Aviation: London Heathrow Airport

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Content: Aviation: London Heathrow Airport
Standard Note: SN1136
Last updated: 14 January 2014
Louise Butcher
Business and Transport
This note looks at how Heathrow has developed over the past twenty years or so, including the construction of Terminal 5; the aborted proposals for a third runway and a sixth terminal; and plans for the airport's future. In 2009 the Labour Government confirmed their support for a third runway and a sixth terminal at Heathrow, should the airport's owners put in a planning application. No application was made before the 2010 General Election, during which both the Conservatives and Liberal Democrats campaigned on a platform to block any expansion of this sort at the airport. Since the airport's expansion plans were abandoned after the 2010 General Election, there has been speculation about what Heathrow can do to increase capacity on its existing site and to improve services. Alternating use of the runways and changes to regulatory policy may make some difference, and it is as yet unclear what the impact on Heathrow might be of the proposed HS2 rail line. The Coalition Government published its Aviation Policy Framework in March 2013 ­ this is largely a collection of technical changes that could be made to airports to increase capacity, improve efficiency and ensure that aviation growth in the UK is sustainable in terms of noise and environmental pollution. The Airports Commission, under the chairmanship of Sir Howard Davies, was set up in September 2012 and tasked with making recommendations as to the timing and scale of any future airport capacity. It will not publish its final report and recommendations until after the 2015 General Election but in December 2013 it published an interim report shortlisting two options for expansion at Heathrow. More detail on the proposed expansion of Heathrow up to February 2009 can be found in Library research paper 09/11: Expansion of Heathrow Airport. Information on the other airports in the South East and London can be found in HC Library Note SN2893; and there is a separate note on proposals for a Thames Estuary airport, SN6144. These and other briefings on aviation can be found on the Aviation Topical Page of the Parliament website.
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1 History and ownership
2 Demand
3 Proposals for expansion
3.1 Work of the Airports Commission, 2012-
3.2 Policy of the Coalition Government, 2010-
3.3 Policy of the Labour Government, 1997-2010
4 Making best use of existing capacity
5 Regulatory regime and the passenger experience
6 Environment/noise
7 Terminal 5
7.1 Overview
7.2 Public inquiry
7.3 Government decision
7.4 Construction
1 History and ownership London Heathrow Airport officially opened in May 1946 after it had been transferred from the military to civilian control in January of that year. The first aircraft to land there was a BOAC Lancastrian from Australia. There were no terminal buildings and passengers checked in at a temporary tent village on the north side of the airfield. International communications needs were handled by a row of telephone boxes and a mobile post office. The only facilities were armchairs, a bar, a WH Smith shop and chemical toilets. By the end of its first year of operation, Heathrow was serving 18 destinations, with 60,000 passengers and 2,400 tons of cargo passing through the airport. As traffic grew the tents were replaced by pre-fabricated concrete buildings. In April 1955 Heathrow's first real terminal, the 'Europa Building' (the current T2), opened for short-haul flights. In April 1968 a new short-haul building (now T1) was opened - at the time the largest airport terminal in Europe. Terminal 3 was expanded in 1970 to accommodate the new Boeing 747s and in 1976 Concorde began operating from the airport.1 Terminal 4 was opened in April 1986. In 1998 the Heathrow Express rail link from Paddington was opened and in November 2001 permission was granted to proceed with the building of Terminal 5 (see below). The British Airports Authority was established by the passing of the Airport Authority Act 1966, to take responsibility for four state-owned airports at London Heathrow, Gatwick and Stansted and Prestwick in Scotland. In the next few years, the authority acquired 1 for more information on Concorde, see HC Library Standard Note SN2764
responsibility for Glasgow, Edinburgh and Aberdeen airports. Thirty years later, the Airports Act 1986 restructured the Authority into a main holding company, BAA plc, with seven separate airport companies operating London Heathrow, Gatwick and Stansted; Edinburgh; Glasgow; Aberdeen; and Southampton airports and an intermediate holding company over the four Scottish airports. It was privatised in July 1987. In June 2006 the Ferrovial Consortium, a Spanish construction firm, bought BAA for Ј10.3 billion.2 In October 2012 BAA changed its name to Heathrow Airport Holdings Ltd.3 Although BAA clearly had its supporters, over the years the voices in favour of breaking up BAA grew louder, in particular as regards the effective monopoly position it held over the main London airports, including Heathrow. Following a referral by the Office of Fair Trading (OFT), the Competition Commission (CC) announced an investigation into BAA in March 2007.4 In April 2008 the Commission published a report on its `emerging thinking' and in December 2008 it reported on its `provisional findings'. The final report was published on 19 March 2009 and ordered BAA to sell both Stansted and Gatwick and one of either Glasgow or Edinburgh airports within the following two years. BAA sold Gatwick to Global Infrastructure Partners in October 2009 for Ј1.5 billion.5 Following numerous rounds of appeals, it also sold Edinburgh Airport to GIP in April 2012 for just over Ј807 million.6 It sold Stansted to Manchester Airports Group in January 2013 for Ј1.5 billion.7 2 Demand Heathrow is the UK's only international `hub' airport. `Hub' airports are essentially large airports which have a significant number of routes, as the March 2013 aviation policy framework states: Although there is no single agreed definition of a hub airport, a key characteristic of hub airports across the world is that they are able to serve destinations that other airports are not. This is because a hub airport supplements local demand with transfer passengers, providing traffic volumes which support higher frequencies of services on more popular routes, and enabling services on more marginal routes that would not otherwise have proved viable with fewer passengers.8 The 2003 aviation White Paper gave the following description: Large airports are able to support a wider range of destinations and greater frequency of services than could be supported by local demand alone. Major airports attract passengers connecting from one flight to another and, because of this concentration, airlines can operate routes and frequencies that would not otherwise be viable. This is well illustrated at Heathrow, which has the highest number of international transfer passengers of any airport in the world.9 2 "Ferrovial lands BAA with final offer of Ј10.3bn", The Guardian, 7 June 2006 3 HAHL press notice, "End of `BAA'", 15 October 2012 4 OFT press notice, "OFT refers BAA airports to the Competition Commission", 30 March 2007; and CC press notice, "Competition Commission airports investigation: invite for evidence", 3 April 2007; all material associated with the investigation is available on the CC website 5 "BAA agrees deal to sell Gatwick for Ј1.5bn", Financial Times, 21 October 2009; GIP is an investment fund jointly owned by Credit Suisse and General Electric ­ it is also the majority stakeholder in London City Airport 6 BAA press notice, "BAA announces sale of Edinburgh Airport", 23 April 2012 7 "Stansted to be sold for Ј1.5bn to Manchester Airports Group", The Guardian, 18 January 2013 8 DfT, Aviation Policy Framework, March 2013, para 1.38 9 DfT, The Future of Air Transport, Cm 6046, December 2003, p112 3
