A new airport in the Thames Estuary, vision or folly?

In November Lord Foster added to the debate about the need for extra airport capacity in  the South East of England when he published his proposals for a new massive airport to be built in the Thames Estuary.These complement London Mayor Boris Johnson´s proposal for a new airport in the same area.The article from the Daily MailOnline (3 November 2011) provides this illustration.

However, a more informative article is provided by FLIGHTGLOBAL ("New London airport proposed to address Heathrow congestion woes" 3 November 2011)

The choice of the actual sites has been made for a variety of reasons. The most important is the need for airports to be taken away from built-up areas so as not to cause acoustic and exhaust fume pollution to the residents, workers and school children under the flight paths of the present airports, as well as safety reasons. All that is true and very real.

Other reasons given are numerous such as the need to have the airport operable 24 hours per day - especially to facilitate the night time use of the runways for freight traffic. Even for passengers there would well be an advantage in 24 hour use. By having more flexible hours the possibility of extending the take off/ landing times means the ability of offering a greater variety of operating times at the distant airports. Also connecting flights might arrive later into the airport at night and leave earlier in the mornings. This is not an unappealing option for arriving passengers whose body clock is out of kilter because of differing time zones.

Four runways would facilitate the ability to increase the number of slots(takings off and landings) so that more airlines and more destinations can be on offer to connect this "London Estuary" airport to the world. This is important, in the case of long haul traffic, since many more destinations could be offered with fewer restraints on airlines from distant countries being able to fly into a large hub and offer connecting flights (or other transport modes). For short haul traffic it is important to a country like Britain in that it would enable the airport to offer flights to/from the outer reaches of the British Isles - meaning the UK, the Republic of Ireland, the Isle of Man and the Channel Isles - together with less accessible places such as the Faroe Islands and Iceland where rail connections are no option. Even many outer reaches of mainland Britain  might gain where rail is no real option - such as Aberdeen, Inverness, Plymouth(now closed), Exeter or Newquay.

Underneath the airport there would be rail stations to provide access to local services(in the south-east of England, including a connection to Central London) and inter-city long distance services (to the major conurbations) in England, Wales and Scotland. Rail services to the European mainland could also be offered through the High Speed 1 (HS1)railline  nearby by a short connection. An estimated 300,000 passengers daily would use all the rail services providing a better and faster service than road traffic.

Additional advantages would be built in - such as another Thames barrier to stop flooding in the upper estuary area while at the same time generating electricity through tidal flows. This would power the needs of the airport and some of the surrounding areas.

The estimated capacity of the airport would be 150 million passengers annually. This is more than double Heathrow´s present annual passenger traffic.

 Need?
There are some who question the need for increased runway capacity in the South East of England. They point out that London has five airports of which only Heathrow is effectively operating at capacity. There are good regional airports serving their cities or conurbations which are operating at below capacity which could well absorb the needs for far greater numbers than at present only if the flights were provided at the local airports. The greater use of railways would reduce the need for domestic flights and where using a London airport is unavoidable then rail connections to/from the airports (such as the proposed rail-spur from HS2 - London to Birmingham - into Heathrow and out to Europe via HS1).

The most influential group following these ideas are the Liberal Democrats who are the junior partners in the British Government at this time. They were the ones who proposed a ban of any sort of runway expansion at London´s Heathrow, Gatwick and Stansted airports. The first breech in this policy is beginning to appear. FLIGHTGLOBAL, again, reported on 29th November "UK govt to explore all airport capacity options,bar Heathrow expansion".

The need for runway expansion in the SE is expressed by large and important sectors, though general public support is not there. 

The Mayor of London, Boris Johnson  "Mayor says new hub airport vital for London and UK’s future prosperity and growth" (london.gov.uk, 18 January 2011)
Virgin Atlantic Airways  "Virgin warns of £1.7 billion threat to UK economy" (ABTN, 26 August 2011)
British Airways´Chief Executive, Keith Williams "British Airways demands Heathrow expansion"(BREAKING travel news, 19 October 2011)
The Institute of Directors  "Business leaders warn UK will suffer without added airport capacity"(ABTN 20 October 2011)
Sir Michael Bishop (now Lord Glendonbrook) former owner and chief executive of the airline group BMI "Airport restrictions 'damaging economy', Tory peer says"(BBC News 30 October 2011)
........ among many others, and these are only from 2011, after the government had already decided to stop expansion at the London airports.

There are reports prepared by very different organisations which are more detailed.....
BLOOMBERG "Heathrow Airport Resists Capacity Crunch as Noise Bar Favors Coastal Hub"(14 December 2011)  This is a balanced article explaining what is happening at Heathrow, with its limitations, and the Thames estuary alternatives, as proposed.

CAPA Centre for Aviation "London’s Heathrow competitive disadvantages are beginning to hurt" (11 April 2011) A short article with some up front data reflecting the postions of the airlines, together with destinations as well as market shares.

anna aero "A Hoover Dam in the Thames – the growing political will to replace Heathrow with an all-new airport" (24 November 2011)  This is a strong article with relevant easy readable data comparing the five London airports and the type of customers as well as the numbers involved.

Vision?
There have been a lot of words spoken and written about the need to stop looking for patchwork solutions and return to the days of our our great Victorian ancestors. Those entrepreneurs, investors and engineers built tremendous infrastructure. Not only did they cover the country with the revolutionary new form of transport and communication, the railway, but also accomplished engineering feats to achieve these projects.Bridges, tunnels, magnificent stations, hotels and port facilities were all among their achievements. These skills were then exported to the world to build railways across continents and mountain ranges which were unimaginable a generation earlier to change the lifestyle of everybody who came in contact with this means of transport.

Why cannot we think in those terms yet again, to achieve marvels, especially with the latest form of travel, air transport? Cannot we provide construction and manufacturing jobs to boost the economy?

