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Competition is invariably a good thing — even over a project Britain’s been failing to build since 1968. So, it’s handy that Surinder Arora, the founder chairman of the eponymous hotels and properties group, is at least providing an alternative to Heathrow’s £49 billion third runway extravaganza (report, Business).
For starters, his Heathrow West scheme, north and west of the airport, isn’t flying in at such an insane price, even if up to £25 billion for a new strip of tarmac and a sixth terminal is still a dizzying sum. There’s a good reason for the lower price, too: his runway’s shorter, 2,800 metres versus Heathrow’s 3,500. And, thanks to that, there’ll be no need to stick all 12 lanes of the M25 in a tunnel, so the planes can freak out drivers by landing on top of it.
As Arora’s submission puts it, not messing around with the M25 has the “critical advantage” of “significantly reducing engineering complexity, lowering construction risk and eliminating what is widely regarded as the single greatest threat to the viability and deliverability of the project”.
Sure, listen to the Heathrow boss Thomas Woldbye and the M25 boondoggle can be done without disrupting existing traffic and then “switched on overnight”. But no one sane believes him — look at the junction 10 interchange with the A3. And, besides, Woldbye’s record on nocturnal capers isn’t great. They include being sparko for a substation fire when the entire airport was switched off overnight.
Anyway, back to Arora. He’s brought along Bechtel, whose recent airport projects span Doha, Sydney and Riyadh, to deliver the scheme and the operator of Singapore’s Changi airport to run his new terminal: two credible outfits. His advisory board also includes knowledgeable blasts from the past — Sir Rod Eddington, the former British Airways boss, say, or Mike Clasper, the ex-BAA chief, even if it’s a mystery what Lord Grade of Yarmouth is doing chairing it. Is he planning to turn the project into a reality TV programme?
Still, does the scheme make sense? Well, Arora cites analysis from the airport’s biggest customer — BA owner IAG — showing that a 2,800-metre runway, adding capacity for another 260,000 flights a year, could handle “all landings, all take-offs by narrowbody aircraft, and 89 per cent of take-offs by widebody aircraft”. So, nearly all present traffic. Isn’t that long enough? And not least when future growth will be from smaller point-to-point aircraft anyway: an issue the Airports Commission failed to grasp with its hot air, hub-obsessed report in 2015. Transfer traffic is falling at Heathrow. Even it forecasts it will only be a fifth of the total by 2031.
In short, wouldn’t a cheaper, shorter runway do the job — still lifting annual capacity by about 65 million passengers to 150 million? Well, there are drawbacks. It would require demolishing more homes: an issue squirrelled away in Arora’s 193-page report. It reckons there’d be a net 135 more than the 752 of Heathrow’s plan, with Sipson village the main casualty — even if local residents think both their figures will be far higher. Heathrow also says a shorter third runway will cut operational flexibility, so increasing noise as it will allow fewer periods of downtime for the locals: a claim Arora calls “complete nonsense”.
It’s nice of him, too, to provide another option, while emphasising that his scheme has “got nothing to do with enhancing land values” — a jibe from critics, given his group’s existing ownership of land and assets around Heathrow.
Still, even if his plan may make more sense than Heathrow’s own, it’s still crazily complex and pricey: more than twice the airport’s £21 billion regulatory value, so implying a doubling of airport charges. And particularly when, for £8 billion, you could add capacity for 100 million passengers at Gatwick, Stansted, Luton, London City and Manchester, with far less hassle.
Isn’t it a bit odd, too, that all the debate is over a third runway before Heathrow’s even been allowed to maximise the two it’s got: the result of it being capped at 480,000 flights a year. Maybe Rachel Reeves hasn’t noticed but raising that would be a far quicker and cheaper way to put some growth on the UK’s runway.
Stamp collection
What a surprise. No sooner is there a Czech in the post than things start looking up for International Distribution Services, the snappily-named owner of Royal Mail (report, Business).
The group has just delivered its first full-year figures since Daniel Kretinsky completed his £3.6 billion takeover at the end of April. And guess what? Profits are up from £114 million to £429 million pre-tax, with even Royal Mail making a sort of profit for the first time in three years: an adjusted operating one of £12 million. Even better, Kretinsky had nothing to do with it. The figures are up to only March 31.
So far, Kretinsky is bringing more harmonious industrial relations, more postal lockers and the promise of extra investment. But his purchase was also nicely timed for two things: the fruits of the turnaround under Martin Seidenberg, who’s still chief executive; and a gift from Ofcom of as much as “£425 million” a year, on its own maths, after it allowed fewer second-class letter deliveries. Put that on five times earnings and that’s up to £2.1 billion extra for Kretinsky. Already, the plc board, under chairman Keith Williams, looks to have sold up for a second-class price.
Budget back-up
Two views on the PM’s exciting deckchairs-Titantic routine. Either it’s odd he’s so keen to bring the Treasury chief secretary Darren Jones to No 10, given the part he’s played in some of Rachel Reeves’s famously backfiring decisions, or he’s actually lining him up to replace her.
alistair.osborne@thetimes.co.uk
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