The demand for air travel is not spread evenly across the UK. It is greatest in the capital and the South East: approximately 60 per cent of air passengers and half of all flights use a London airport.10 In its December 2013 interim report the Airports Commission (see below) predicted the likely future demand for aviation in both unconstrained and constrained scenarios as follows: The carbon traded, capacity unconstrained forecast (1) allows the Commission to estimate total potential demand for UK airports, in the absence of any constraints on capacity or further policies to control aviation emissions. This forecast suggests that unconstrained aviation demand is likely to grow significantly between now and 2050. Figure 4.2 shows the median forecast for unconstrained demand is 450 million passengers per annum (mppa) in 2050, in a range of 380 mppa to 530 mppa. The median estimate is 7% lower than the January 2013 DfT forecasts [...] The carbon traded, capacity constrained forecast (2) shows the effect that current capacity constraints would have, if they are not alleviated. Here the median passenger demand forecast falls from 450 mppa to 400 mppa by 2050, in a range of 350 mppa to 455 mppa. Forecast passenger numbers in this scenario are 4% lower in 2030 and 11% lower respectively in 2050 than the levels forecast by the DfT in January 2013. This reduction is largely explained by the improved modelling of overseas hubs and updated forecasts for UK and foreign GDP. [...] The climate change Act 2008 set a target for total UK greenhouse gas emissions to be reduced by 80% by 2050, relative to a 1990 baseline. The CCC's [Committee on Climate Change] current assessment of how this target can be met assumes that CO2 emissions from UK aviation in 2050 should be at or below 2005 levels. [...] The Airports Commission's carbon capped, capacity unconstrained forecast (3) updates the previous work of the CCC, using a broadly similar approach. The Commission's updated analysis suggests that: · based on current forecasts, the compatible level of passenger demand growth is around 67% by 2050; · this translates into an increase of around 38% in the number of ATMs [air traffic movements], given current assumptions around average aircraft sizes and load factors; and, · as the CCC found, this is compatible with a range of policies on capacity expansion. [...] In the carbon capped, capacity constrained forecast (4), total demand across the London airport system is projected to reach 90% of the available runway capacity by 2030. This rises to more than 96% in the carbon capped, capacity unconstrained 10 CAA, Aviation trends: Quarter 3 2013 [accessed 6 January 2014] 4
forecast (3), in which passenger choices are not restricted by the limitations of existing runways or other infrastructure.11
While traffic at London and South East airports continues to rise, compared with similar airports in Europe, it has long been argued that Heathrow is ill-equipped to deal with projected future rises in passenger numbers. For example, the table below compares passenger traffic and the number of runways at Heathrow with its main continental hub competitors Paris Charles de Gaulle, Amsterdam Schiphol and Frankfurt:
European hub airports
Number of runways12
Number of passengers per year (2012)13
Efficiency of runway use average no. passengers per flight14
London Heathrow
70.1 million
Frankfurt/ Main
57.8 million
Paris Charles de Gaulle 4
61.6 million
Amsterdam Schiphol
51.1 million
3 Proposals for expansion 3.1 Work of the Airports Commission, 2012- All of the reports, consultations and Working Papers published by the Airports Commission are available on its website. On 7 September 2012 the Secretary of State for Transport, Patrick McLoughlin, announced that he had asked Sir Howard Davies, the former chairman of the Financial Services Authority, to chair an independent commission tasked with identifying and recommending to Government options for maintaining this country's status as an international hub for aviation.15 The Commission's terms of reference are available in full on the Gov.uk website, but in summary it was tasked with examining the scale and timing of any requirement for additional hub capacity and identifying and evaluating how any need for additional capacity should be met in the short, medium and long term. The Commission was asked to report before the end of 2013 on · its assessment of the evidence on the nature, scale and timing of the steps needed to maintain the UK's global hub status; and · its recommendation(s) for immediate actions to improve the use of existing runway capacity in the following five years ­ consistent with' credible long term options'. The Commission was asked to publish a final report no later than summer 2015 on:
11 Airports Commission, Airports Commission: Interim Report, December 2013, pp107-110 12 PwC for the Airports Commission, Hub Airport Capacity: International Competition, December 2013 13 Eurostat, Table avia_paoa [accessed 6 January 2014] 14 Eurostat, Tables avia_paoa and avia_tf_aca [accessed 6 January 2014] 15 HC Deb 7 September 2012, c41WS
· its assessment of the options for meeting the UK's international connectivity needs, including their economic, social and environmental impact; · its recommendation(s) for the optimum approach to meeting any needs; · its recommendation(s) for ensuring that the need is met as expeditiously as practicable within the required timescale; and · to provide materials to support the government of the day in preparing a national policy statement to accelerate the resolution of any future planning applications for major airports infrastructure.16 On 17 December 2013 the Commission published its interim report. It concluded that there is a need for one net additional runway to be in operation in the south east by 2030 and that there is likely to be a demand case for a second additional runway to be operational by 2050. The Commission announced that it will take forward for further detailed study proposals for new runways at Gatwick and Heathrow. The two options for Heathrow are Heathrow Airport Ltd's proposal for one new 3,500m runway to the northwest and Heathrow Hub's proposal to extend the existing northern runway to at least 6,000m, enabling the extended runway to operate as two independent runways. The Commission will undertake a detailed appraisal of these options before issuing a public consultation in autumn 2014.17 The Commission's forecasts indicate that a new runway at Heathrow would be very wellused, with the expanded airport operating at around 80 to 90 per cent of capacity by 2030 and at maximum capacity by 2050.18 The Commission reported that many of the features and impacts of the two Heathrow options are broadly the same. The costs for each would be higher than those for most single runway options considered at other sites, although less than those for the south west runway option at Heathrow. Estimated as costing Ј13-18 billion by 2030 they are, however, "much lower than most options with four or more runways, in many cases by several orders of magnitude".19 However, each proposal has different, specific impacts, set out by the Commission in its report. For option (a) ­ one new runway to the North West ­ these are as follows: · a significant increase in capacity of up to 260,000 air traffic movements (ATMs) per year; · `roughly neutral' impact on the number of people affected by noise (the new runway would allow a portion of the airport's traffic to land and take off further to the west than the existing configuration of runways, so those aircraft would fly at a higher altitude over the most densely populated areas); · the spread of the noise impact would be over a larger area, meaning that some people would be newly brought within the 57LAeq contour; 16 DfT press notice, "Airports Commission membership", 2 November 2012 17 op cit., Airports Commission: Interim Report, for full details see chapter 6 18 ibid., para 6.88 19 ibid., para 6.91 6
