Heathrow

Have you been wondering why BAA has gone quiet on its plans to expand Heathrow and Stansted? Just a few months ago it was keen to stress that both airports would have new runways as soon as the tarmac could be poured, but their latest financial reports shows that BAA is so broke that it is reusing teabags* in the staff canteen.

So far this year BAA has lost over half a billion pounds from the three London airports, with passengers down by 4 million. The biggest decline was at Stansted, which lost 14% of passengers. Domestic flights fell 10% across the airports, with flights to the EU down 8% and international flights down 6%. So what need for the new runway - or for the increase in passenger numbers they twisted arms for last year?

In other BAA news, Gatwick still hasn't sold. BAA wants £1.5 billion, down from £2 billion last year, and has challenged the Competition Commission's demand that it sell Stansted, Gatwick and either Edinburgh or Glasgow within two years. There's some complicated leveraging thing going on with bonds and stuff, but basically it's overvalued the airport and can't sell it.

No cash means no expansion, whatever spin BAA chooses to put on it: bulldozing villages doesn't come cheap, especially when we're digging in to resist. It's perhaps a little too early to start celebrating, but let's face it: we've won**, even if the other side hasn't conceded defeat just yet.

* I am reliabily informed that reusing teabags is a perfectly sensible thing to do. However the image of BAA's staff fighting over a second-hand Tetley while outside the offices hordes of angry residents and anti-expansion campaigners wave placards and chant slogans is so heartening that I thought I'd share it with you.

** Given that I've started doing these little notes, I may as well continue: there plenty of regional airport battles to fight and win, but passengers and profits are down across the sector. Perhaps that iconic symbol of the fight against climate change won't be in Sipson and Harmonsworth, but at Newquay, Doncaster or Birmingham airports instead...

Source: Flickr

Business leaders are supposed to have a head for figures, and certainly pretend to be  anti-ideological and just dealing with facts (when they aren't giving 110% that is). So why did the British Chamber of Commerce put out a report yesterday which massively overstated the case for the third runway?

The BCC are about as unreformed as capitalists get; never happier than when they're plundering our future and ferretting the proceeds into offshore bank accounts. But their report, entitled 'Why destroying Sipson and Harmondsworth will make me millions', makes a number of very basic errors which a GCSE media studies student would have been failed for. Stand by for a techie, economics-jargon filled discusion of monetised benefits...

Firstly, the BCC report claims £30bn benefits from expansion, but forgot to include any costs. This includes the cost of climate change, noise, air pollution, and congestion and is a bit like saying asbestos is great at stopping fire without mentioning that is also highly toxic. It also means that the report failed to take into account the value of time lost by executives sitting in traffic on the M4 and M25 as they try in vain to get to the airport (see below).

Secondly, those £30b benefits are predominantly aggregated time savings, not actual money. To work this out, the BCC has worked out how many people will save how much time once the runway is built and multiplied that by the value of each minute they're saving. Famous critic of time saving valuation John Adams once worked out that the best place to put London's third airport, given the extent that economic benefits favour time savings, was Hyde Park. However BCC has gone further, using a figure which is 40% higher than the Department for Transport uses. I know business leaders have inflated sense of their own worth, but that's ridiculous.

Thirdly, they calculated the relationship between economic growth and investment in infrastructure according to the figure in the Eddington report, of 0.2% increase in GDP per 1% increase in capital spend. Never mind that Eddington was the former head of British Airways and trying to justify airport expansion; this figure has always sat at odds with the most comprehensive study of infrastructure investment, the Standing Advisory Council on Trunk Road Assessment (SACTRA).

The 1990s studies by SACTRA found that there was little or no link between investment in infrastructure and economic growth. If you can force yourself to read 300+ pages of economic-speak, you'll discover that: non-transport factors in a region (such as the availability of skilled labour) were usually a more critical factor in regenerating a region than transport infrastructure, and there would be winners and losers when new transport infrastructure was built - competitive areas may gain improved access to weaker areas, which in turn may suffer job losses.

