PART 4 London City Airport Response to New Economic Foundations Report Royal Docks Revival

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3 PART 4 London City Airport Response to New Economic Foundations Report Royal Docks Revival a) Introduction 1. On 10 April 2014, the New Economic Foundation (NEF) published its report Royal Docks Revival: Replacing London City Airport. 2. The report recommends closing London City Airport at the earliest opportunity and seeking a sustainable neighbourhood on the site in its place (page 44). 3. In response to the publication of the report, London City Airport ( the Airport ) issued a press release rebutting the reasoning and conclusions of the report. 4. This note, prepared by York Aviation, Air Quality Consultants and Quod on behalf of the Airport, provides a further response to the NEF report from a planning perspective with reference to the City Airport Development Programme (CADP) planning applications and supporting documentation which are currently being considered by the London Borough of Newham. 5. It explains that the criticisms made do not stand up to scrutiny and there is no support in planning policy or regeneration strategies for its closure. b) Principle of Closing the Airport 6. There is no support in any planning policy or regeneration strategy for the closure of London City Airport or an alternative plan for its use. It is noted that: a. There is no mention of the closure or restrictions on the London City Airport in the Government s Aviation Policy Framework (APF). This establishes the principle of securing a balanced approach to the benefits of aviation taking into account aviation s environmental impacts. The CADP application proposals are consistent with this objective, and will make best use of existing runway capacity. b. The future of London City Airport is not specifically under review as part of the Airport Commission s Review of capacity in the South East. The primary focus of the Commission s work is the consideration of long term solutions for airport capacity in the South East. The Commission s interim report published in December 2013 is concerned with selecting long term options for Airport Capacity, with an indication that there is a case for at least one additional runway by 2030 (para. 1.3 &. 4.92). The review is based on London City Airport operating within its existing movement limits and it is noted that the Airport (as enhanced by the CADP proposals) can deliver short to medium term operational and passenger improvements, making best use of existing capacity, until the long term solution can be delivered. 1

4 c. Strategic planning policy in the form of the London Plan (2011) makes no reference to introducing additional restrictions or closing London City Airport. Policy 6.6 relating to Aviation states that the Mayor supports improvements to the facilities at London Airports in ways other than increasing the number of movements. Specific mention is made in respect of resisting further expansion of Heathrow. There is no specific commentary on London City Airport. d. Local planning policy contained in the Newham Core Strategy (2012) makes no reference to closure or restrictions. Policy INF1 refers to the optimisation of airport capacity, with the supporting text (paragraph 6.200) recognising that future growth will need to be carefully considered. e. The non-statutory Vision for the Royal Docks (Royal Docks Parameters for Development) (2011) prepared jointly by the Greater London Authority (GLA) and the London Borough of Newham (LBN) recognises that London City Airport is a major asset to London and acknowledges that its accessibility and convenience is at the heart of its success (para.43). 7. Policy makers at all levels are required to take into account often competing requirements. However, it is clear that none of them have sought to adopt policies which seek to close the Airport or curtail its operations. Instead the focus has been to guide change and the optimise outcomes. c) Specific Comments 8. Section 4 of the NEF Report seeks to provide the case for closing the Airport. It sets out its case under three headings: Diverting demand to other airports; Local economic, social and environmental considerations; and A distributional analysis. 9. In this section, each of these are considered in turn. Diverting London City Airport traffic to other London Airports 10. The NEF report starts from the premise that the opening of Crossrail in 2019 will enable passengers from London City to be redistributed to other airports without significant journey time penalties. As set out at paragraph 3.12 of the CADP Need Statement, the journey time to Heathrow will still be substantially greater than to London City from key centres of passenger demand which London City Airport serves. Crossrail will, itself, also improve the journey times to London City Airport from Central London. Even if it were possible for passengers which are expected to choose London City to use Heathrow or the other London airports, there would be substantial journey time penalties. 2