· no internationally designated sites would be directly impacted by the proposal (the South West London Waterbodies SPA/Ramsar site would lie within 2km of the expanded airport site, with the potential for some indirect impacts); and · requirement for a `significant number of demolitions', totalling approximately 1,500 houses and including the loss of the village of Harmondsworth, much of which is a conservation area. A second conservation area in Longworth would also lose listed buildings (around 30 listed buildings would be lost in total).20 For option (b) ­ extending the northern runway to the west ­ the impacts are as follows: · a maximum additional capacity of 190,000 ATMs per year; · all night flights could use the western portion of the extended runway, resulting in the population falling within the 55 LDen contour, being more than 20,000 lower than for the north western runway option; · could potentially encroach upon the South West London Waterbodies SPA/Ramsar site; · direct effects on just eight listed buildings (none Grade I or Grade II*) and only indirect effects on the Colnbrook Conservation Area; and · relatively few demolitions, with a probable total of 720 properties estimated to be lost.21 The Commission also made recommendations about making best use of existing capacity ­ these are addressed in section 3.2, below. Heathrow Airport welcomed the Commission's report and in particular the short-listing od the new north west runway option. In a press notice it said: Heathrow's shortlisted option for a full-length runway located to the north-west is better than the 2003 Air Transport White Paper proposal for a short third runway. There will be fewer households within Heathrow's noise footprint with a third runway than there are today due to quieter aircraft, steeper landing approaches, and the runway's location further to the west. Unlike the previous proposal, the north-west option will deliver periods of community respite from noise with no aircraft overhead.22 Heathrow Hub also welcomed the inclusion of their proposal for an extended northern runway in the Commission's report.23 HACAN, the body that campaigns against aircraft noise around Heathrow, stated that the report was "`the trigger to 18 months of intense campaigning against Heathrow expansion". John Stewart, Chair of HACAN, said: "The scale of the opposition will be so great that we 20 ibid., paras 6.101-6.106 21 ibid., paras 6.107-6.111 22 HAHL press notice, "Heathrow north-west third runway option short-listed by Airports Commission", 17 December 2013 23 Heathrow Hub press notice, "Heathrow Hub shortlisted by Airports Commission in its Interim Report", 17 December 2013 [NB Heathrow Hub is not affiliated to Heathrow Airport] 7
believe that [the Heathrow options] are politically undeliverable and should have been dropped at this stage".24 3.2 Policy of the Coalition Government, 2010- Before the 2010 General Election both the Conservative and Liberal Democrat parties had indicated that they were opposed to a third runway and a sixth terminal at Heathrow and had long campaigned against it. When the then Labour Government announced in January 2009 its intention to invite BAA to put forward a planning application for a third runway and a sixth terminal, the then Shadow Transport Secretary, Theresa Villiers, said that the Conservatives would "fight them every step of the way".25 Subsequently, the Conservative Party Manifesto for the 2010 election stated: "Our goal is to make Heathrow airport better, not bigger. We will stop the third runway and instead link Heathrow directly to our high speed rail network, providing an alternative to thousands of flights".26 Following the general election and the formation of the Conservative-Liberal Democrat Coalition Government, the Coalition Agreement stated: "We will cancel the third runway at Heathrow".27 In May 2010, following the election of the Conservative-Liberal Democrat Coalition Government, BAA (now Heathrow Airport Holdings Limited, see above), the owners of Heathrow, announced that they would abandon their plans for a third runway and a sixth terminal at the airport.28 However, there followed concerted lobbying by the airport itself, the main airlines that use it and by business to persuade the Government to look again at its policy on Heathrow. The thrust of their argument is that Heathrow is the UK's main airport hub and that to let it decline would harm the UK economy. They also argue that this relative decline, compared to LHR's main European and global competitors is already happening, particularly in relation to routes to the booming economies of Asia, India and South America.29 Consequently, the Government set up an independent Airports Commission under the chairmanship of Sir Howard Davies in September 2012, charging it to report on long term capacity options by summer 2015 (see above). The Commission's December 2013 interim report announced that it would undertake further study on two options for expansion at Heathrow. The Government `welcomed' the report and in a statement to Parliament the Secretary of State for Transport, Patrick McLoughlin, said: Now that the commission's report has been published, we will be working closely with promoters to consider the form and scale of any appropriate relief [for those living around the sites of the three options to be further considered by the Commission] that might be put in place, and we will set out our thinking on this important issue in our response to the interim report.30 24 HACAN press notice, "Campaigners vow to fight any expansion at Heathrow", 17 December 2013 25 HC Deb 15 January 2009, c360 26 Conservative Party, Invitation to join the government of Britain: General Election Manifesto 2010, April 2010, p23 27 HMG, The Coalition: Our Programme for Government, May 2010, p16 28 BAA Heathrow press notice, "Heathrow updates local residents", 24 May 2010 29 see, e.g. London's Connectivity Commission for London First, London, Britain and the world: Transport links for economic growth, February 2012; Heathrow Airport press notice, "UK will lose over 140,000 jobs without urgent action on aviation", 7 March 2012; and: Frontier Economics, Connecting for growth: the role of Britain's hub airport in economic recovery, September 2011 30 DfT press notice, "Government welcomes Airports Commission interim report", 17 December 2013; and: HC Deb 17 December 2013, c622 8