Next the BCC made loads of claims about the benefits of transfer passengers. Former BA boss Bob Ayling dismissed this, saying that transfer passengers only benefit the economy by buying a cup of tea and a biscuit. CE Delft challenged the view that, if Heathrow does not expand, firms will locate to other cities in Europe which have large and expanding airports:

"Although the access to good aviation links is one of the location factors for new companies, it should be noted that currently London is already ranked number 1 for its transport links with other cities and internationally. Notably, the impact of the location factor ´access to air services´ is of greater importance with regard to companies’ decisions on where to invest within the UK, than on the decision regarding the country in which first to locate……. One may ask oneself the question what additional effects could be expected from further adding to the capacity of the airport."

Finally, the BCC forgot an age old adage of economics: people like to spend money. Their report assumes that if we can't buy an airline ticket, we'll hoard our money under the bed and never, ever spend it. This is nonsense of the first degree: if flights to the Bahamas are too expensive, we'll go to France or Italy (or Blackpool) instead. CE Delft: "It is clear that the money currently spent on aviation would be spent in alternative ways in other sectors if there had been no aviation, or in case of restrictions on runway capacity. Thus it would also contribute to GDP and employment, and have indirect and induced effects."

So dodgy facts, omissions and outright untruths: pretty much what we've come to expect from the aviation industry. And to think that the authors of this report are the very people the Government keeps going to for economic advice. Could that be why we're in such a bloody mess?

The airlines are collapsing. Air traffic is down 11%. BA can't afford to pay its staff. Airports are looking more and more like ghost towns. It's bad news all round - and UK tax payers could be asked to bail out the third runway should (or rather, when) BAA and Ferrovial bite the financial dust.

The Government has been planning a belt-and-braces plan to take over BAA's airports should it go into administration. MP John McDonnell - wielder of maces, defender of Hayes and Harlington - discovered that we'd end up spending tax revenue on the expansion itself.

"We know the Government is going to have to pay for the collateral damage in terms of the impact on the local communities, the shift of populations, the new schools, the creation of new communities elsewhere for these people to live," he told the House of Commons.

"We now believe there will be direct subsidy as a result of BAA's precarious financial position and the precarious financial position of Grupo Ferrovial globally (BAA's parent company) and that we will have to actually subsidise the development itself, the construction of the runway and the terminal."

No, said Transport Minister and runner up in the 2004 Medway bullfrog lookalike competition Paul Clark. Heathrow was so awesome we just had to have more of it. He did make one concession though: Heathrow expansion should not come "at any price".

Given that the price is already the communities of Sipson and Harmonsworth, the undermining of our carbon reduction targets, the breaching of EU NOx levels, the health and wellbeing of most of London and more bloody flights to nowhere, just what price does the amphibious Minister think is too high to pay?

So yesterday we were proud to announce a collaborative comedy performance starring none other than BAA's Colin Matthews - a man known throughout the business community as a bit of a laughing stock. Colin is performing his one man show at City University on Tuesday the 19th of May - and hundreds of you are eagerly preparing to cancel some pretty hot dates to make it there.

But while the activist community was getting itself nicely worked up, Colin thought you weren't excited enough. After a quick chat with our event department, he decided that what you needed a little more encouragement. So we arranged for a special sneak preview of his forthcoming show on the Guardian's blog site, comedyisfree. A taster, if you will, of all the mirth and merriment that is to come next Tuesday.

And what mirth! What merriment! Who could fail to laugh their socks off when Colin quipped that a third runway was needed because "Leeds/Bradford and Durham Tees Valley airports both lost their links to Heathrow as airlines shuffled their slots"? What a joker: they lost their links because - wait for it - the flight was more expensive and took longer than a nice trip on the train! And I hear that his punch line, "we should all be concerned that Frankfurt has direct links with six Chinese cities" brought the house down in many a West London community.

So cancel your dinner date and ignore that anarchist meeting you were going to attend. Hop on your private jet and fly into City University, Tuesday 19th of March for a one-night-only comedy extravaganza. Tickets are free, but be quick!