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Airport expansion plans grounded by Covid and climate change

Last week, British Airways, Virgin Atlantic, and Heathrow CEOs stood on an empty runway, Resumption of overseas travel Sent a clear message: The airport is desperate to get back to work.

The airport pandemic continues to be disastrous. In the UK, a loss of £ 2.6 billion can occur between April and September. This is because the outlook for the second summer, when there is no large amount of overseas travel, will increase.

Airports face two challenges: recovering from a pandemic and addressing climate change. The need for expansion is questioned when the future of travel is uncertain.

So far, most of Britain’s privatized airports have not been overly dependent on government. Only Gatwick Airport, which is 50.01% owned by Vinci of France, uses the Bank of England’s Covid Corporate Financing Facility, which provides temporary grants and loans.

Instead, airport owners have reduced operating costs and capital investment to keep cash. This has so far supported corporate cash flow, along with stock injections and suspension of dividend payments.

“Lenders treat borrowers in a very different way than they did after the global financial crisis,” he said. Macquarie Asset ManagementIs investing in this sector through Aberdeen Airport, Glasgow Airport, Southern Pton Airport, and AGS Airport, a 50:50 joint venture with Ferrovial, which owns the much smaller Farnborough. “At that time, it was a pretty confrontational relationship. It’s far from what it is now.”

“The lender basically says it’s not your fault — we speak wisely about exemptions and amendments, and no one is responsible,” he added.

Nevertheless, goodwill has its limits. In the pre-pandemic era, airports were considered a safe investment. It generated a relatively stable and predictable source of income and was often associated with inflation. Most privatized airports are fully owned or held on long-term contracts and are protected by their exclusive position as an exclusive provider in a particular area.

But on Thursday, the Airports Council warned of a “serious airport investment crisis” in Europe after the industry was forced to take on more than € 20 billion in additional debt last year.

It casts doubt on the expansion plan. Howard Davies led a £ 15m survey of airport capacity for almost three years. HeathrowThis week, he said he was no longer sure if he needed it. “Heathrow Airport is happy to be able to fill the two runways,” he told LBC.

“I doubt [Covid] Perhaps it changed the profile of future aviation demand. “

He has economics 3rd runway It still makes sense, but if you need it in the southeast, it should be in Heathrow.

Still, most industry figures believe that air travel will recover.

“Demand is expected to be a problem for the London market again before the pandemic or shortly after 2025,” said Stewart Wingate, CEO of Gatwick Airport. Told.

British Airways Airbus A319 aircraft take off from Heathrow Airport. The airport’s proposed third runway may not currently be needed © John Sibley / Reuters

The government predicts that flight demand in the UK will increase by 50% from 2018 levels by 2050, and airports from Gatwick to Glasgow are pushing to allow expansion for use. I will.

Many development projects have been put on hold due to the crisis, but none have been abandoned.

The industry plan is HeathrowIf the third runway costs £ 14 billion, demolish the house and fill part of the M25 with a more modest proposal to raise the passenger cap at airports, including Bristol.

Others, including London City and Gatwick, are urging the airfield to be restructured to allow for more takeoffs and landings. Southampton Airport has recently been granted planning permission to extend the runway by 164m to allow for larger planes.

Even if many of these projects are approved after the pandemic, they still face major hurdles from a keen focus on climate change. Campaign Group Airport Expansion Opposition has already stated that it will launch a legal challenge against the expansion in Southampton.

Ministers also included transport in the UK’s carbon budget and net zero target this year. The government’s own climate change committee states that airport expansion needs to be balanced with capacity reductions elsewhere.

“There will continue to be pressure to approve key projects in line with these comprehensive climate goals,” said Eleanor Reeves, a partner at law firm Ashurst.

The aviation industry argues that expansion is not incompatible with its climate change efforts and points out a decarbonization program that includes a net zero target for 2050.

“There is no silver bullet for aviation and climate change resolution, but it is feasible,” said Andy Jefferson, program director for Sustainable Aviation, an industry-owned group of manufacturers, airports and airlines.

This strategy involves more efficient flight, but also relies heavily on unproven new technologies such as electric aircraft and sustainable fuels that are not yet commercially viable.

However, there are signs that investors are increasingly supporting environmental activists.

David Lowery, Head of Research Insights for Data Analyst Prekin, said: “Depending on how serious they are, these assets can be completely off the radar.”

Airport expansion plans grounded by Covid and climate change Source link Airport expansion plans grounded by Covid and climate change

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