The Government's full response to the interim report has yet to be published. However, there has been some comment from the two parties that make up the Coalition. Ed Davey, the Liberal Democrat Secretary of State for Energy and Climate Change wrote: Nick Clegg and the Liberal Democrats made our approach to the Davies Commission clear yesterday. We will not endorse an expansion in airport capacity which would increase noise pollution for the hundreds of thousands of residents living beneath the flight path or break the Committee on Climate Change's recommendations on aviation. Of course we will look at what the final Davies Report recommends, but we are a party which believes in evidence-based policy making and we have not seen any evidence that expansion at Heathrow could be done without increasing current noise and air pollution; as such the Liberal Democrats continue to oppose Heathrow expansion.31 The Conservative leadership has not given a clear view of whether it would back a third runway at Heathrow after 2015. Some backbenchers back Heathrow expansion for economic reasons, others are opposed, largely on environmental grounds. One of the most vocal of the latter is Zac Goldsmith, who responded to the interim report by warning the Prime Minister that: "... people would ever forgive the Conservative Party were it to perform that kind of Uturn [approving expansion at Heathrow]" and repeated his pledge to trigger a by-election in his West London seat "if the Government this side of the election provides a green light for Heathrow expansion".32 3.3 Policy of the Labour Government, 1997-2010 The outgoing Labour Government supported the plans for a third runway: the Labour Party manifesto for the 2010 General Election stated: Heathrow is Britain's international hub airport, already operating at full capacity, and supporting millions of jobs, businesses and citizens who depend upon it. We support a third runway at Heathrow, subject to strict conditions on environmental impact and flight numbers.33 However, in October 2011 Labour's then Shadow Transport Secretary, Maria Eagle, announced that the party had dropped its support for the scheme and that the party had been wrong on the issue when in government.34 Just before the Airports Commission published its December 2013 interim report (see above), there was speculation that Labour's position on Heathrow expansion had `softened'.35 In her response to the interim report the current Shadow Transport Secretary, Mary Creagh, made no comment on what Labour's view on Heathrow expansion might be, but she did call on the Commission to "take into account the need to minimise local and environmental impacts of increased capacity" as it continues its work.36 In a January 2014 interview with the New Statesman the Shadow Chancellor, Ed Balls, said: 31 "Edward Davey MP writes: Liberal Democrats continue to oppose Heathrow expansion", Lib Dem Voice, 18 December 2013 32 "Zac Goldsmith: Voters would not forgive Tory U-turn", London Evening Standard, 17 December 2013 33 Labour Party, A future fair for all: the Labour Party manifesto 2010, April 2010, p1:8 34 Full text of Maria Eagle's speech, on Labour's ideas on future aviation policy, 31 October 2011 35 "Labour denies Heathrow third runway U-turn - but there has been a shift", New Statesman `Staggers' blog, 12 December 2013 36 Labour Party press notice, "Mary Creagh's response to Sir Howard Davies report", 17 December 2013 9
... yes I do [support aviation expansion]. I thought the Howard Davies report was a very informed first stage, which I think made the case for airport expansion...I think a modern, open British global economy needs effective aviation capacity.37 In 2002 the Labour Government published a series of consultation documents seeking views on the future development of air transport in the UK. One of the consultation documents covered the South East of England.38 The consultation sought to solicit opinion on three central questions: whether new airport capacity should be provided in the South East and if so, how much; where new capacity should be located; and what measures should be taken to mitigate the environmental impacts of growth. On the question of where any new airport capacity should be located, the Department proposed a new short runway for Heathrow.39 Stakeholder responses to the consultation process were mixed. While organisations representing the aviation industry were keen to emphasise the material and commercial benefits to significant airport expansion in the South East,40 conservation and consumer groups contested the need for air transport expansion at all.41 The December 2003 White Paper, The Future of Air Transport, offered support for the development of Heathrow, including a new runway, provided that stringent environmental limits could be met. The White Paper stated that demand for Heathrow was `very strong' and would always likely be `far in excess' of capacity. Overall, the White Paper stated that Government supported a third runway at Heathrow, to be built after a second runway at Stansted, probably in the period 2015-2020. BAA stated in their submission to the consultation preceding the White Paper that a third runway would require the building of a sixth terminal outside of the current airport boundary. With that in mind, the White Paper recommended that BAA carry out work on further proposals for terminal capacity and an appraisal of the potential impacts, on the basis of which a further consultation would be required. The White Paper also recommended that airport operators should maintain a `master plan' document detailing development proposals. It went on to state: "We will expect airport operators to produce master plans or, where appropriate, to update existing master plans to take account of the conclusions on future development set out in this White Paper".42 The Department produced a guidance document for the development of master plans in July 2004.43 Further to this recommendation, BAA Heathrow published its interim master plan in June 2005. The plan mapped out BAA Heathrow's vision for accommodating increased passenger growth and catering for expanding airline businesses. Aside from the Ј4.2 billion investment in Terminal 5, the Plan set out how a further Ј3 billion would be spent to 2015. The plan also outlined possible further developments beyond the ten year timeframe, including the safeguarding of an interim boundary for a possible third runway. The plan was prepared as a consultation document with the intention of publishing an updated version 37 "Ed Balls interview: I could go into coalition with Clegg", New Statesman `Staggers' blog, 8 January 2014 38 DfT, The Future Development of Air Transport in the UK: South East, Second edition, February 2003; see also: DfT, South East and East of England Regional Air Services Study (SERAS): Appraisal findings report, April 2002 39 ibid., The Future Development of Air Transport in the UK: South East, Second edition, paras 7.4-7.6 40 see, for example: BAA, Responsible Growth: BAA's response to the Government's consultation on the future of air transport, May 2003 41 see, for example: The response of HACAN ClearSkies to the The Future of Air Transport in the United Kingdom: South East Consultation Document, November 2002 42 op cit., The Future of Air Transport, p141 43 DfT, Guidance on the Preparation of Airport Master Plans, July 2004 10
