LONDON BRIEFING:BRITISH BUSINESS leaders have weighed into the debate over the future of Heathrow airport, coming down firmly against the UK government's controversial plans for a third runway.
Their surprise intervention is another blow to the increasingly isolated British prime minister Gordon Brown and gives an unexpected boost to environmentalists, who have long campaigned against any expansion at Heathrow.
The perceived wisdom has always been that financiers in the City of London and the wider business community would welcome the additional capacity the extra runway would bring to Heathrow. But corporate luminaries including Sainsbury’s chief executive Justin King and Jon Moulton of private equity firm Alchemy Partners have now made it clear they are in the opposite camp.
They have formed a lobby group against the third runway and kicked off their campaign by publishing an open letter in which they argue that the benefits are “unclear and unproven” and the business case “simply does not stack up”. A new runway would have no guarantee of securing a greater number of international or domestic connections and could even reduce them, they argue, accusing the government of failing to have adequately explored alternatives. Wearing their corporate and social responsibility hats, they also raise the “quality of life” question, which they say is “too important to ignore”.
Air quality in the Heathrow area already breaches EU standards and a third runway would put people’s health further at risk. Nor can climate change be ignored, they say.
Finally, they cite the millions of people in the UK who oppose the runway. They are “our customers and our colleagues” and the business community “must take account of the strongly held views of those living in the broader community in which we operate”.
One of the leaders of the rebel group is Russell Chambers, the man dubbed Tony Blair’s “favourite investment banker”. He hit the headlines a few years ago for lending the then prime minister his Bermuda shorts on holiday in Barbados. Chambers, who apparently lives in the Heathrow flight path, is a senior advisor to Credit Suisse.
Other signatories include media tycoon James Murdoch; Ian Cheshire of Kingfisher; Charles Dunstone of Carphone Warehouse; and Sir Roy Gardener of catering group Compass.
They represent a powerful cross-section of British business and their public stance on so controversial an issue is to be welcomed – even if one or two happen to live near the flight path. But why have they taken so long to make their views known? After all, organisations that speak on behalf of business, such as the Confederation of Business Industry and the British Chambers of Commerce have been equally vocal in their support for the government’s plans.
It seems the powerful business leaders were reluctant to speak out earlier for fear of offending customers who serve the airport industry and who would benefit from the runway. Now that their views are public, they hope other opponents will come out to join them.
Environmental lobby groups were delighted with the turn of events – not to mention the spectacle of, as Greenpeace put it, “big business trashing big business”.
The growing opposition to the third runway is a blow not only to the government but also to airports operator BAA, which yesterday underlined the severity of the crisis facing the industry as it reported falling passenger numbers and soaring losses.
Interest payments at BAA, which operates Heathrow, Gatwick and Stansted, spiralled to more than £300 million (€339.3 million) over the first quarter, while passenger numbers at its London airports dropped by 10 per cent. Despite a boost from higher passenger charges, losses rocketed to £316 million.
Owned by Spanish construction giant Ferrovial, BAA is weighed down by almost £10 billion in debt, a legacy of its takeover by the Spanish firm three years ago.
The dismal figures from the group, accompanied by a warning from BAA chief executive Colin Matthews that trading will remain difficult for the rest of the year, will only serve to strengthen the case against the third Heathrow runway.
The growth assumptions made by the government (and BAA) when calculating the business benefits of expanding the airport were made in a far sunnier economic climate, well before the recession set in.
Whether business leaders are onside or not, the figures cannot be expected to stack up when BAA’s losses are rising and its passenger numbers falling at such an alarming rate.
Fiona Walsh writes for the Guardiannewspaper in London