Folly?
It all sounds good but there is a lot to look at before such an endeavour can be attempted again. A macro-airport by the Thames is a macro-project so the government will be involved  one way or another. Even if the airport itself is constructed with money provided by private investors - not a sure thing - the taxpayer will have to put up the money to connect the airport to the national road and rail networks. This alone is not cheap. Also, more than likely, the government would have to provide backing for private investors (Politically, and economically, who could permit an investing bank, insurance company or pension fund go bust if everything went wildly wrong?) The crisis of 2008 demanded an excessive amount from the taxpayer to prevent a recession. 2011 only aggravated the economic situation, and subsequently government finances, in western Europe due to the crisis with the Euro, even in the UK (outside the eurozone).    

This means such a macro-project would be extremely hard, if not impossible, to finance. We do not have to look far into the past to see comparatives. The investors in the Channel Tunnel (1980s-90s)effectively lost their investment with the cost overruns, during construction, and low traffic figures during the first years of operation. At the very best they will recuperate the initial investment at the end of the 21st Century. Everybody will be very wary.

Lord Foster estimated the cost of his project at GBP50 billion (about €60 billion). His company was the architect for Hong Kong´s new twin runway airport  built in the bay off Lantau Island. This, of course, means he should know what he is talking about with regards to facilities, construction time and cost. Incidentally, Hong Kong´s government is now considering a third runway at the airport(Air Transport World 29 December 2011 "Hong Kong airport third-runway recommendation goes to government"). 

However, people will be cautious and even reluctant to invest in such a macro-project. The Channel Tunnel is a monopoly - there is no alternative rail route to mainland Europe - though there are other forms of transport. The Estuary airport is not a monopoly. It will be competing not only with other forms of transport but also with other airports, both within the UK and on mainland Europe - not least Paris (CDG) and Amsterdam(Schipol).


Even if we disregard Paris and Amsterdam there is no guarantee that London Estuary will attract the airlines and so the traffic. The airports at Southend (no big loss) and London City (much to the chagrin of businessmen in the City and Docklands) would be forced to close - their take off/landing paths would clash or be too close together. But "Estuary" would not affect Stansted, Luton, Gatwick or Heathrow. There is no talk or proposal for them to close.


To give an example of what would happen. In the 1970s Gatwick was still underutilised so the government of the day tried to get all the foreign airlines to transfer to Gatwick. They refused point blank and insisted that they stay at Heathrow with British Airways. It must be mentioned, and emphasized, here that we are talking about a time when route capacity was shared equally between the foreign carrier and BA. In that case no carrier could dominate the routes and competition with other carriers was severely limited. Now we are talking about a time of free movement without government controls on capacity not only in Europe but also to other countries. Thus obligation on carriers to transfer to "Estuary" is a non-starter. The airlines want to stay together where the traffic is generated. 

Another example is in Japan where airlines were forced to fly into specific airports.Have not the Japanese opened up to foreign airlines, again,  the more central Tokyo Haneda airport to compete with the designated international airport Tokyo Narita and this has been accepted with open arms by the foreign airlines?


One could talk about other details of objections but the list would be extensive. Suffice it to say that .......
- a project for an estuary airport(Maplin Sands) was looked at in the 1970s and rejected. Neither the weather nor the migration habits of the wild geese have changed in the interceding years.
- A massive gas plant is located on Lord Foster´s site (the Isle of Grain)providing a high proportion of the UK´s gas needs, which would have to be relocated together with a power plant.
- There is a large sunken ship loaded with undetonated explosives lying off the Island which could prove extremely dangerous if disturbed (even by vibrations from constant aircraft movements)
- The flight paths for landings/take offs would infringe on Dutch air space which obviously they would object to, especially as the Estuary would be in competition with Schipol - the approaches are from the east-south-east and not north-east as stated in the article.
- though four runways are envisaged are they not too close together for interference by airwake thus restricting usage of parallel runways?
- Are all the costs included (such as movement of other facilities as mentioned)?
There are many more questions which put into doubt such a project.

This blogger has posted opinions before about the whole question of new runways in the South East of England and my opinions are well stated there about this folly.
on 20 March 2010   "Runways in South East England"
on 5 July 2010   "Luton - The Next Best Bet ?"
on 26 January 2011 "a new airport for London"
and 3 September 2011 "Half Way Hubs"
Other solutions do exist but need a little lateral thinking.

And a Happy New Year.

A mishmash Government airport policy going nowhere fast..

You have a Conservative government elected in Spring 2010. One presumes that they are inclined to lower taxation in order to stimulate growth while letting the economic market decide in which sectors to invest so as to provide the growth in economic activity to the, eventual, benefit of all - or so the theory goes.

Complicate the whole matter by not giving the Conservatives a clear majority. They have to form a government by forming a coalition with the Liberal Democrats. This means their policies are tailored to the desires of the Green/Environmental lobby. This means great restrictions on economic activity, limiting, at least, the most vote-catching areas of economic policy.    

The results are a hybrid which has neither logical progression nor satisfactory economic lines of action.

What interests us is the effect on transport companies and the infrastructure involved. As a result of the coalition the activities of, some, airports is limited in order to reduce the uneconomic usage of a means of transport, planes, used by many but despised by environmentalists.

The usage of an enironmentally acceptable means of transport, trains, is promoted but comes up against the interests of powerful parties who happen to vote for the principal governing party.


The really environmentally damaging means of transport, the car, is unmentioned and not attacked. Each vehicle is used by one individual to travel from A to B to C to D to E to F etc. throughout the whole day incessantly producing more damage to the environment than any other means of transport.

Public transport, in the form of buses and coaches, is reduced to providing for school children, unemployed and pensioners - certainly outside the cities - to the detriment of full daytime and evening services (up to 11pm.). The car remains KING but remains unfingered. 


All this smacks of hypocrisy, but let us stick to air travel which is the principal object of the political attack. The best way is to look at this problem from a point of view relevant to air transport.