sometime in 2006; this did not happen. Instead, BAA Heathrow decided to await the conclusions of the technical work being undertaken by Project Heathrow and the Government's decision on whether a third runway could go ahead.44 On 22 November 2007 the Government published its consultation document on the future of Heathrow, and, in particular, whether a third runway should be built and whether mixed mode should be introduced. All of the documents pertaining to the consultation, which closed in February 2008, are available on the Department for Transport's archived website. The main issues outlined in the document were as follows: · Support for a third runway and sixth terminal, conditional on no increase in the size of the area significantly affected by aircraft noise (as measured by the 57dBA Leq noise contour in 2002); being confident of meeting European air quality limits around the airport, in particular for nitrogen dioxide (NO2) which is the most critical local pollutant around Heathrow; and improving Public transport access to the airport; · A revised proposal by BAA for adding a third runway north of the A4 (2,200 metres (m) operational length compared with the original 2,000m proposal), with associated passenger terminal facilities and access to the road and rail networks. This could potentially enable the airport to handle around 700,000 air transport movements (ATMs) a year, nearly 50 per cent more than today; · Proposals for introducing mixed mode on the existing two runways, either with or without additional ATMs, as an interim measure ahead of a third runway. Runway alternation would have to cease during mixed mode operations; and · Whether adding a third runway at Heathrow could provide capacity to increase movements in the night period.45 Shortly after the consultation was published, anti-expansion groups, led by HACAN, stated that they would challenge the building of a third runway on economic as well as environmental grounds.46 Later, in March 2008 The Sunday Times ran a story, based on documents obtained under the Freedom of Information Act, to the effect that "the airports operator BAA colluded with government officials to "fix" the evidence in favour of a new third runway at Heathrow".47 The Government repeatedly stressed that this was not the case.48 On 15 January 2009 the then Secretary of State for Transport, Geoff Hoon, announced the Government's support for a third runway and new terminal at Heathrow, conditional on environmental and air quality criteria being met and additional ground transport capacity being added.49 He also indicated that the government had concluded that mixed mode should not go ahead, but that the Cranford Agreement should end, permitting easterly take 44 BAA Heathrow press notice, "Transforming Heathrow", 6 June 2005; the draft plan is available on the BAA archived website [warning: large document] 45 DfT, Adding capacity at Heathrow Airport: consultation document, 22 November 2007, pp8-9 46 "Report attacks Heathrow expansion", The Times, 2 December 2007 47 "Revealed: the plot to expand Heathrow", The Sunday Times, 9 March 2008; the documents in question are: FOI 1, FOI 2, FOI 3, and FOI 4 48 see, e.g.: HC Deb 2 April 2008, cc880-881; and HC Deb 11 November 2008, c674 49 HC Deb 15 January 2009, cc357-358; the documentation published alongside the Secretary of State's statement, including a report on the consultation responses, is available on the DfT archive website 11
offs from the northern runway.50 There was no further progress before the 2010 General Election. 4 Making best use of existing capacity There are a number of initiatives that come under the heading of `operational freedoms'. This can include things like optimising runway use, better information and smarter air traffic control (ATC). Shortly after it assumed office in May 2010 the Coalition Government set up a South East Airports Task Force with `key players' from across the industry to explore ways of making the most of existing airport infrastructure and improving conditions for all users. The group would be chaired by the then Aviation Minister Theresa Villiers and its initial focus would be on action at Heathrow, Gatwick and Stansted.51 The taskforce reported in July 2011. One of the key measures it recommended regarding Heathrow was the introduction of more `operational freedoms', such as extension of simultaneous use of runways.52 The report explained: At Heathrow, Tactically Enhanced Arrivals Measures (TEAM) have been used for a number of years. TEAM is a system under which for the first hour of the day (i.e. between 06.00 and 07.00), when conditions require it ­ and at other times when there are severe arrivals delays ­ both runways may be used for landings. This is a way of clearing the backlog of early morning long-haul arrivals and reducing the number of planes that would otherwise be held in the "stack" awaiting permission to land. It is not the same as "mixed mode" which would involve planned arrivals and departures on both runways. Tactically Enhanced Departures Measures (TEDM) would involve the use of both runways for departures which could also have efficiency and resilience benefits. The Taskforce considered how punctuality, delay and resilience could be enhanced at Heathrow by the further use of TEAM and the introduction of TEDM and concluded that the deployment of these operational freedoms could potentially deliver: · significant benefits for passengers by improving the resilience and reliability of the airport; and · environmental benefits, with fewer unscheduled night flights, lower emissions and less stacking (where planes queue up to land).53 The taskforce concluded that there should be a trial of extended simultaneous runway use starting in autumn 2011.54 The first phase of the trial ran from November 2011 to February 2012, and phase two ­ with slightly different parameters ­ ran from July 2012 to February 2013. Heathrow published the outcome of the trials in October 2013. They involved more flexible use of the runway infrastructure, i.e. the use of both runways for arrivals; the use of both runways for departures; redirecting departures after take off; and the increased use of the southern runway for A380 aircraft, small and light aircraft and Terminal 4 traffic. During Phase 1, the freedoms were used regularly whilst in Phase 2, the freedoms were staggered 50 ibid., c357 51 HC Deb 15 June 2010, c48WS 52 DfT press notice, "New measures to cut delays at Heathrow", 14 July 2011 53 DfT, South East Airports Taskforce: Report, July 2011, paras 5.11-5.12 54 ibid., para 5.19 12
to provide, as far as possible, a means to assess the benefit of each freedom independent from the others.55 The final report concluded that, on balance: Operational Freedoms, as trialled, delivered useful operational performance improvements in limited areas. While their use did not provide the wholesale significant benefits that could be required to facilitate recovery from the most severe episodes of disruption, Heathrow believes that operational freedoms do help to mitigate against, and recover more quickly from, those less serious disruptive events which still result in poor performance and passenger experience.56 With that in mind, it recommended that three operational freedoms should be integrated into standard procedures as soon as practically possible: TEAM: Use of both runways for arrivals in either direction when disruptive conditions prevail subject to:- · Actual or anticipated arrival delays which are likely to impact operations · The headwind component on approach to Heathrow is forecast to be greater than 20 knots at 3000ft. · Aircraft are arriving on their stand more than 30 minutes later than their scheduled time or if 30% of all aircraft (arrivals and departures) operating from Heathrow are running 15 minutes late. · There is disruption to the operation, for example from snow. · Usage to increase from 6 landings per hour up to 12 landings per hour Early Vectors: Use of early vectoring procedures for departures in either direction and on any route subject to:- · Actual or anticipated departure delays which are likely to impact operations · The headwind component on departure from Heathrow is forecast to be greater than 20 knots at 3000ft. · Evidence of routing bias leading to excessive delays · There is disruption to the operation, for example from snow. Proactive Freedoms: Option to use the southerly runway for A380, Terminal 4 and small/light wake vortex category aircraft.57 However, the CAA thought that the data from the trial was `inconclusive' and that the benefits claimed by Heathrow Airport in their report (above) had "not been statistically proven". The CAA said that operational benefits of operational freedoms were offset by some redistribution of aircraft noise among local communities, and preliminary work had suggested some detrimental impact: 55 HAHL, Operational Freedoms Trial: Final Report, October 2013, p2 56 ibid., p3 57 ibid., p3 13
