Airport Runway again……

dudleyowenDeputy's Blog 2019

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This week we re-ran the airport runway extension debate …..again. Here is a copy of my speech.

“The world is a changing place that is undeniable. That change is fast paced and relentless, but one thing that is driving the change is the realisation that we cannot continue making decisions about our future relying solely on the tools of the past.

That is, in my view, what we are being asked to endorse today in regards to the runway extension. A costly exercise in creating a business case which entrenches us in looking backwards.

I understand why some are calling for the business case to be delivered. It is after all a second phase of the PWC work and this would seemingly take the work to its logical conclusion…. However there are a few points that I wish to make in this respect.

Firstly based on much evidence that I have already seen, I disagree that a runway extension outside of the perimeter fence will reap the purported rewards or deliver the return on investment that we require to justify the huge spend and therefore cannot support a business case for this.

Secondly, substantial work over the years including this latest report, has already been done which has given good indications of capital costs and environmental impact versus potential returns from tourism and new business capture.

The PWC report, is informative and from my reading of it and the presentation from the authors – it is clear to me that they are not endorsing a runway extension, rather saying this is an option, but not a quick or cheap fix option and that it may not deliver the return that we would be seeking.

Thirdly the report was primarily focused around infrastructure and market based options for improving our air links. PWC were not though asked to review Aurigny’s strategy or their operating model which was one of the “significant market-based, strategic mix of options” which we are told “may bring increased connectivity by changing the basis of investment decisions by airlines”.

Well that leads me onto a subject that many of us like and that is the often called for: need to sweat our assets, making what we have, work better for us. Making sure that our state-owned airline is working to its optimum.

Now I would definitely support a further review into Aurigny, by independent consultants – which PWC suggest – to know where we can give the best direction to optimise their operation, via the shareholder objectives that we give the business.

Deputy Ferbrache asked what we might be prepared to subsidise in order to reduce fares….er up to £700,000 perhaps?

If that will really make a difference because he has seen the same reports that I have and the work done on price point elasticity shows that the price has to be driven down substantially in order to encourage people to make a journey just for the sake of it….

We also know we have some real jewels in our tourism treasure trove which need support and attention. Enhancing our offering as Deputy Queripel has spoken already about along with confirmed this week that a Tourism Action Plan is currently be worked on will be proactive on these points.

Perhaps controversially ……we could even look into the commercialisation of our airport to encourage enterprise and efficiency in its operation – the only publically owned one in the Great Britain bar Cardiff I believe? What benefits could be reaped from the commercialisation of that I wonder? Let’s ask Jersey – that’s how they’re running theirs nowadays.

Lastly and here my thoughts are completely aligned with those of Deputy Hansmann-Rouxel and I am sure one or two others…
…..climate change casts a shadow over us all, no matter where we are in the world. It is no joke, it’s not a transitory issue which will go away. We need to take it far more seriously than we have to date.

I don’t think I’m too far off the mark when I say that very few States policies are measured against their carbon neutral credentials – with the exception of those from E&I…..

My experience is that consideration of the environmental consequences of policies is not structured into our decision-making.

I feel critical of this in hindsight and think that we should change this and there is no time better to start than the present.

We are alive to changing in our approach in decision making at a governmental level ….. in the way we do business, the way we travel, the way we approach leisure – the way we view ourselves, …a smarter approach, all in the face of the threats from climate change and the consequences of irreversible environmental damage.

Guernsey is changing, the world is changing and with the increasing awareness of the catastrophic impacts that modern day human activity has had on the environment, for us to be trying to make the case to continue down a path which essentially is an investment in the trend of unsustainable growth, is to me illogical.

With many governments around the world especially those in neighbouring Europe favouring a robust march towards a net zero carbon position by 2050 – I struggle to understand how a conversation to try and progress the extension of our runway fits into these type of aims.

Shouldn’t we actually be sharing these aims?

We have the Energy Policy due to be presented to this assembly in a few months, I hope – will that I wonder be fully endorsing the introduction of the higher carbon emitting aircraft that are mentioned in the report such as the A319 & Boeing 737s into Guernsey and our local atmosphere?