London has five main airports in 2011 - Heathrow, Gatwick, Luton, Stansted and City - each with its (considerable) infrastructure of road and rail links, with car rental firms, hotels, wharehouses, freight depots and other ancilliary services etc. All of a sudden we have three more "London" airports - Oxford, Southend and Manston. These are underdeveloped so will need the aforesaid infrastructure to be brought up to an acceptable standard so that they can be called anything approaching a London airport.


How is it then that Heathrow, Gatwick and Stansted are not permitted to expand while nothing is said about the other three "London" airports? In fact they are given free reign to expand.


Is this a lack of airport policy, just plain ignorance of what is going on, or hypocrisy again? Is it not just a double standard regime? Any development provides jobs (good) but piecemeal development (bad) just dissipates energy, financial effort and provokes mis-usage of limited land resources, as such a development at Biggin Hill or Northolt would.


One would suppose that the development of Stansted airport would mean the closure of Cambridge,  Norwich and Southend airports. This has not happened. The latter two are active and expanding, even with international routes.


Bournemouth (Hurn) has existed for many years but with Southampton to the East and Bristol to the West is it not superfluous to needs?


The quadrangle of Manchester, Leeds-Bradford, Humberside and East Midlands seems to cover the needs of a wide area. What need is there then for another new airport  at (Robin Hood) Doncaster? Is it not superfluous to needs?

One could also mention the cases of Coventry, Gloucester, and Swansea airports as being unnecessary, while also questioning the need for Dundee in Scotland.


South West England is another case. Up to recently the area has been served by Exeter, Plymouth and Newquay airports. While Exeter has a heathy business with FLYBE, Plymouth is due to close 23rd December, and Newquay has a tenuous existence. Penzance has long been the heliport for services to the Scilly Isles but even that is under threat of sale to a supermarket chain with the helicopter services being transfered to Lands End. This is not to the liking of many residents due to the increased noise of so many helicopter flights and the increased car traffic into the area. 

The airport policy in relation to the outer extremes of Great Britain are of tremendous importance. Air traffic into Heathrow is now non-existant from South West England, some Channel Isles, the Isle of Man and Inverness, while very limited into the other London airports.


If government policy is to reduce the number of domestic flights for environmental reasons are they not then prejudicing the interests of the islands and regions of this supposed United Kingdom? If the idea is to reduce the number of domestic commuter flights then why is it that it is not happening, except from the islands and the outer regions? This government policy is detrimental to the outer regions and islands so should be reconsidered and reversed.Even the magazine Business Traveller has reported the head of the Manchester Airport Group on the subject.

What is the way forward? Without doubt the market can and should determine needs. If private capital is invested into infrastructure then the government should interfere. Let the normal planning process determine the rights and wrongs of investment. Do not, however, let the nimbys determine the outcome of any enquiry - they(we) are only part of the equation.


For that reason Heathrow should be extended by a third runway while Gatwick, if it so desires, should be permitted to apply for a second runway, with Luton and Stansted under the same conditions. But what about a new airport in the Thames estuary, you might say? That will be looked at in a subsequent article.                                      

Heathrow - Gatwick Rail Link

 Just after Trans-Trax published its ideas about a proposed Reading - Heathrow link, another idea has been floated; that of a rail link between Heathrow and Gatwick airports. This was firstly mentioned on the BBC  and Daily Mail(including a map proposal) on 8th Oct. followed by Breaking Travel News. Even London Mayor Boris Johnson had his pieces to say to support  the scheme in the Evening Standard (10th Oct.).and Daily Telegraph (11th Oct).

Heathrow - Gatwick Rail link, a possible route

As Trans-Trax has proposed in this last (Reading - Heathrow) post and in other previous ones, it seems that the UK Government is taking on board some of the ideas expressed in this blog.We cannot but be satisfied.

The basic premise is to build a new line from Reading, through Heathrow and Gatwick to Ashford where it would connect to the Channel Tunnel. This idea  is called SHSL, published 24th Feb.2010. It is redundent to explain all the implications as they have been well looked at in the previous posting Reading - Heathrow Rail Connection (6th Oct.2011), amongst others.

The interesting thing is that the idea has been floated, which is the first stage in the process of convincing voters. However, it must be mentioned how the government goes about this because it is not crystal clear.The problem with governments is that they do not tell you the whole truth, usually because they are afraid of upsetting too many voters at the same time - the old addage applies -  divide and rule.

To understand this you have to look back at other policies.Why does the government want a HSR2 spur into Heathrow? To add travel time on its way north? To connect to HSR1 through that bottleneck of inner London? The idea on its own is absurd. The results would never justify the cost. However, if you plan to have direct trains from the airport to other cities then the idea falls into place. Run trains from Heathrow to Manchester and Leeds so the reduction in air traffic releases slots. With the resulting reduction in rail journey times then there would be knock-on effects for traffic to Newcastle and Scotland, with a reduction in demand for air transport. Government thinking is that more slots would be freed up. As a result the need for a third runway disappears thus justifying the decision. Unfortunately, such thinking is extremely simplistic, and as such this blogger considers it short-sighted and erroneous.

The connection Heathrow - Gatwick is part of the same thinking. Provide a fast link between the two airports and you, thus, reduce the need for competing flights from both airports. You also  treat Gatwick as another terminal and so integrate the airport into the workings of Heathrow, and subsequently you are able to use any spare capacity there for long haul slots.

What the Government does not say is that if you continue the rail line the 73 kms. due east across open country you arrive at Ashford to link up with the Channel Tunnel (This will be done eventually if intial reactions are not wholely negative). As a result you would be able to offer direct train services from both Heathrow and Gatwick to Paris, Brussles, Rotterdam, Amsterdam, Düsseldorf, Cologne and even Frankfurt.This is the sort of service the Government wishes to emulate which already exists in airports such as Geneva and Zurich.

Gatwick - Ashford rail Link a proposal

How many slots would then be released for other services? The Government would consider very many but the real number would probably not be so many in an ever expanding market.