Communities below the westerly approach paths have their respite period interrupted by aircraft arriving on the runway usually used for departures, while others are affected by vectoring off the established departure routes.58 Taking these findings on-board, the Airports Commission's December 2013 interim report recommended further ways to make better use of existing capacity, including airport collaborative decision making; airspace changes supporting performance based navigation; enhanced en-route traffic management; and time based separation. Particularly as regards Heathrow, it further recommended "trials of measures to smooth the early morning arrival schedule to minimise delays and provide more predictable respite for local communities as part of a range of measures to increase the flexibility of runway use".59 5 Regulatory regime and the passenger experience Following its decision in 2010 not to proceed with plans for a third runway and sixth terminal at Heathrow, BAA (now HAHL) refocused its efforts on improving Heathrow's status as a hub airport. There have been numerous reports over recent years stating that lack of capacity and poor service at Heathrow damage the UK economy and deter business travel and foreign investment.60 However, the July 2011 South East Airports Task Force report (see above for more details) stated that Heathrow had improved the passenger experience.61 Passenger experience is now a key part of the new regulatory regime at Heathrow, managed by the CAA. Since the main period of privatisation in the late 1980s, the CAA has economically regulated those airports deemed to have market power, setting price controls to protect their users from anti-competitive behaviour. In December 2012 the Civil Aviation Act 2012 received Royal Assent; this Act fundamentally changed the way the CAA economically regulates airports, effectively providing for a new system of economic licences. It only regulates airports with substantial market power, where competition law could not provide sufficient protection for consumers and where the benefits of regulating would outweigh the costs for airport users. Below is an explanation from the CAA of how it regulates airports under the new system and why this is an improvement over the old system: Before the Act, we only had one way of regulating airports ­ setting a cap on what they could charge airlines and setting minimum service standards every five years. The new Act includes powers for us to have much more flexibility to tailor regulation to the individual circumstances of each airport. By setting out economic licences for regulated airports, the CAA is able to vary the licence conditions imposed on them to best protect passengers, based on the circumstances at each airport. For instance, while a price cap might be appropriate at an airport with high market power where there is little or no competition, this type of regulation is costly for airports and airlines, so may lead to unnecessary expense for passengers if the airport has less market power. In those situations, it might be more 58 CAA, Heathrow Airport Operational Freedoms Trial, CAP 1117, October 2013, p9 59 op cit., Airports Commission: Interim Report, pp12-13; full details in chapter 5 60 e.g. "'Hassle of Heathrow' takes toll on City", Financial Times, 30 July 2007; "Heathrow delays hurting London's financial status", The Daily Telegraph, 31 July 2007; and "London cannot afford this Heathrow chaos", London Evening Standard, 31 July 2007; "Terminal decline: Heathrow one of worst airports", The Times, 30 March 2011; and "Fears `Heathrow hassle' will damage business", Financial Times, 8 November 2011; see also: London First, Imagine a world class Heathrow, June 2008 61 op cit., South East Airports Taskforce: Report, p55 14
appropriate to allow the airport to agree a commercial contract with its airline customers with the regulator only getting involved to ensure the airport sticks to what was agreed. The new powers also mean we can be much more flexible ­ under the old system, if something went wrong and passengers lost out, we would have to wait until the end of the price cap period to make any change, potentially five years. The new licence regime will give us the power to make much more rapid changes to licence conditions, to stop passengers suffering. For instance, if an airport performed poorly during bad weather one winter, the CAA would be able to change their licence to give them a duty to ensure it didn't happen again the next year.62 In January 2014 the CAA published the finding of its market power assessment of Heathrow. The CAA found that Heathrow passed the market power test and, therefore, requires an economic licence from 1 April 2014.63 At the same time the CAA published details of what will be in that licence. The proposed price control licence condition contains a single-till, retail price index (RPI)-X control: It is composed of the following key Building Blocks: · traffic forecasts of 347.7 million passengers; · operating expenditure (opex) of Ј4,731 million; · capital expenditure (capex) of Ј2,816 million; · a pre-tax, real weighted average cost of capital (WACC) of 5.35%; · commercial revenues of Ј2,790 million; and · other regulated charges (ORCs) of Ј1,004 million and other revenues of Ј675 million. This gives an average per passenger yield of Ј19.74 over Q6. This compares with Ј23.43 in HAL's [Heathrow Airport's] July 2013 Alternative Business Plan (ABP) and Ј15.56 suggested by the Heathrow airlines. The CAA's proposed price control, RPI1.5% per year over Q6, compares with RPI+4.2% per year suggested by HAL in its July ABP and RPI-9.8% per year suggested by the Heathrow airlines in their response to the CAA's initial proposals.64 Of interest to Heathrow's customers will be the licence condition on operational resilience. This requires Heathrow "so far as reasonably practicable, to secure the availability and continuity of airport operation services, particularly in times of disruption, to further the interests of passengers and cargo owners in accordance with best practice and in a timely, efficient and economical manner".65 This may help to address concerns about, for instance, the airport's operations during incidents of sever weather. 62 CAA, Economic Regulation Briefing, CAP 1025, April 2013; information on the old system and how it came to be reformed can be found in HC Library research paper RP 12/07 63 CAA, Notice Of Determination under Section 8 of the Civil Aviation Act 2012: Heathrow Airport, CAP 1133, January 2014; the licence will last for 4 years, 9 months 64 CAA, Economic regulation at Heathrow from April 2014: notice of the proposed licence, CAP 1138, January 2014, p4; prices in 2011/12 money 65 ibid., p39 15