An interesting study carried out last year by the European Business Aviation Association concluded that the millennial generation – believe that climate change will have the biggest impact on the future of sustainable air transport. This will drive realistic and innovative change in the marketplace.

But our conversation today is not reflective of that at all.

The issue of climate change, should be complemented by our desire to reduce carbon emissions, but the policies we are making instead creates a tension between the two.

I fear this tension will hold us back from making sound judgements about our transport infrastructure and connectivity needs, which the younger generations will not thank us for.

The comments from Alderney Representative Roberts yesterday where for me a demonstration that the threat that carbon emissions pose are not always taken seriously: suggesting that Deputy Brouard join climate change protestors on London Bridge – they are at least drawing attention to the issue, whether or you’re your like the way they are doing it.

And it is time that we all started not just to sit up and listen, but also take action by changing the way we do things.

As is often the way, this particular question is coming to the States at the wrong time – with consideration to the Energy Policy and the Tourism Action Plan coming down the line, we are not doing this in the right order.

Any business case should absolutely be influenced by these two important policy development areas.

Now I will read in precis from the PWC report because I think that this is helpful – as Deputy Le Tocq has reminded us this debate isn’t about whether or not to lengthen our runway, it’s about whether we should only focus our efforts in looking at this as a key option to enhance our air links – I am sure that many of my colleagues have read this, but I read this also for the benefit of listeners and for the record:

The authors begin by reminding us of the objectives that the States of Guernsey have set for Air Transport:
“• Maintain and expand its air links so that Guernsey is well connected with the UK, other Channel Islands and Europe.
− Provide guaranteed connectivity to lifeline and strategic routes to the Island.
− Encourage air traffic from all other routes when this generates a significant net economic or social benefit to the Island.
− Stimulate incremental local air passenger traffic (resident and business), and visitor passenger traffic (leisure and business) to support the achievement of visitor growth objectives.
• Ensure that these air links are reliable, sustainable and affordable to all parts of the Island’s population and the visitor market
• Ensure that air links enable existing business to function appropriately and support the expansion of all types of economic activity.”

So those are our aims – that’s what where we want to be…….

PWC then go on to say that…“Determining the most cost-effective way to achieve these goals is complex, not least because it requires the consideration of a number of inter-related factors including:
• The airport and its infrastructure
• Route licencing
• The role and objectives of Aurigny
• Interplay between other modes of transport (in particular sea links)
• Underlying demand for travel, including the different requirements and expectations of residents, tourists and business travellers”

So they have identified a number of factors which need to be considered in reaching those aims. I have said already that some of those factors have never been, or have been insufficiently considered. If we go ahead with just the business case for the runway, which as we know has been considered in quite some detail since 2008 – I think that we will fail to have considered all factors properly and will fail to get even close to reaching our aspirational objectives.

The PWC report also identified the Trilemma of connectivity, reliability and affordability. This is absolutely a key point for us to understand and should shape our decision-making.
The report states that there has to be trade-off between these. They are not the first to have stated this – I have heard this many times from various aviation experts and actually calls into question the realism of some of our stated strategic aims for air links.

It is an accepted fact that as a “sub-optimal” market place we can’t have it all. And the trade-off that I am personally prepared to make in exchange for reliability and frequency ….. is affordability.

Now this means different things to different people and having been brought up travelling round the world due to my Dad’s job as a pilot – he in fact flew for one of the earliest aviation disruptors and budget airline pioneer Freddie Laker – … I am very aware of that the real cost of travel is not cheap: it never has been and never will be. The margins are thin and there is no denying that aviation business costs are high.

But many are seduced by the concept of low cost carriers and the trade-offs there are well known and are helpfully listed in the report:
including adapting capacity to seasonal demand,
dynamic pricing so that headline pricing is attractive – but last-minute prices can be more expensive than network carriers
and shutting down routes at short notice if they don’t meet the required commercial thresholds.

I have been consistent in my approach to the opposing the extension of the Airport runway length out of the perimeter fence. I don’t think that the concept stands up to scrutiny and the last 3 years that I have spent, up close to this matter as a member of the Committee for Economic Development has actually further added to this view.