Take the idea further and connect the the Gatwick - Heathrow link through T4, T1/3 and T5 to the recently mentioned Heathrow - Reading link. Then you have your connections to the West and South Wales(via the GWML), but also to Oxford, Birmingham and destinations northwards.

Pie in the sky? I do not think so. 

It must be mentioned that not everyone is in favour of a Heathrow - Gatwick rail link. Willie Walsh, the chief executive of IAG(parent company of BA), was the quickest off the mark, in the Daily Telegraph (9th & 10th Oct), Reuters(9th Oct.), and Railnews.co.uk(10th Oct.) rejecting the proposal. This was followed by Breaking Travel News (10th Oct.) where the Board of Airline Representatives (BAR UK) in the name of 86 airlines rejected the proposed rail link.

To understand this it should be said that the airlines are concerned about the lack of runway capacity in South East England, especially in the places into which they wish to fly. The rail link, itself, they would accept and even welcome, but certainly not as an excuse to not deliver on a new third runway for Heathrow and/or a new second runway for Gatwick, or any other new runway at Stansted or Luton.  The Government is thinking that the slots released would satisfy mid-term future demand. On the other hand the airlines know that you are making the airport network more attractive so potentiating demand thus annulling the sorted after effects.

The costing of the project is of very high importance because it would obviously fall on the taxpayer while the third runway at Heathrow was to be paid for by its users, the airlines, and not the general taxpayer. However, many projects with a European perspective have been financed in large part by the EU. It all depends what happens to the EU cohesion fund when it is up for renewal in 2013.

The position of this blog is clear. On its own the link is expensive and hard to justify, even though a rail link between the two airports is more than welcome. If fact it would take off the roads 4 coach services per hour in each direction - meaning about 12 coaches in total with what that means in diesel consumption and exhaust fumes. Add that to the savings made on the Reading - Heathrow service (7 coaches) and the savings become considerable. The important thing is to put this into context. A Reading - Heathrow link and a Heathrow - Gatwick link seperately are illogical. A Reading - Heathrow - Gatwick service makes sense. This would connect the two airports but also open up connections from the west and north without funneling more traffic through that bottleneck called London. To extend the line to Ashford is the next logical step, not just for local services to Ashford(with passing points on the way), itself, and on to Margate, but also long-haul services directly through the Channel Tunnel to continental Europe. The possible variations of services are numerous.

NB: If the name proposed for this new rail link is Heathwick, then is the Reading - Heathrow rail link Readrow? Awful and stupid names.

Reading - Heathrow Rail Connection

The original idea was called Airtrack. This was a BAA promotion(just like Heathrow Express(HE)) of rail connections from Heathrow Terminal 5 (where space has already been reserved for extra rail tracks/platforms) via Staines to Waterloo, Guilford and Reading. This idea TRANS-TRAX analysed on 30th June 2010 in a posting on this blog called Airtrack - is it worthwhile?.

There were some good elements but we thought that the idea was flawed. Certain elements proved to be insurmountable obstacles - such as the extended closure of level crossings on the Staines - Reading section, and the lack of train paths to fit the trains into the heavily scheduled services on the South West network. The result was that BAA cancelled the project in April 20011.

What has been little mentioned is the fact that the whole project was an idea of, and to be financed by BAA (the owners of Heathrow). The expense of running sets of dual system trains (to operate with overhead electrical supply, and then on the South West Train Network with a third rail trackside connection) also proved to be onerous with limited benefit (lack of train paths) and possibilities to increase frequencies. The focus, anyway, was on benefit to BAA, not service to the passengers. So the project died its death.

However, a partial solution is being worked on. On 5th September 2011 an article appeared on the BBC website titled "Hammond Heathrow £500m rail link plan consideration" 
This is being sold as direct trains from Cardiff and Bristol into Heathrow. There will not be that many per day so would not make such a direct connection viable. The article was echoed on 11th September, in a more realistic vein by the Reading Chronicle, titled "Airport rail link hopes run high" Here the focus in the article is on the 4 train per hour shuttle between Reading and Heathrow Terminal 5. This is much more realistic. It would replace the coach shuttle between the two cutting travel time to under 30 minutes. It thus offers a direct connection at Reading from all points west to Heathrow, opening the possibility of direct trains from the West (and South Wales into the airport). The shuttle would also mean that passengers who, at present, go into Paddington to catch the HE back to Heathrow would not have to do so.

The coaches services from Reading drop passengers off at T5, T1 and T3, while on the return leave from the Central Bus Station and then T5 and on to Reading. Each one way trip takes just under an hour. By providing the rail connection then at least seven coaches could be taken out of service, with the resulting savings of diesel oil and elimination of exhaust fumes.  

As the Readng Chronicle article explains the rail link would depart Reading along the GWML towards London. Then it would leave the GWML just east of Langley station, run across country for about 5.5kms. to enter T5 in a tunnel to the two unused platforms which already exist there. Without doubt, by the time the link is built the GWML will be electrified to Reading at least.
Thus, it would only be necessary to extend the overhead electric power supply to T5 on the spur from Langley. The transport units can be the same as the ones used for the Heathrow Express and/or the Crossrail schemes.                                                                                                                                     
 

The probable route from Langley station (on the GWML) to Heathrow T5

On the other hand the connection Reading  - Heathrow should not be looked at in isolation.

The Reading Rail link will connect into T5 using two platforms which already exist but, as yet, have no takers. The question, therefore, arises about what can be done with this connection. The downside is that there is no further connection to other terminals. Can this be solved? Of course it can.

As we said before the Reading link and the HE link will use the same vehicles and overhead power system, which obviously means the two can run over the same lines. Therefore, the same systems can be used over the same lines as far as they will go. To run the Reading link from T5 to T3/T1 is so possible. To continue it to Paddington (just like the HE) is possible but a non-starter, since it is easier to go direct to Paddington from Reading along the GWML than through the airport.