Heathrow called referred to the RPI-1.5% price control cap as a "draconian position". The airport's chief executive, Colin Matthews, said: The CAA's final decision includes aggressive operational, commercial and passenger forecasts. It requires Heathrow to reduce operational expenditure by more than Ј600 million, stretches commercial revenue targets by in excess of Ј100 million, which includes revenues from retail and car park charges, and assumes significant passenger volume growth over Q6. The settlement leaves little spare resource available to manage the consequences of potential disruption at Heathrow.66 6 Environment/noise General information about aviation and climate change is given in HC Library research paper RP 08/08; detailed information about the environmental issues surrounding any expansion of Heathrow is given in Part II of HC Library research paper RP 09/11. In May 2007 BAA launched a noise website for its airports, a press notice said: The system is part of a Ј1.8 million investment programme by BAA to upgrade its noise and track keeping and complaints handling systems at its London airports and includes the launch of `Webtrak.' `Webtrak' is an innovative on-line tracking system that at a scroll of a mouse allows local residents to track aircraft arriving and departing from the airport, and displays their height, allowing them to make more detailed enquiries about aircraft noise.67 Heathrow is a `designated' airport for the purposes of Section 78(3)(b) of the Civil Aviation Act 1982, as amended, which allows the Secretary of State to specify the maximum number of occasions on which specified aircraft may be permitted to take off or land during specified periods. As a result, although night flights are not banned, (except for the noisiest types of aircraft), restrictions are imposed on the number of night departures and arrivals. The Department for Transport currently imposes movement limits and quotas between 2330 and 0600. There are also restrictions on the noisiest types of aircraft between 2300 and 2330 and 0600 and 0700.68 The EU Environmental Noise Directive (2002/49/EC) requires noise levels to be assessed from road traffic, railways, major airports and industry. The Directive was implemented in the UK by the Environmental Noise (England) Regulations 2006 (SI 2006/2238). Regulation 7 requires the Secretary of State to make strategic noise maps for agglomerations, major roads, major railways and major airports. In March 2009, Defra published guidance for Airport Operators to produce their airport noise action plans. The guidance was subject to a public consultation towards the end of 2008.69 Heathrow's noise action plan was adopted in May 2011 and can be found on the Heathrow website.70 66 HAHL press notice, "Heathrow's response to CAA's Q6 price control decision", 10 January 2014 67 BAA press notice, "BAA launches noise websites", 25 May 2007; the Heathrow noise website is available to view online; the webtrak real time airline tracking tool is available on a separate site 68 for more information on night flights, see HC Library note SN1252; and for aircraft noise more generally, see SN261 69 Defra, Directive 2002/49/EC: Guidance for Airport Operators to produce airport noise action plans under the terms of the Environmental Noise (England) Regulations 2006 (as amended), March 2009 70 Heathrow Airport, Noise Action Plan, May 2011 16
7 Terminal 5 7.1 Overview Terminal 5 opened on 27 March 2008 to a slew of bad headlines after the baggage system failed.71 British Airways cancelled a number of flights from T5 over the following days and delayed moving all of its operations to the new terminal.72 The problems cost BA approximately Ј20 million.73 In November 2008 the Transport Select Committee published a short report into the opening and concluded: The opening of Terminal 5 revealed serious failings on the part of both BAA and British Airways. Like both organisations, we acknowledge the inevitability of 'teething problems' but deeply regret that so many were allowed to bring the operation of Heathrow's newest terminal to a halt. Nevertheless, we are glad that our inquiry has enabled the BAA, British Airways and Unite to describe how they are working together to make Terminal 5 a success.74 The public inquiry into the building of a fifth terminal at Heathrow airport began on 16 May 1995 and closed on 17 March 1999 making it the longest in UK planning history. The Inspector told the inquiry that he expected to take up to two years to produce his report;75 in the end he delivered it to the then Department for the Environment, Transport and the Regions (DETR) in December 2000.76 On 20 November 2001 the then Secretary of State for Transport, Stephen Byers, announced that the Labour Government had given its approval to the development of Terminal 5. He said that conditions had been imposed to protect the interests of those living in the vicinity of the airport.77 BAA claimed that the terminal was needed to cope with the projected rise in numbers of passengers from around 58 million then to 80 million in 2013, to maintain Heathrow's position as a world airport hub. BAA argued that because aircraft were getting larger the number of flights would only increase by eight per cent. BAA told the public inquiry that it was prepared to accept a cap on aircraft noise at 1994 levels and a limit on the number of night flights at then current levels. It maintained that noise would not increase because engines were getting quieter and noise monitoring was improving. BAA said that if Terminal 5 was rejected the South East of England would run out of airport capacity in five years with damaging effects on the economy. BAA also claimed that opinion polls showed a growing number of local residents supported the terminal.78 The London Chamber of Commerce launched a campaign, Business for T5, to promote the benefits of expanding the airport.79 It claimed that overseas visitors would spend an estimated 10 million fewer nights in Britain if Terminal 5 did not go ahead with a loss of about Ј1 billion to the hotels sector and another Ј500 million to the wider tourist industry. 71 see, e.g., "Disastrous start at Heathrow embarrasses BA", Financial Times, 28 March 2008; and "Making history? It is memorable, but for all the wrong reasons", The Times, 28 March 2008 72 "BA postpones shifting flights to T5", Financial Times, 12 April 2008 73 "Terminal chaos costs BA Ј20m", The Daily Telegraph, 31 March 2008 74 Transport Committee, The opening of Heathrow Terminal 5 (twelfth report of session 2007-08), HC 543, 3 November 2008, para 22 75 HC Deb 26 May 1999, c173W 76 HC Deb 16 January 2001, c185W 77 HC Deb 20 November 2001, cc177-79 78 The Heathrow Terminal Five and Associated Public Inquiries: Report by Roy Vandermeer QC, 21 November 2000; in two volumes, available for MPs and their staff to view here: Chapters 1-20 and Chapters 21-34 79 "Go-ahead urged for fifth Heathrow terminal", Financial Times, 10 February 2000 17
HACAN (the Heathrow Association for the Control of Aircraft Noise) made the case to the inquiry that the arguments used by BAA were fundamentally flawed for a number of reasons, including: · The proposed terminal was designed to handle an extra 30 million passengers per annum with better facilities and without the need for additional runway or night flying ­ but the runways were already close to full capacity; · The government promised an end to Heathrow expansion when it agreed to the construction of Terminal 4;80 · The government had promised to limit air transport movements to 275,000 per annum but in 1992 these were already 375,000 per annum; and · Heathrow already imposed more noise on more people than any other international airport in the world and the increased flights required to justify Terminal 5 would add enormously to noise pollution, air pollution, ground congestion and to the real risk of mid-air collision.81 Another major objection of local authorities and residents was the effect of any additional traffic caused by Terminal 5 on the already over-stretched infrastructure. 