Where do you stand on the aviation capacity debate?
I’d politely suggest predictions of the imminent demise of British aviation have been exaggerated. Listening to parts of the debate it’s interesting how it’s described as a terrible capacity crunch when in fact we’ve actually got a bit too much capacity – it’s just in the wrong places. And I joyfully celebrate every time I board a plane how lucky we are to have such a competitive, low-cost aviation sector. And because everybody wants to fly into London we have better fares than one would predict. To take a brief example, London to Melbourne (just about the longest journey you can make from the UK) costs £900 direct which is about 40 per cent, sometimes 50 per cent, less than a Melbourne resident would pay. Things will get even better once you begin to erode the market distortion caused by having Heathrow at effectively its declared capacity.
Are you saying that the capacity crunch is overstated? That it doesn’t exist?
Heathrow has no spare capacity under its current rules and operating regime. The only way to get proper competition in
a meaningful way is to have spare capacity in parts of the system that do not have spare capacity at the moment.
And where are those parts?
So Gatwick has bits [of capacity] around the edges which is fine. Heathrow has plenty of spare capacity; it is currently about 80 per cent of its ATC [air traffic control] potential capacity within the hours of operation. So when [Heathrow] says they are 98 per cent full what they mean is that “we use 98 per cent of the slots that we are allowed to use”, which is a completely different metric.
So given that competition will only flourish where there is spare capacity, we do need some spare capacity and that might involve building a third runway at Heathrow. It might involve building a second runway at Gatwick; it could conceivably involve building a second runway at Stansted but I think we’re looking at another twenty, thirty, forty years for that.
Might that involve building no new runways at all?
Only with the sorts of command economy decisions that we are not going to see.
So we’ve got plenty of capacity but we haven’t really got it where people really need it. And it’s difficult to see where Gatwick can begin meaningfully to compete with Heathrow while we have the
current alignment of runways.
When people talk about connectivity they tend to elide this with talk of a single hub airport…
But these people who talk about connectivity tend to be politicians – who have their own reasons to do all sorts of things – and Heathrow airport.
Are they wrong to talk in those terms?
Let’s just take a step back. London is the biggest aviation market in the world and rather more than half that capacity is at Heathrow. So Heathrow is important. But the figures suggest (or one set of figures suggest) that 37 per cent of people at Heathrow are connecting. Let’s call it a third roughly. But they are not doing that every single day because nine out of ten of people flying in and out of London are origin and destination passengers.
Now British Airways would much rather fly everybody between Heathrow and Miami point-to-point because it will get a premium for that. It would rather fly everybody from Heathrow to Moscow point-to-point because it can get a premium for that too. But on a wet Tuesday in November, it’s never going to do that. So therefore they have this great power to turn on capacity, to say to travellers in Moscow and Miami, “Hey, if you work around our schedules, our availability, we will give you a great price.” And that helps fill up spare capacity and aviation has very high fixed costs and very low marginal costs. So that’s a fantastic thing to have and it’s not something Air France or Lufthansa has because they do not have sufficient capacity at their hubs to offer that origin and destination traffic.
British Airways wants lots of point-to-point traffic but it also wants to have the right to lots of connecting traffic and I’m not sure the extent to which of the other airline alliances apart from oneworld really sees London as a potential lone hub rather than just simply a rich source of traffic.
So we’re not talking about the need for a hub, we’re talking about the needs of British Airways. Or is that unfair?
If you want a traditional 20th century hub then the best shot Britain and London has is Heathrow and British Airways. But I’m just not sure whether that’s the right question to ask. You need to be aware of what the 787 might do, of what the Airbus A350 might do in terms of point-to-point. Look at what Norwegian – by far the most radical low-cost airline, far more so than Ryanair or EasyJet – is doing buying 787s and flying them to New York. To say, “Here’s how air traffic works, it’s all hubs and spokes” is not correct. And neither is it correct to say it’s all going to be direct. It’s going to be messy.
What’s your favourite airport in the world?
I’m going to be quite conventional and say Amsterdam Schiphol. I don’t love it just because it has somehow managed to compress a hub into an area where you can actually have simple terminal connections but because they put a bit of the Rijksmuseum in there too. They really thought, “Okay, what do we do in Holland. Well, we do lots of trading; we’re very good at that. Oh, and we had the golden age and produced the world’s greatest art. So let’s put some of that in.”
Any others?
[Singapore’s] Changi airport because it’s got a swimming pool on the roof and a cactus garden. And furthermore you can get from Jumbo Seafood on the East Coast Parkway to Changi in about ten minutes in a cab which means you can have the best feast ever and then fly home to London.
And your least favourite airport?
[New York’s John F] Kennedy used to be but not anymore. Sheremetyevo in Moscow is probably top of the list. On the other hand, airports are a means to an end like prisons, like hospitals. [You want to] get in and get out as fast as possible. It doesn’t matter if they are Amsterdam or Changi or Sheremetyevo, you just want to get out.
If you could change one thing about air travel what would it be?
Security.
To make it more efficient?
To make it more human. You, and everyone reading this, has no evil intent in their heart but if they fly they will be treated as if they are international terrorists. Ensuring that they don’t have any sharp objects or guns is a forty year old paradigm of how we make the skies safe.
You should be looking at people for their behaviour – and absolutely not their race or religion – to spot some reason to want to enquire a bit further as opposed to frisking people even though they are clearly not going to cause any trouble. You might one day have lounge marshals much like sky marshals: they won’t have guns, they’ll sit around and look around.
Is it true that your first job was as a cleaner at Gatwick?
It was my first job in travel. I’d had a paper round before that. But yes, I started cleaning out Freddie Laker’s planes. And then I started frisking people.
So is that where the love affair with travel began?
No, no. That began when I realised I was living in Crawley and I thought there must be better places in the world than this.
Interview by Jon Bernstein
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