are mainly short haul with some 91% of its business being with European airports, Spain being the number one destination. Currently, Gatwick is not reaching the developing markets that are needed by the country, but instead is exporting money out of the country and out of the UK in holidaymaker’s wallets and purses, and via their credit cards.     The few long-haul flights that Gatwick handles, just as with its short haul ones, are holiday trade only and low cost tickets operated by low cost airlines that bring the least into the UK economy. It is actually cheaper to fly to Europe than take the Gatwick Express to London. Less than half of the UK population fly and yet they subsidise the industry, as it does not pay VAT or duty. Should the country vote for Brexit, the effect on airfares will depend on the extent that a post-EU Britain chooses to replicate its existing access to the EU single market in aviation (and in other sectors). Gatwick is not supported by businesses, large or small. The major airlines do not support it, nor do Chambers of Commerce outside of Sussex. All twelve local MPs are opposed to it, and no local County Councils, Borough or District Councils support its expansion. Gatwick is now surrounded on all sides by more protest groups than ever before in Kent, Surrey and East and West Sussex. Emma Jones - one of the Government’s business ambassadors and founder of Enterprise Nation - had previously appeared in Gatwick press releases and websites. January 2016 she has said, "Expanding Heathrow is a massive opportunity for all of the UK’s businesses – from the largest right down to the smallest. With 40 new long-haul routes to fast-growing markets and improved domestic connectivity, expansion will enhance the UK’s productivity and drive growth by boosting exports.’

References - • Gatwick Airport Daily Mail 8th February 2016 • Airports Commission final reports • Gatwick Airport Media centre • CAA figures for aircraft movements

The Airlines Voices that are being ignored that opposed Gatwick expansion:

So where is the business case for expansion? The airline responses are vitally important, for it is their support that would be crucial for an expanded Gatwick. Their response focused on a number of areas, the airlines addressing them on a commercial basis: § Need to maintain and develop a single hub airport § Both legacy (network) and Low Cost (LCC) airlines see no business case for a runway at Gatwick and lend no credence to the concept of split or competing hubs. § Indeed in the case of New York, the single hub status has recently been reinforced with the announcement by United Airlines that it will move its remaining stand-alone JFK services to Newark where its hub is located.

To connect with the rest of the world - The airline responses emphasise that the strength of a hub status is a function of the ability to tap into both point to point and connecting markets. They see the connectivity which is offered by a hub and which can be best developed at the UK’s hub airport as being a key element in their thinking They make no mention of Gatwick. Areas served by airports - Gatwick's catchment area is seen not only as being small, but also as attracting predominantly leisure traffic, which is more price sensitive and so generates lower revenues. Surface access - airlines highlight recognition that Heathrow has the best surface access infrastructure as well as scope to improve it to support expansion. Conversely they express concerns about the limits on Gatwick's surface access. Airlines commercial stability - Unfavorable impact of lack of business travel would seem to have a price as airlines refer to Gatwick as the ‘graveyard for airlines’ eg Oasis, Laker, Braniff, PEOPLExpress, Zoom FlyGlobeSpan, and DanAir Norwegian Airlines based at Gatwick is expanding the long haul model, but announced record losses of - 1049.8m NOK (£84M) for 2014 and its share price has slumped by 30% since August 2015. Record low oil prices would seem to be keeping the Norwegian business model afloat. Norwegian CEO Bjorn Kos said: “We enter 2016 with favourable fuel costs …………We see a good demand for quality flights at affordable fares, but the unpredictable political decision to introduce passenger tax in Norway is creating an uncertain situation in this market” So it would seem that the UK leisure traveller is financially beneficial for Norwegian Airlines than their home market.