5 11. The value of these journey time savings is set out in the Socio-Economic chapter of the CADP Environmental Statement (ES) as 73 million in This makes a substantial contribution to business efficiency and is a factor in business location decisions in East London. The NEF report goes on to make a number of other assertions about the ability of other London airports to handle the passengers who would prefer to use London City. a. There is room to handle London City passengers at other London Airports 12. As made clear at paragraphs 2.13 and 2.14 of the CADP Need Statement, the Government s 2013 Aviation Policy Framework clearly identifies that domestic and short haul services are already being displaced from Heathrow in favour of long haul services with larger aircraft and that all the London airports will be full by This view is confirmed by the more recent work by the Airports Commission in its Interim Report. 13. The data set out in Table 2 of the NEF report is misleading as it deals only with theoretical spare terminal capacity at each of the airports and, significantly, ignores the fact the Heathrow already operates at the practical limits of its aircraft movement capacity in terms of reliable operations, resilient to the effects of delay. In order to reach its maximum passenger potential, there will need to be continued displacement of smaller aircraft by larger resulting in some European cities losing services completely and others seeing fewer flights with larger aircraft. This is explained further at paragraphs 3.13 and 3.14 of the Need Statement. The other airports are less accessible for the core of the London City market and, as noted above, use of other airports would increase the costs for business travellers substantially, with consequent economic damage. 14. Whilst the outcome of the Airports Commission s work may be an agreement for substantial additional airport capacity at one of the airports serving London, this will not provide capacity which is vitally needed now to ensure that flights and passengers displaced from Heathrow can be accommodated at an airport best suited to the market. For many short haul business routes, this is London City. b. London City destinations are largely served by the other airports 15. Although other airports do offer services to some of the same destinations as served from London City, these meet the needs of their own catchment areas. As illustrated in Figure 3.6 of the CADP Need Statement, London City sustains a high share of the market in the key East London districts and it is these passengers, particularly the business travellers, which would be substantially inconvenienced if they had to use other less well located airports. This is explained in paragraph 3.14 of the CADP Need Statement. According to CAA Survey data, 54% of the Airport s passengers are travelling for business purposes and 60% of passengers are inbound visitors to London. 3

6 c. Flights could accommodate additional passengers within current capacity 16. The NEF report asserts that the relatively small number of passengers which use London City could be accommodated on flights which already operate from the other airports. However, this takes no account of airline booking practices and the actual achievable load factors. As explained at paragraph 3.8 of the CADP Need Statement, load factors are constrained on short haul flights because they have a high proportion of business passengers travelling on flexible fares, who are able to switch between flights at short notice. On such routes, airlines sell a lower proportion of seats but command a premium price for such tickets so as to enable passengers to switch. This is highly valued and an important component of a business passenger offer which is the largest component of London City s activity. d. Surface access is improving travel to other airports 17. As illustrated in Table 3.3 of the CADP Need Statement (repeated below), London City commands a substantial journey time advantage within its catchment area. The position with Crossrail is explained in paragraph 3.12 of the CADP Need Statement, as referred to above. Even with improvements, the journey times to the other airports will be substantially greater than to London City. As such they cannot provide a realistic alternative for time sensitive business travellers, which make up the majority of passengers using the Airport. Table 3.3: Public Transport Journey Times from Key Boroughs to Airports (mins) London City Heathrow Gatwick Stansted Luton Southend City of London City of Westminster Newham Tower Hamlets (Canary Wharf) Source: TfL Journey Planner e. Future demand requires management 18. The CADP growth projections for London City are based on the Department for Transport 2013 forecasts, which took climate change implications into account. Over the CADP timeframe, these growth projections are well within any restrictions imposed by climate change obligations, although the Airports Commission has indicated that these may impact on the longer term growth potential post

7 Local Impacts and the case for closure 19. The NEF report totally ignores the impact which the air accessibility via London City has had on the development of the East London area as a whole. Many of the activities which the report considers as beneficial, such as the Siemens Centre or Excel, were attracted to the area in a context where London City Airport existed and was growing. The Airport was one of the first developments in the regeneration of the Royal Docks and was a key influencing factor in almost all that followed. This is apparent in relation to the planned ABP development (on the north side of the Royal Docks) and the Silvertown Scheme (to the west of the Airport), where both developers have expressly stated that the presence of the Airport was a key factor in their decision to invest 1. Closing the Airport would have significant ramifications and wider knock on consequences on development in the area. The study simply does not examine this or establish where the balance would lie. a. The contribution to the economy 20. The NEF report sets out to examine the economic contribution of the Airport by comparison with that from ExCel. The comparison appears to contain a number of inconsistencies. At the headline level, it would appear that activity related to ExCel may have a greater total impact on the UK economy currently than London City Airport, possibly as much as double. Different figures are quoted in different documents (the GLA minutes used by NEF give different data to that given in ExCel s Corporate Social Responsibility (CSR) Report) so the basis and validity of the ExCel figures is not clear. Both headline figures for the Airport and ExCel include the spending by tourist visitors as well as more direct impacts, with indirect and induced effects added on top. ExCel has not published the detail of its headline number more recently but detailed information provided in the 2007 CSR, when the total impact was assessed as 750 million, the same as London City in 2012, showed that 211 million was generated directly on the ExCel site and this included spending by visitors in hotels. If this expenditure was excluded to provide a comparable figure to London City s direct impact then the direct local impact of both operations is likely to be of a similar magnitude at around 110 million a year currently. The comparison between 110 million and 513 million direct impact set out by NEF is s not comparing on a like for like basis. b. Jobs 21. Currently, around 2,000 people are directly employed at the Airport (approximately 1,900 full time equivalent jobs). Although the number of people employed at the Airport has shown only limited growth over the period since the previous planning application this is a direct consequence of the reduction in passenger numbers during the recession, with air traffic levels only now reaching the previous peak seen in In terms of the number of people employed relative to the passenger throughput, employment is as expected previously. 1 Spokesman for ABP and Sir Stuart Lipton representing Silvertown Quays quoted in article on Page 4 Financial Times, Friday 11 April