On the other hand, if the decision were made to extend the Reading link to T3/T1 and then turn south to T4, we would end up with all the terminals connected to the rail system for the subsequent benefit of passengers, and subtracting a substantial number of cars from the roads.  Then, if the thinking were to extend the system the 2.5 kms. to Feltham rail station, we could provide the (old Airtrack idea) vision of a connection to Twickenham, Richmond, Clapham Junction and Waterloo, with all the connections to South West Trains (and others) which this implies.

However, our thoughts do not stop there. We refer you to our article on this blog , called Fast Trax 2 - the case for a Southern High Speed Alternative. This we call  SHSL published here  24th February 2010.

Since then our ideas have not changed - in fact with this news, actually reinforced. To connect T5 to the GWML and subsequently Reading and beyond, opens up all sorts of possibilities. From this conclusion we should not exclude services to Southampton in one direction, but more likely services to Oxford and Birmingham in the other (with all the connections implied there). The expensive and unnecessary HSR2 link from Central London would then be called into question.

We,even, go further and look at the possibilities of connecting the Irish boat services at Fishguard (from Rosslare) to Reading, to Heathrow and onwards. By onwards we see the line extended to Gatwick(thus providing the much sort after rail link to that airport). But why should services stop there? Can they not be extended to Ashford and on  to the Channel Tunnel and Lille? Here we would be talking about passenger and freight traffic which would eliminate from the roads all the lorries going to Ireland through Fishguard (if not other ports as well). This would be a tremendous saving in diesel oil and all the fumes that it implies by taking off the roads a very large number of lorries on a European designated priority route between Ireland, the UK and Continental Europe.

The ideas expressed in the said blog are still valid and worthwhile. It just needs a bit of common sense and political will to set the ball rolling - even if the whole process is done in a step by step approach.

What future is there for Virgin Atlantic and British Midland International?

Virgin Atlantic confirmed, in April 2011, that it had put itself up to scrutiny to see what sort of future it may have.Should it sell itself, join an alliance or find some other solution?That problem  we will look at after looking at BMI because it has a great bearing on the matter.
  
Lufthansa,firstly started looking at the possibilities of turning BMI around to make a profit. This process started in April 2010 after the airline lost GBP156 million the previous year. The progress was looked at again in September 2011, with the idea of accelerating it after the Middle East troubles of the spring and summer of 2011, which hit BMI particularly hard since a large part of their international traffic is into and out of that region.Very quickly the decision was reached to sell BMI either in whole or in parts or even liquidate the airline. 

British Midland International is comprised, principally, of three parts.  
1- BMI mainline flies out of Heathrow on domestic and Irish trunk routes,some European,  some flights to Africa(e.g. Sierra Leone and Addis Ababa) and the majority of long haul flights to the Middle East and Central Asia. These were inherited when BMI took over the BA franchisee BMED in 2007.
2- BMI regional flies mostly between UK domestic routes outside London(mostly out of Aberdeen) but also offers a connecting route to Frankfurt(parent Lufthansa´s hub) from East Midlands 
3- BMIBaby is the low-cost airline of the group flying to, mostly, holiday destinations from East Midlands, Birmingham, Cardiff and Manchester. It, too, is trying to restructure its business to increase revenue



The basic problem is that, really, these three models are not really compatible.BMI flew Manchester - Chicago, which was later discontinued, and with the liberalisation of the North American market even had an opportunity to launch Transatlantic flights from Heathrow. It makes one think that BMI´s parent, Lufthansa and/or its American partners in STAR ALLIANCE did not want competition from another carrier at Heathrow  - which seems very likely.





 
BMI Regional flies a selection of routes that do not tie in with any other connections at Heathrow nor any other STAR ALLIANCE hub(except the aforementioned). It is more like the other regional airlines, Flybe, Eastern and Loganair. Could it have a future? That is a possibility but only if its flights offered feeds into/out of larger airports (which might be/become small hubs). Here it would have to extend its network (e.g. by merging with Eastern Airways?)

BMIBaby is a baby airline in size, compared to its competitors, and has been reducing its size and operations in recent months. It is a leisure and semi-business airline which has two opportunities. Either it drops out of the market and lets its business be taken over by rivals, or it sells itself to a rival as a going concern. As a business with aircraft, staff, airport infrastructure and good-will, it might be attractive to a foreign concern wishing to enter the British market. Its British rivals would look closely at the business to see if it were worthwhile or not - they might even wait for it to go bust and then pick up the pieces. 
Another element has entered into the frame with the founder of Easyjet, Sir Stelios Haji-Ioannou, announcing on 26th September 2011 that he is going to start a new budget airline, called FASTJET (www.fastjet.com). He has even registered the name E-JET (www.e-jet.com)  He could shorten the process of setting up a new airline by buying the rights, especially the air certificate, of BMIBaby and then develop the airline as he sees fit. On the other hand he might ignore it and go his own way - that would probably be the last nail in BMIBaby´s coffin.




Those airlines that have already expressed an interest in buying the group, or parts of it, are IAG (BA´s parent), Virgin Atlantic and the Abu Dhabi based Etihad. In fact BA has taken advantage of the situation and 23rd September 2011 bought six pairs of take off/landing slots at Heathrow airport.This last action is only one in a series which has been going on for some time with transfers of slots at Heathrow between members of the Lufthansa group, and probably will not end there. Lufthansa knows that its slots are extremely valuable and so if the case were that the sale of the slots produced more than the breakup value of the airline, without doubt the group would sell them and close the airline. 


BA´s interest lies in the slots at Heathrow. It knows well enough that it would have "competition" problems with the authorities if it took over the whole airline. Besides BA ,most likely, is not interested in any part except BMI mainline. That network of routes could well be interesting for BA to fill in gaps in coverage but they would certainly have to be profitable to make BA interested. It appears that BA is more after yield than coverage. Thus we conclude that it only wants the slots to do as it pleases. 

