A clutch of reports

1st August, 2008

A whole clutch of reports about or relevant to aviation have appeared in the last couple of weeks. AEF has not been able to study and comment on them in any detail, but here is an outline.

‘Generated users benefits and Heathrow expansion: understanding consumer surplus.’

By the Stockholm Environment Institute. This study, commissioned by Friends of the Earth, looks at the method used by the government to calculate the economic benefits of expanding Heathrow. It is also relevant to other airports.

‘Consumer surplus’ is a rather esoteric economic concept, and the report concludes that calculation of consumer surplus is subject to so many uncertainties and assumptions that it is an unsound justification for an expansion which has so many clear-cut and well-quantified downsides.

‘Aviation emissions cost assessment 2008’

This report by the Department for transport follows a consultation – see earlier story, and AEF’s full response to the consultation. See also this irreverent but pertinent critique (Word doc, 3 pages) by the AirportWatch economics group.

The report assesses the cost of climate-changing (greenhouse gas) emissions and concludes that, according to the assumptions used (‘scenario’), the cost of emissions is £0.9bn to £3.9bn pa. The ‘central case’ is £1.8bn. The report compares these costs with the present level of APD (Airport Departure Tax) and AVGAS (tax on fuel for propeller planes) and concludes that tax “covers” the cost emissions with £0.8bn to spare for the central case.

Our view is that the comparison is irrelevant and misleading – there is no reason to consider that APD or other taxes should only cover climate change costs. Other ‘external costs’, eg noise, air pollution, destruction of communities, etc ought to covered and, furthermore, aviation should make a contribution to general government revenues, just as other sectors do.

Report on UK’s carbon emissions

This was commissioned from the Stockholm Institute by DEFRA and was reported on national news on 1st August. The report shows that a misleadingly rosy picture is being painted of Britain’s emissions by the government.

While emissions reported to UNFCCC (United Nations Framework Convention on Climate Change) fell by 5% between 1992 and 2004, emissions attributable to the UK actually increased by 18%. The difference is due to, among others, international aviation being omitted from the UNFCCC returns. Another major factor is increasing imports of goods whose manufacture generate much CO2. (Under UNFCC conventions, such goods are counted against the country of manufacture instead of the country of consumption).

For some more information see short article.

‘Aviation services and the City’

This was commissioned by the City of London Corporation (ie City council) from York Aviation. While the corporation’s comment was cautious, the report was seized on, predictably, by the London Chamber of Commerce in support of a third runway.

The report argues that air travel is important to (some) businesses in the City. Few would doubt that, but it requires a tortuous chain of logic to go from there to saying we need a third runway for national economic reasons. We have not studied the report to see how it takes account the fact the 60% of Heathrow’s traffic is already leisure, that 30% is transfer traffic (ie no use to businesses in London) and that the great majority of traffic resulting from a third runway would be leisure (government consultation data). However, we note that play is made of a survey of London business. Just 44 business responded, accounting for 38,000 trips. That is, about 1 tenth of one percent of Heathrow trips. This tiny self-selected sample is no basis for reaching conclusions on Heathrow expansion.

Birmingham runway extension good for health!

Birmingham International Airport published a report on 10th June insisting that far from harming the quality of life for local people, a planned £120 million runway extension will have an overall benefit on health. Liverpool University carried out a detailed study. However, they declined to produce an easy-to-read summary so the airport commissioned RPS Consultants to put across the message.

This is another example of a tortuous and contrived chain of logic to support airport expansion. The report claims that lengthening the runway would create 20,000 jobs. This would increase societal health because employed people and richer people are, on average, more healthy than unemployed and poor people. Health impacts due to air pollution, noise, community severance, etc are considered negligible, while the global effects of climate change are ignored.

‘The economics of Heathrow expansion’ (July 08)

This report, written by CE Deflt for HACAN, examines the economic case for expansion of Heathrow and concludes that estimates, especially from Oxford Economic Forecasting (OEF), greatly exaggerate the benefits and ignore the disbenefits. For more information see earlier article.