A really important and key statement that supports previous research that is contained within the report is this: “Whilst the provision of a longer runway will provide sufficient infrastructure for expanded airline operations, there is no guarantee that airlines will provide any additional capacity without significant financial and commercial support. Airline fleets are finite, and airports and communities compete for routes. Airlines select routes based on perceived profitability and commercial risk considerations”

And it is this lack of guarantees on the return that concern me greatly because as far as I can see it, the only guarantees that the business case will give us are that there will be an enormous capital cost and huge environmental impact.

PwC analysed market-based options for enhancing Guernsey’s air links connectivity and identified a smarter approach to using what we have and using it better.
Some of these options are already being progressed and you have heard these from Deputy Parkinson just yesterday:
• The Committee for Economic Development has used funding from the Future Guernsey Economic Fund, to secure a pilot link from Guernsey to Heathrow from March to October 2019;
• The application by Guernsey airport of a route development airport charges discount policy for new routes; and
• The adoption by the States of Deliberation of the “quasi-open skies” approach from September 2018 has enabled the liberalisation of the licensing framework.

All of these positive policy decisions which I have been involved with and strongly supported have added to the number of scheduled flights and good level of connectivity that we have into and out of Guernsey.

PWC were engaged in order to assist the States of Guernsey in its discussions and decision making and I think that they have done a good job in considering previous research and exploring the options.. In my view there is sufficient detail given to inform any judgement as to whether any runway extension is feasible, but for me the point is whether it is desirable.

Because it is a fact that if you are prepared to throw enough money at a project you will make a business case for it.

After all a business case is merely a justification for a project on the basis of its expected commercial benefit or, in terms of the States, the return on the investment … and this is where the catch is: we can define a return on investment in so many ways there is complete flexibility for any case to be made whether or not it is logical.

So whether this is a desirable endeavour or not is very much where I sit with this matter.

We are getting stuck in the pre-War era of filling in valleys and laying tarmac in very much the wrong place. 80 years have passed and we are still looking back to this formula to provide solutions to our connectivity issues, rather than looking forward and wondering what we can do to lay the foundations for the changes that will take us into the new world of future generations?

Given the change that we are undergoing at the moment, can I really be sure that delivering a contentious infrastructure project of this type, which really is based on aging and polluting technology – the emissions from the aircraft that we will be building for, are excessive compared to the smaller type which we currently support – is the correct legacy to leave our island with?

No I can’t.

Having spoken to those who think that the extension is the panacea to all air connectivity issues that we have, it is clear that they think that the extension ex perimeter will fix the problem of fog, long queues at Airport security, hand baggage allowances, customer service and affordability.

None of this is directly the case, though there may be some of these factors affected by larger aircraft servicing Guernsey, who would be facilitated by a longer runway.

A business case can only look at the current situation to be the factual position and anything forward of that is assumption and presumption…. and perhaps some guess work?

So to conclude: Having read the policy letter, having read the report and had the privilege of talking in depth with the Authors, having spoken to many aviation experts, economists and industry specialists – having been up close to this matter for 3 years and interested since the Airport rebuild back in 2002, I have heard many reasons why not to extend our runway to a length that takes it outside of the current perimeter, but have yet to hear compelling evidence from others what problem they think an extension to that extent would fix.

So I will not be supporting Proposition 1a or 1b….however I would like to reassure colleagues, especially Deputy Hansmann-Rouxel that if this proposition succeeds and a business case is commissioned that I will be working hard to ensure that a more rounded view of the changing face of the aviation world will be taken into consideration and also that the work undertaken is done in a far more collaborative way between the relevant Committees.

Before I close, a few words about the proposition 2. Yes of course sea links are key part of our connectivity and therefore extremely important for Guernsey.

But Deputy Parkinson yesterday put forward strong and correct arguments against the work that P & R are proposing to do to look at contingency options for our sea links, specifically to examine the cost and feasibility of establishing a stand-alone ferry service.

The Committee for Economic Development – where mandate sits – are continuing to work to ensure that our sea links are secure using private services.

So to spend the best part of half a million pounds on an investigation into buying a boat, just in case, is not an idea that I can support at this time.
Thank you Sir.