Another point to mention here is the anouncement of BMI´s winter timetable which sees decreases on its domestic flights Heathrow to Edinburgh and Manchester while increasing its flights to Morocco.

Virgin Atlantic needs BMI at Heathrow for its slots (most certainly) and/or its network (possibly). VA does not have  feeder flights or a feeder airline to its flights at Heathrow only codeshares with BMI so its British Isles and European routes would certainly be of interest. However, BMI´s North African, other African, Middle Eastern, Arabian and Central Asian routes are a long way from VA´s present markets. VA focuses on markets with a high standard of living, upmarket leisure resorts, and strong business travel destinations - basically, where there is a strong demand for Business and First class seats. Thus quite a few routes would be looked at carefully by any prospective buyers.

If the proportion of slots at Heathrow are looked at then we see that BMI has about 10-11%, Virgin Atlantic about 3% while BA  has 43%. From that statistic alone the interest of VA can be seen. In comparison with its large rivals in Europe BA has substantially fewer slots at Heathrow than its rivals Lufthansa at Frankfurt(66%), Air France at Charles-de-Gaulle(59%)and KLM at Schiphol(57%). This why BA sees no competition problems in taking over BMI´s slots

What is Etihad´s interest? This is difficult to say. However, it must be remembered that Etihad is a non EU airline so would not be allowed to take over more than 49% of BMI. Therefore, the obvious conclusion is that Etihad would make the investment together with EU investors. If Etihad goes it alone in BMI with financial backers then it is looking for management control, even if it does not obtain absolute control. There also exists the possibly of another airline(European) investing with Etihad in BMI. As yet it is not known what their plans are.

Whatever happens it should not be forgotten that BMI is in STAR ALLIANCE whose members hold 33% of the landing slots at Heathrow and they would not wish to lose out to competitors in any sale of slots. However, it should also be mentioned that the rule with the slots is "use them or lose them" (at least 80% of the time). In fact BMI, at least for a time, ran empty planes into/out of Heathrow just to maintain some of its unallocated slots. That is why Lufthansa might have its hand forced, and will have to sell the slots.

It should also be pointed out that landing/take off slot pairs are time specific - meaning that you might have one at 07.15, another at 14.35 and another at 22.05 hrs. This makes them difficult to be used for any other purpose than at present. For example, a 07.15 or 22.05 take off for New York  just cannot be sold to customers but to connecting passengers maybe. On the other hand landings at those times might well be what the airline wants for long-haul flights. 


VIRGIN ATLANTIC:
Nearing the completion of the merger of BA and Iberia into IAG, Virgin Atlantic asked its advisors to look into the possibilities it had to remain alive in the future. These included joining an airline alliance, or not, merging with another airline, or whatever. Sir Richard Branson seemed to lay down some parameters when he said that if it came to selling part of the shareholding of Virgin Group(51% at present) in VA then it would remain with a substantial shareholding. That,undoubtedly, blocked some possible solutions. Singapore Airlines holds the other 49%. However, it has been said for some time that SA wants to offload its shareholding.

As mentioned previously, VA flies a series of long-haul routes to North America(9 destinations), the Caribbean(8),  Africa(5), Asia(5) plus Sydney. Most flights connect to other carriers for onward codeshare services - Singapore Airlines, Air New Zealand, United (Continental), South African. BMI provides the codeshares for the services in the British Isles, continental Europe and also for the other mid and long-haul BMI services from London Heathrow. These airlines are all in the STAR ALLIANCE. Some other codeshares are available on specific routes, including Virgin Australia in that country.

As mentioned before the part of BMI Mainline that provides connecting passengers  would more than likely be of interest to VA. The mid-haul and long- haul routes are another question. It is difficult to see VA flying to Addis Ababa, Damascus, Tehran, or Baku, for example. The slots would certainly be interesting but might be put into use for other different leisure and/or business destinations.

All the indications, as pointed out here, suggest that Virgin Atlantic join STAR ALLIANCE. However, things are never that simple. It has been said that this possibility was open to VA some years ago but was rejected by Branson because the conditions were too onerous. The said conditions have not been seen so cannot be commented on. Suffice it to say that Branson has a strong personality and will not be pushed around easily.

The other alliances to be considered are "oneworld" and "Skyteam". "Oneworld" has as its leaders BA and American Airlines, amongst others, while "Skyteam" has its leaders as Air France/KLM and Delta. To join "Skyteam" would be a very big plus for that alliance as its profile in Heathrow is very small and the addition of VA would make the alliance a more serious competitor.  To join "oneworld" is a non-starter. This would combine VA with BA and only provide  insurmountable and unacceptable competition problems.

One option which has not been mentioned is the VIRGIN ALLIANCE, or whatever it could come to be called as a fourth possibility. The US, EU and other countries´authorities would without doubt welcome such an option. It would provide more competition and offer an entrance to other airlines which would find it difficult to enter the three big alliances at present.

Let us look at the Virgin Group. It owns 51% of Virgin Atlantic. After that it invested in the setting up of Virgin Blue (Australia) which resulted in Pacific Blue (for New Zealand and the Pacific islands) and Polynesian Blue for services from Australia to Samoa ( in conjunction with that government). Later for international services to San Francisco and Abu Dhabi V Australia was set up. These all are now being incorporated into Virgin Australia as the single brand. This process should finish by spring 2012.Virgin Group (Branson´s holding company) retains about 25% of ownership. 

Virgin America was the next deal. Here the limitation on ownership is 25% as others have found (including BA - in United, later in US Air - and KLM in North Western). The main point of contention in the setting up of the airline was that the US authorities would not let Richard Branson or others of Virgin Group have a managerial role so excluded them from the board. This is a tremendous limiting factor. On the other hand the US authorities do not put any sort of stoppers on Branson promoting the airline in the US when it opens new routes - which is quite frequently.