8 22. In comparing employment to ExCel, NEF again make inconsistent comparisons. Whereas as the employment projections for London City are based on a local employment catchment area and relate to full time equivalents, the 53,000 jobs cited for ExCel at 2017 are jobs, many of which being part time or temporary and appear to include all tourism related employment for visitors which during their stay in the UK visit an exhibition at ExCel. In terms of direct on-site employment, the ExCel CSR for 2012 cites 3,400 direct local jobs, with the remaining jobs being related to broader supply chain and tourism impacts, which as noted above may be overstated. Assuming the breakdown of the on-site employment is similar to 2007, approximately 41% of jobs are temporary at peak times and it is not clear the proportion of part time employment amongst the remaining jobs, which may also include employment in local hotels which has been treated separately in the London City projections. Again, it would seem likely that actual local employment at ExCel is broadly equivalent to that at London City. Furthermore, ExCel report 44% of employees as being resident in East London, with 24% from Newham. This compares with London City where 61% are resident in the local study area and 27% from Newham. c. Business and Regeneration 23. As noted above, the NEF report ignores the role which the presence of the Airport has had in the regeneration of East London and in attracting business to the area. Indeed, ExCel has acknowledged the presence of the Airport as being a factor in its success. In the Integral to Growth Report, published in February 2011, it was estimated that the presence of the Airport could, on conservative assumptions, have contributed to attracting activity to the City, Canary Wharf and ExCel equivalent to in excess of an additional 900 million of GVA. This is comparable to some of the wider benefits cited by NEF in the ExCel comparison. d. Fiscal contributions 24. NEF deals only with very narrow fiscal contributions and fails to examine the tax impacts, such as for example the 23 million of air passenger duty paid by passengers using the Airport today or wider tax payments by companies operating at the Airport. It is not clear what point it is seeking to make. e. Noise impacts 25. The NEF report expresses concern about the number of residents affected by noise and how this will increase with future proposals. Concerns are also expressed in respect of impacts on local schools. 26. The Airport has been located in the Docks for many years, before much of the housing in the surrounding area was planned or built. Much of the housing stock is therefore insulated and local residents used to the Airports presence. There are commitments in existing planning agreements for the Airport to continually monitor noise experienced by the local community and if to assist with the further insulation of properties. 6

9 27. The Airport only operates for limited hours with no night flights and closure for part of the weekend. The busiest periods at the Airport also do not coincide with the periods when the local community are likely to be most sensitive to noise, with peaks in activity in the morning and evening rush hours. 28. Drew Road Primary School has been built to ensure that it is adequately protected from the effects of aircraft noise. Other schools in the local area also benefit from noise insulation. The Airport will continue to liaise with sensitive neighbours regarding the CADP construction phase in order to minimise disruption. f. Air pollution 29. The NEF report expresses concern about the poor air quality conditions in Newham and the particular effects on the health of deprived communities. The report also raises concerns with regard to the air quality monitoring undertaken by the Airport, stating that monitors have been removed. 30. Health issues have been considered extensively as part of the CADP Applications which was accompanied by a Health Impact Assessment (HIA). Construction and operational emissions of particulates (PM 10 and PM 2.5) and nitrogen dioxide (NO 2) will remain within standards set to protect people s health. 31. The CADP HIA concludes that the changes in local pollutant concentration and population exposure are not of a level to quantify any change in health outcome, and the proposed CADP does not constitute any measurable risk to the local community, passenger or visitor health from changes to nitrogen dioxide and particulate matter exposure. This analysis used data concerning health effects associated with air pollutant exposure published by the UK Department of Health's Committee on the Medical Effects of Air Pollutants (COMEAP). The HIA further concludes that the proposed CADP will not have a disproportionate impact upon any single community group (considering community grouping factors such as age, ethnicity, or religion). 32. The HIA also highlights the fact that projects that have the potential to support regeneration, reduce unemployment and improve socio-economic circumstance, which will contribute to improving the health and wellbeing of socio-economically deprived communities (para 5.91). The proposed CADP presents a significant increase in the number of direct, indirect and induced income and employment opportunities, with a high proportion of the new jobs likely to be taken up locally. This will have significant socio-economic health benefits at a regional and local level (para 5.98). 33. Chapter 7 of the CADP Environmental Statement also describes how the Airport engages with the local community in numerous different ways, generating tangible benefits to the quality of life of local residents. The Conclusions of the HIA (para 6.19) are that when accounting for the underlying factors defining the local burdens of poor health in the surrounding area (largely socio-economic and lifestyle related), and the direct, indirect and induced socio-economic benefits from the proposed CADP, alongside the impressive catalogue of committed community support initiatives introduced by the Airport to optimise local health benefit uptake, the proposed CADP constitutes a net health benefit. 7