Individual Airline Submissions British Airways submitted - Customer Profile at Gatwick BA views Gatwick as "... primarily a short-haul leisure airport which has struggled to grow the number of long-haul destinations since BA scaled back its previous base operation there..."1 EasyJet also gave evidence to the Commission describing the leisure focus of their customers at Gatwick and the witnessing of the numerous long haul airlines who have either waited, sometimes for years, to obtain Heathrow slots or have consciously moved services from Gatwick to Heathrow eg Asia, Vietnam. UK Regional Connectivity - BA explains the interaction between short haul routes into Heathrow and long haul " Over 40% of passengers on BA’s Heathrow domestic services are transferring to an international flight."2 The strength of BA's hub at Heathrow affords a wide range of global connections, which is not the case at Gatwick. In addition the high volume of connecting traffic supports a higher frequency of operation on domestic services. Surface Access - BA offers support with improving surface access at Heathrow but draws attention to the fact that Gatwick "... will continue to depend heavily on one rail line and one motorway."3 Virgin Atlantic submitted – Virgin is clear that there is only room for one hub airport in the UK and that wherever capacity may be added, " Heathrow will continue to remain the UK’s only hub airport. "4 Adding under Airline Business Strategy - It made a conscious choice to move its non-leisure services from Gatwick to Heathrow when the governing rules made it feasible. Virgin raised the issue of business travel and how time is a sensitive issue for business travellers, affirming that neither Gatwick nor any other London airport can act as a substitute for time sensitive customers. Gatwick’s number one customer did not see Gatwick as the route for business growth. EasyJet Submitted - Area Served by airports - EasyJet assesses, "The two-hour drive time catchment for Heathrow...(as being)...25% larger than Gatwick’s and (containing) an additional 6 million people."5 They gave sound evidence to the issues and barriers with Gatwick – " The barriers to entry at Gatwick are significantly lower than Heathrow, with slots either obtainable for free, or for relatively small sums compared to Heathrow slots."6

                                                                                                               1  British  Airways  response  to  the  Airports  Commission  Public  Consultation  on  new  runway  capacity  in  the  South  East  February  4th  2015  p6  2  British  Airways  response  to  the  Airports  Commission  Public  Consultation  on  new  runway  capacity  in  the  South  East  February  4th  2015  p8    3  British  Airways  response  to  the  Airports  Commission  Public  Consultation  on  new  runway  capacity  in  the  South  East  February  4th  2015  p18  4  Virgin  Atlantic  Response:  Airport  Commission  final  consultation  on  shortlisted  options  for  new  capacity  p16  5  easyJet  response  to  the  Airports  Commission  consultation  p9  6  easyJet  response  to  the  Airports  Commission  consultation  p  11  

" At Gatwick EasyJet purchased 25 slot pairs from Flybe for £20m in 2013... There have been several slot sales at Heathrow where the value of a single slot has been at least £20m..."7 This example illustrated by EasyJet clearly showed the Commission that airlines do not value Gatwick as the important place to be based. The Board of Airline Representatives in the UK submitted that in favour of Heathrow and gave the reasons being close proximity to markets, airline alliance communities and the greatest surface connectivity to the London Underground, road and rail, once again recognising the ‘Achilles hill’ of Gatwick, one road and one railway line that can’t be improved. What was a major blow for Gatwick’s hopes of expansion was they went on to submit that, " Despite the existing capacity restrictions and higher charges at Heathrow, long-haul network airlines and alliances have shown no propensity for moving services from Heathrow to Gatwick, or for any comprehensive operation split across both airports...... It is extremely unlikely that long-haul network carriers currently at Heathrow would move operations to an expanded Gatwick, but would more likely continue with their current strategy to evaluate potential at other major hub airports."8 A submission was received by the Commission from OneWorld group of airlines stating, "oneworld is the only global airline alliance with significant hub operations transferring passengers among member airlines at Heathrow …………… thanks to support from connecting traffic and on the need for a mix of long and short haul services to maximise opportunity for connections.” Gatwick is placing much on Norwegian airlines growth but, as previously stated Norwegian Airlines announced record losses of - 1049.8m NOK (£84M) for 2014 and its share price has slumped by 30% since August 2015. It would seem that only the current record low oil prices is keeping the Norwegian business model afloat. Could they be joining the Gatwick graveyard especially if Gatwick can’t afford the fixed landing fees? London has more airports surrounding it than New York yet Gatwick would seem to be in the wrong location, it has very poor surface access, the railway aspect of which cannot be improved. There is no Underground connection and only one Motorway.

Gatwick can never be a hub airport. This is Gatwick Airport 2nd February 2016 with a deserted runway

                                                                                                               7  easyJet  response  to  the  Airports  Commission  consultation  p  12    8  BAR  UK  response  to  Airports  Commission  public  consultation  Assessment  of  proposals  for  additional  runway  capacity  at  Gatwick  and  Heathrow  airports  p3  &  6  

Will Gatwick become another ghost airport like at Ciudad Real as the airlines and business do not support it? http://www.telegraph.co.uk/travel/news/Spanish-ghost-airport-up-for-sale/

The CAGNE conclusions from these submissions is that airlines do not support Gatwick expansion due to: • Lack of diversity in passengers • Lack of scope of catchment areas, Gatwick not being used by travellers from west • That slots are still readily available today at Gatwick illustrates the lack of desirability of them • That key slots can be obtained free or at low cost emphasises the lack of their desirability • That Gatwick has very poor surface access • Airlines see Heathrow as the hub airport for growth which includes EasyJet

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