As can be seen from the photographs the image of the three airlines(Virgin Atlantic, Virgin Australia and Virgin America) is very similar. One can easily be confused with another. This is deliberate, logical and done for a purpose. The reason is to confect a global image of the airlines so that passengers can flow from one to the other - feeling comfortable with the service and amenities.

Is it not logical to conclude that a VIRGIN ALLIANCE is in the making?

Virgin America has difficulties in establishing any sort of alliance beyond codesharing without seeking permission from the US anti-trust authorities. Thus it cannot be taken into consideration until the other parts of the puzzle are in place. After that it should have no problem in receiving anti-trust immunity with its namesakes as a fourth alliance to promote competition - especially over the North Atlantic, and the Pacific to a lesser extent.

Virgin Australia is very active in promoting its services. It has TransPacific routes to the western US coast, to Abu Dhabi as well as Australia and New Zealand routes, and seeks to extend its network in Asia.

Currently, apart from Virgin Group, Air New Zealand has a 19.99% shareholding in the company. This makes for co-operation not competition, obviously. On the other hand Singapore Airlines has signed a co-operation agreement with Virgin Australia as recently as June 2011. This is in addition to SA´s investment in Virgin Atlantic which it might not be so willing to sell as before.

Virgin Australia has also signed an agreement with Etihad Airways for services from Australia to Abu Dhabi and onwards to such destinations as Europe (and not only Great Britain). These services started thrice weekly in February 2011. Obviously, it opens up the possibilities for passengers to a large number of destinations in Europe and the Middle East as well as other points in Africa and Asia. The only "negative" points to consider, if that is the case, are the agreements(in the USA) with Delta (which is in the Skyteam Alliance) and Alaska Airlines (close to oneworld) which do not seem compatible with the rest of its connections.

The present HEAVY airlines with the Virgin airlines are members of the STAR ALLIANCE. This makes one conclude again that the tendency is to take Virgin Atlantic ( and its sister airlines) into STAR ALLIANCE. However, the question remains if that is the intention.


The brand is strong in the three markets(UK, USA and Australasia) and very similar in image. Could the group go it alone? That would depend on the other three airlines ANZ, Et and SA joining them - in which case the attractions are greater.This is not such a strange idea since SA is known to not get on well with its partners in STAR ALLIANCE. What else can Virgin Atlantic do?


It must not be forgotten that the Virgin Group has a high profile in various countries in Europe and the Middle East. With mobile phone companies, health clubs and megastores in France, Germany, Italy, Portugal, Spain and Greece, amongst others.Thus the latent potential to build on the Virgin name is very strong. Add to that, that Virgin Atlantic is not a country specific name then the possibilities of opening up routes from non-UK airports mean that the adaptation to each market could go ahead without much readjusting of the image or the message.


Taking over BMI, and most certainly its European routes, would open the doors to establish Virgin Europe airlines, operating inter-European routes. The obvious aim would be to feed into long-haul VA routes from Heathrow or anywhere else VA decided to fly from.This would be a venture, without doubt, with a greater possibility of succeeding than the present BMI.

CONCLUSIONS: 
The BMI group should be split up and sold in parts. 
BMIBaby should be sold off to the highest bidder - possibly Stelios.
BMI Regional  has a more difficult future and will probably end up in the hands of Flybe, though Eastern Airlines might be a better fit (since both it and EA operate from Aberdeen)  
BMI Mainline should go to Virgin Atlantic, maintaining the routes(or at least slots from Heathrow). The European (with North African and Middle Eastern parts should be folded into a new airline called Virgin Europe. This would ensure feeder services into its present routes, those of its partners and provide a vehicle to expand.

Virgin Atlantic can accept going into STAR ALLIANCE  with or without BMI Mainline. It would, however, end up under the diktat (or even ownership)  of Lufthansa with a role such as Swiss at present. We cannot see Lufthansa and Richard Branson seeing eye to eye.

To enter SKYTEAM is another option to provide a bigger presence of that alliance at Heathrow(which at the moment is tiny). It would be better to negotiate such a move with BMI under its belt but Lufthansa would probably not permit that. Both Delta and Air France would dominate any negotiations about entry not necessarily making life easy for Virgin Group, and maybe limiting its manouverability.

To enter "oneworld" is a non-starter as it would complicate competition issues at the airport and across the Atlantic by being in the same alliance as British Airways. 

The last option is the aforementioned VIRGIN ALLIANCE (though the name would most certainly have to change because of the sensibilities of any non-Virgin members). Here the three Virgin airlines, ATLANTIC, AMERICA and AUSTRALIA  together with Singapore Airlines, Etihad and Air New Zealand, and possibly interline partners(as at present) such as Jet Airways and Air China(though this airline already has a cross-shareholding with oneworld member Cathay Pacific), could forge a formidable group.

From here on it is a question of waiting to see how things develop.

Half Way Hubs

 Heathrow´s (LHR) efforts to become a significant hub for air transport in Europe took a turn for the worse when the new Coalition government in the UK decided that there would be no further runway expansion at Heathrow, Gatwick (LGW) and Stansted(STN) airports in London.

British Airways (BA) abandonded any chance of extending activities and converting into mini-hubs its operations at Birmingham, Manchester, Glasgow or Edinburgh when it sold the services from those airports to FLYBE. It has thus had to decide that its future lies elsewhere within the "oneworld" alliance with its future connection to AIRBERLIN and its merger with IBERIA thus opening the possibilities of extending operations to Berlin, Düsseldorf and Madrid.

In fact BA has already given up on the British regions and dedicated itself to London exclusively. As a recent letter to the Economist said "The airline should rebrand itself London Airways". It has found itself with no room to expand at Heathrow while its alternative airport is a limited one-runway operation at Gatwick. 


To solve this problem the effort has been devoted to reducing the short-haul flights within the UK and using the slots thus released to increase frequencies and aircraft size on the more profitable routes (i.e to the USA and Canada)from LHR so as to increase yield with more profitable seats devoted to First and Business classes. The net result is the reduction of destinations on offer. While the transfer passengers on domestic flights will be still offered the connexions, the Continental and Intercontinental transfer passengers will have fewer destinations to choose from, thus, will take, frequently, their custom elsewhere.