10 34. The Airport operates a comprehensive air quality monitoring programme at 20 sites in and around the airport boundary. The location of these sites has been agreed with, and is subject to approval by, the London Borough of Newham. The air quality objectives set by Government to protect human health relate to ambient air quality, and the monitoring sites have been established to reflect this. There have been no recorded exceedences of the air quality objectives at any relevant location since monitoring commenced in Over this time period, only one monitoring site has been moved, and this was directly related to works associated with the Olympic coach park. One site is located at rooftop level and this provides some context as to whether emissions from aircraft at low altitude may be contributing to pollutant concentrations. All of the other (19) monitoring sites are at ground level locations, many close to roadsides or close to sources within the Airport boundary itself. Distributional Considerations g. Community severance 35. The NEF report expresses concern about the isolation of North Woolwich because of the Airport. This area has always been separate from its surroundings due to its location between the River Thames and the Royal Docks. London City was the catalyst to the Woolwich branch of the DLR and without this link this area would significantly less connected that it currently is today. Sixty eight percent of passengers travelled to London City Airport do so by public transport; much higher than any other UK Airport, including Heathrow (40%), Gatwick (37%) and Stansted (47%). The concentration of public transport at the Airport means that it is available to local residents, with for instance a number of bus routes converging at the Airport in addition to the DLR. The Airport also provides amenities which are used by local residents including shops and cash machines in the land side part of the terminal. h. Passenger benefits 36. The passenger journey time benefits relate to the situation today and will grow as the volume of passengers using the Airport grows. As noted above, Crossrail will reduce the relative journey time to Heathrow for some passengers but it will equally reduce journey times to London City for others. On balance, the impact is expected to be broadly neutral. However, given continuing displacement of passengers from Heathrow as long haul services replace short haul, the journey time advantage of London City over the more distant alternatives would be expected to increase rather than decrease. 37. It is not disputed that the income of passengers using London City tends to be higher than the average. However, it would be wrong to say that the benefits accrue only to the wealthy few. To the extent that these business travellers lead to activity which supports employment both at the Airport and in the local area, the benefits will flow throughout society. 8

11 38. The Airport itself supports a wide range of employment, education and training opportunities, for example, over the last five years it has: Provided 371 local people with employment through Take Off Into Work Provided over 200k in grants for local students embarking on their university education Donated over 4000 hours of volunteering time to local projects Engaged with 20 local primary schools and 24 secondary schools Provided work experience weeks to 240 local students Continued to support our local children s hospice, Richard House i. Quality of life impacts 39. As explained, the Airport has been located in the area for a number of decades before much of the local housing was planned and built. In granting planning permission for the Airport initially, and any subsequent permissions, the overall benefits of the Airport were considered to outweigh any negative environmental or community impacts. j. London City Airport in an unequal London 40. As noted above, it would be wrong to categorise the benefits of London City as accruing simply to those passengers who use it. The beneficial economic impacts flow through the local community in terms of the range of employment supported directly and indirectly. d) Conclusions 41. The NEF report was prepared in conjunction with lobby groups who are against the ongoing presence of the Airport. Consequentially it does not, therefore, provide a balanced review of the benefits and impacts of the Airport. 42. This note has carefully reviewed each of the criticisms made by the NEF and demonstrates that they do not stand up to scrutiny. 43. There is no support in planning policy or regeneration strategies for the Airport s closure. Indeed, there is clear evidence that it has been an important catalyst to the regeneration of the Docks and East London more generally. 9