7.2 Public inquiry BAA plc and Heathrow Airport Ltd lodged a planning application on 17 February 1993 to the London Borough of Hillingdon for a fifth terminal building to be constructed on land which was then occupied by the Perry Oaks sewage sludge works.82 The applications referred to: · the development of an additional passenger terminal complex together with the provision of aircraft aprons, taxiways and associated facilities including an aircraft hangar; · infrastructure for aircraft maintenance and other tenants' developments; · hotel accommodation, car parking, rail station for facilities for Heathrow Express and London Underground; · connections to the airport road system and the public highway network; · an aircraft visual control room; · re-alignment of rivers and landscaping; and · the development of a fuel farm comprising tankage for storage and supply of aviation fuel together with the provision of associated facilities including office accommodation, car parking, the construction of roadways and hard-standing and landscaping. 80 the decision on Terminal 4 was taken by the incoming Conservative Government in late 1979 81 HACAN, Opening Statement to the Public Inquiry into a Fifth Terminal at Heathrow by the Chairman of HACAN, Dermot Cox, 16 May 1995 82 an earlier public inquiry into expansion plans at Heathrow and Stansted, held between 1981 and 1983, had already identified the Perry Oaks site as land onto which the airport should be able to expand 18
The then Secretary of State for the Environment, Michael Howard, wrote to the Director of Hillingdon Council on 15 March 1993 stating that, as the proposals related to a development of considerable regional and national importance and would give rise to substantial controversy, it was an application that should not be dealt with by Hillingdon. It should instead be dealt with jointly by the Secretaries of State for Environment and Transport under section 77 of the Town and Country Planning Act 1990. The letter also announced plans for a public inquiry.83 The public inquiry started on 16 May 1995. The Inspector for the inquiry was Mr Roy Vandermeer QC, assisted by Mr Michael Brundell BA DipTP FRTPI. As outlined above, the inquiry's scope included not just the plans for a new terminal building and taxiways, but also the associated Transport infrastructure including a spur to the M25 link roads, proposals for the Heathrow Express railway and an extension to the Piccadilly Underground line. Plans put forward by Thames Water to relocate their Perry Oaks sewage works to Iver South in Buckinghamshire were also considered. The public inquiry was expected to last about 18 months but actually lasted almost four years. The total cost of the inquiry to all participants is estimated at over Ј83 million of which the private sector is estimated to have spent some Ј64 million with the rest borne by central and local government. Government Departments and their agencies spent approximately Ј11.8 million on the inquiry. 84 The main organisations opposing the construction of the terminal were HACAN and the allparty coalition of 12 local authorities around Heathrow, Local Authorities Against Terminal 5 (LAHT5). The local authorities are estimated to have spent Ј6.5 million on the inquiry85 and because of budgetary restraints had to tell their lawyers to stop attending for a time although they returned at the end of the inquiry to make written submissions. Lawyers from Hillingdon, the local planning authority, apparently stayed. 86 A press report claimed that a decision had been made to build Terminal 5 despite the fact that it had been discovered that the building project could cause flooding;87 the terminal building would be partly built on the flood plain of the Colne River. Two rivers, the Duke of Northumberland and the Longford, which run parallel to each other, would be diverted. The article claimed that BAA had been asked to carry out water flow tests on the two rivers. A Parliamentary written answer on 23 October 2001 stated that BAA's revised proposal for the diversion of two rivers round the proposed terminal site was still being considered.88 7.3 Government decision In his statement to the House of Commons in November 2001 announcing the government's approval for the construction of Terminal 5, the Secretary of State for Transport, Mr Byers, explained that the delay in announcing the decision was due to BAA's decision to revise the twin rivers scheme which was a part of the original application. He highlighted the benefits of going ahead with the scheme, as identified by the inspector in his report, as Heathrow's contribution to the economy and more practically the relief of pressure of the existing 83 Letter from Michael Howard to Director of Planning, London Borough of Hillingdon, 15 March 1993 [HC DEP 5317(3S)]; see also: Department of the Environment press notice, "Michael Howard calls-in planning application for a fifth terminal at Heathrow Airport", 17 March 1993 [PN 175/93] 84 HC Deb 19 December 2000, c117W 85 HC Deb 17 December 1997, c196W 86 "Inquiry caught up in a holding pattern", Financial Times, 15 May 1998 87 "Flooding risk hits Heathrow terminal plans", Sunday Times, 22 July 2001 88 HC Deb 23 October 2001, c199W 19
terminals. He also referred to the problems identified by the inspector, such as: noise; extra road traffic; air quality; intrusion into the green belt; and the effects of construction. The inspector concluded that the benefits would outweigh the environmental impact as long as the effects were properly controlled. Mr Byers also outlined the following conditions attached to the development of Terminal 5: · A limit on the number of flights each year of 480,000; · The noise effects of Terminal 5 to be limited by a condition restricting the area enclosed by the 57-decibel noise contour to 145 sq km as from 2016; · Stricter control on night flights via an extension of the night quota period; · Promotion of the use of public transport (the extension of the Piccadilly line and Heathrow Express would be required before the new terminal opened); · Reduction in the provision of car parking places for the airport as a whole below that in the original proposals; · Rejection of the proposal to widen the M4 between junctions 3 and 4b; and · Work should not start before approval had been given for the scheme to divert the twin rivers.89 7.4 Construction The construction cost of Terminal 5 was estimated at around Ј2.5 billion in 2001.90 In 1996 the CAA supported BAA's proposal for a pricing formula which would allow it to pre-fund construction of Terminal 5. This followed a core recommendation of the Monopolies and Mergers Commission that BAA's revenues from landing fees at Heathrow and Gatwick should be allowed to rise by the rate of inflation minus three per cent for the five years from 1 April 1997. The figures assumed that BAA would be able to pre-fund Ј230 million of the cost of the terminal. The MMC left the option open to the CAA to back an RPI-8 formula from 1997 to 2002 followed by a sharp increase in landing charges when the terminal opens. The final cost was Ј4.3 billion.91 In addition to the main terminal building, T5 also consists of two satellite buildings (the second of which will be completed by 2011), 60 aircraft stands, a new air traffic control tower, a 4,000 space multi-storey car park, the creation of a new spur road from the M25, a 600-bed hotel, the diversion of two rivers and over 13km of bored tunnel, including extensions to the Heathrow Express and Piccadilly Line services.92 89 HC Deb 20 November 2001, cc177-79 90 "Flooding risk hits Heathrow terminal plans", Sunday Times 22 July 2001 91 "Heathrow's Terminal 5: a great leap forward", The Daily Telegraph, 26 January 2008 92 transport proposals initially mooted by BAA in a 1996 public transport strategy document: BAA, Making Tracks - Airports as catalysts for public transport, 1996 20

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