BA´s business  from LGW is more and more directed to the leisure market, with long-haul flights to exotic destinations in the Mediterranean, Caribbean and Americas or Asia. The reasoning is that the vast majority of the passengers are UK based and not transfer ones. But this is the old story of the chicken and egg. If you do not offer the transfer possibilities then the passengers will not come. Flying into one airport and out of the other is not  a comfortable or popular option so is used less.

In an extensive article in June 2010 the Economist wrote about the "Rulers of the new silk road" 
This refered to the aggressive policies adopted by  EMIRATES, ETIHAD and QATAR AIRWAYS starting from nothing in 1985, 2003,1993 (respectively), supported by their governments and respective ruling groups. They have extended their reaches to every continent providing  potentially massive hub airports in the Arabian Gulf at Dubai, Abu Dhabi and Doha.

Etihad aircraft at Abu Dhabi





The three airlines were born out of GULF AIR(in Bahrain) after some short-sighted policies were applied leaving the emirate of Dubai out in the cold. This provoked the Sheikh in Dubai to start up his own airline which in turn (on seeing the success of the venture) provoked the rulers of Qatar and Abu Dhabi to start up their own airlines. These actions in  turn resulted in the development of the airports of the respective sheikhdoms.

GULF AIR has been slow to react and has not been able to expand at the rate of the other three high flying airlines which are doubling in size every few years. In fact its prospects took a turn for the worse after 14th March last when the ruling Sunni clan invited into the country the armed forces from Sunni Saudi Arabia to quell civil protests(by the Shia majority population) violently. Any prospects of making Bahrain an attractive destination or hub evaporated when the armed intervention put the lid back on the boiling pot but left the populace seething with frustration. 

 



Oman was the other member of the group to form GULF AIR but has now formed its own airline  OMAN AIR with its base in Muscat.

Doha airport

The distance from Doha to Abu Dhabi is about 320 kms while from there to the new airport in Dubai is only about 75 kms.Muscat is about 350 kms, from Dubai. The capacity of Doha is due to grow to nearly 50 million pax/year while Abu Dhabi will reach about 40 million pax/year. On the other hand the Jebel Ali airport in Dubai will be designed to accept a staggering 160 million pax/year. "Thus within five or six years there will be more capacity at these three Gulf airports than there is now(or planned) at Heathrow, Paris Charles de Gaulle and Frankfurt combined." 

How do they do this?  What EMIRATES(EK), ETIHAD(EY) and QATAR AIRWAYS(QR) offer an enviable service of one stop flights from Europe to the Far East,  Australasia and Africa (and vice versa). Most notably, they do not fly from only the major cities in competition with the "legacy" carriers but also offer an extensive service from the secondary airports in Europe to their hubs. These secondary airports tend to be ignored or only offer a connection through the "legacy" carriers´ own hubs. Thus BA will offer connections from Manchester or Glasgow through Heathrow, Lufthansa will offer flights from Hamburg through Frankfurt while Air France will offer flights from Toulouse through Paris CDG. While the flights from Europe can be direct to the required destination, frequently the timings, or destinations on offer themselves, are not to the liking of the clients. 

High profile advertising in certain areas such as football clubs and their respective leagues in Europe meant that  the Gulf airlines automatically reached their (other) target audiences in Asia and Africa through TV coverage of the weekly matches thus achieving a double whammy.The resulting effect was to increase brand awareness dramatically and open the door to potentially massive markets.

The only half way hubs which can offer any sort of competition are Hong Kong, Bangkok and Singapore. these are destinations for some while stopovers for others. In fact,  the joint service agreement between BA and QANTAS has just been renegotiated on the Kangaroo route. Both airlines will now only fly direct from Australia to London through Singapore(one stop) while their respective routes through Bangkok and Hong Kong will mean a stop over and change of aircraft at those points. FINNAIR (amongst others) also flies into those hubs to connect with CATHAY PACIFIC and QANTAS.

B787 Dreamliner and the New B747-8

The importance of these hubs in the Arabian Gulf means that with modern aircraft they can reach anywhere in the world. The distances from Dubai or Abu Dhabi to Sydney or New York are 12000 kms and 11000 kms. respectively. These are well within the range of the Airbus A300, A340 or (the massive) A380, and the Boeing B747, B767, B777 and (new Dreamliner) B787. all these options obviate the need to stop over at London or Paris on the North Atlantic route. It also opens up all of Asia to direct flights from the Gulf to anywhere. Even if we wish to travel to Cape Town, it is less than 10000 kms while the furthest destination (of note) Buenos Aires is still within the range of the majority of the long range aircraft family at 13500kms.

Airbus A380

The number of destination airports served by the Gulf airlines from Europe are QR to Europe 25, to Nrth. America 4, EY to Europe 10, to Nrth. America 3, while EK to Europe 26 and to Nrth. America 5 . Eastwards to South Asia and the Far East(Pakistan onwards)the story is the same.QR offers  37 destinations, EY offers 27, while EK offers 29. Admittedly many of these destinations serve the migrant workers in the Gulf , but a greater share is to serve transfer passengers going East and West.

This data is surely enough to show the commitment of the Gulf airlines to expand their connections and their markets to offer a worldwide service for the international traveller. 

"Qatar Airways Ltd. Chief Executive Officer Akbar al Baker said that the second-biggest Middle-Eastern carrier may operate 190 planes by 2020, 60 more than envisaged, as it follows Emirates in building a long-haul transfer hub to rival London, Paris and Frankfurt. Abu Dhabi’s Etihad Airways, the regional No. 3, is also committed to adding new jets and routes, CEO James Hogan said in an interview in London."

The European legacy carriers have been slow (too slow!!) to react. The question now is what they can do, if anything, to save their customer base.