DCSIMG

Comment: Getting the business of aviation right

Martin Flanagan

Martin Flanagan

  • by MARTIN FLANAGAN
 

THE clear blips on the radar suggest strongly that Britain is not going to get a new airport on an island in the River Thames east of London, even if it causes chagrin to one blond mop-haired mayor.

Instead, the interim shortlist of the Airports Commission to meet massively growing business and leisure travel by 2030 places the ball in Heathrow or Gatwick’s court.

As such, it mirrors much of the residential property market: an older generation of airports looking likely to block a younger, new generation getting its foot on the aviation ladder.

The current preference of Sir Howard Davies, head of the commission, is for a new runway either at the existing two-runway Heathrow west of London or at currently one-strip Gatwick south of the English capital.

A third option on yesterday’s shortlist, with a final decision due in 2015, felicitously after the next general election for such a noisome electoral issue, is that Heathrow might extend one of its existing runways so that it could operate as two independent landing strips for planes.

One bookmaker has already moved to shorten the odds on Heathrow being chosen from 3-1 to 5-2. I don’t think the business community will be that fussed which of the leading contenders is eventually chosen as long as government gets its finger out after the final decision.

Aviation capacity has been the jumbo on the runway of our political life for decades now. It would be nice if it could be definitively sorted in order to hone Britain’s international business competitiveness and anticipate exponential globalisation of trade.

One clear advantage Heathrow has (an enlargement of Stansted airport has also not impressed Davies) is that it is a hub airport, connecting short-haul to long-haul flights worldwide.

That puts it squarely in international competition for business passengers with Amsterdam, Frankfurt and Paris. The smaller, although still big, Gatwick is a pure point-to-point airport, therefore benefiting the business community arguably less if it gets an additional runway.

Many industry experts say another advantage both Heathrow and Gatwick have is that giving either a new runway would cost notably less best than building an airport from scratch.

Although the age of austerity will hopefully be well behind us when the new capacity is operational, the burden on the taxpayer is a legitimate factor to be considered, even if environmental concerns and business lobbying tend to gain greater airtime.

Dysfunction built into insurance drive chain

MOTOR insurance has a dodgy chassis. So the Competition Commission (CC) has decided in the provisional findings of its probe into the £11 billion industry.

A key faultline in the sector for consumers, says the CC, is that the party handling any accident claim, usually the insurer or intermediary representing the “innocent” driver, is not the insurer likely to pay for the prang.

The roundabout shunt effect, however, is that by divorcing “control” and “liability” for any claim there is little incentive to keep costs down for repairs, replacement cars, etc.

It is a classic case of biting off your nose to spite your face because all car insurers are the liable parties sometimes so it all feeds into higher premiums for all drivers.

The car insurance industry has hard-wired dysfunctionality. The CC says it is considering far-reaching reforms. Bravo.

 

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