Breakingviews - Heathrow expansion faces long Covid-19 quarantine

  • 12/16/2020
  • 00:00
  • 10
  • 0
  • 0
news-picture

LONDON (Reuters Breakingviews) - Heathrow Airport’s expansion plans may face a long Covid-19 quarantine. Britain’s Supreme Court on Wednesday cleared the hub’s path to build a third runway that would boost capacity by two-thirds, overturning environmental objections. But the long-delayed 14 billion pound project now faces existential questions about whether airline travel will ever fully recover from the pandemic. The judge’s ruling overturned a February verdict from the Court of Appeal which concluded that the runway plan ignored the British government’s obligations to reduce its carbon emissions under the 2015 Paris climate treaty. If Heathrow can secure the relevant planning permissions, it can in theory start work. Yet Heathrow’s shareholders, which include Spain’s Ferrovial, the Qatar Investment Authority and China Investment Corporation, might want to wait before starting their bulldozers. The expansion plan relied on bullish forecasts for air travel, predicting that the number of people passing through Heathrow would rise from 80 million in 2018 to 130 million once the third runway was operational by 2030. So far this year, the airport has welcomed just 21 million passengers. Any recovery will take time. The International Air Transport Association expects global passenger numbers to plummet to 1.8 billion this year, from 4.5 billion last year. And even though the rollout of vaccines may coax travellers back into the air, the IATA reckons passenger numbers may not reach 2019 levels until 2024 at the earliest. Senior executives at travel companies are even more pessimistic, arguing that international business travel will never return to its pre-pandemic heights. Even if that outlook proves too gloomy, Heathrow may still struggle. The airport intends to recoup the cost of the expansion in part through extra landing fees. That will put an extra financial burden on airlines like British Airways owner International Airlines Group, which had to raise fresh funds from investors, and Deutsche Lufthansa and Air France-KLM, which received multibillion-euro state support packages. Passing on the extra costs to customers would further weigh on demand for air travel. Heathrow’s expansion may have overcome massive environmental and political opposition. But post-pandemic financial logic suggests its expansion plans should stay grounded.

مشاركة :