Heathrow or Gatwick? British PM Theresa May to take a call on new airport capacity in London this month

An aircraft takes off from Heathrow airport in London, Britain.
An aircraft takes off from Heathrow airport in London, Britain. PHOTO: REUTERS

LONDON (REUTERS) - Prime Minister Theresa May will decide where to allow new airport capacity near London this month, a long-awaited ruling that will help shape Britain's economy and trading ties following its vote to leave the European Union.

Mrs May will either support plans for a new runway west of London at Heathrow, the busiest airport in both Britain and Europe, or at Gatwick to the south. The decision has been debated for more than 25 years and any further delay could risk economic growth as both sites near full capacity.

At 18 billion pounds (S$30.6 billion), Heathrow would be the more expensive project and face legal challenges over its environmental impact on densely populated west London. But its established trade links with emerging markets strengthen its case in the wake of the Brexit vote. It also has the backing of the major airlines.

For its part, Gatwick, the country's no. 2 airport that mostly connects to Europe, argues it can build a runway more quickly and cheaply and that its rural position means it would disturb fewer people with noise and air pollution.

The decision has split successive governments, faced with protests from high-profile politicians, local residents and environmental campaigners. Mrs May's spokesman said on Monday (Oct 10) that the decision would be made in October, clarifying an earlier timeline for it to come shortly.

"She is the kind of person who won't baulk at making a decision," former Conservative transport minister Steve Norris said at an event on the sidelines of their party conference.

Three options are under consideration: building a new runway at Heathrow for 18 billion pounds, lengthening one of its existing two runways for an estimated 14 billion pounds, or building a new runway at Gatwick for 7 billion pounds.

Mrs May's predecessor David Cameron had been due to rule on it in July, after he delayed an earlier decision, and sources and media reports said he favoured Heathrow. But the vote to leave the EU cost Mr Cameron his job and the decision was delayed again.

For business leaders, Heathrow remains the preferred choice. A hub airport delivering passengers on to further destinations, Heathrow is also Britain's biggest port by value of goods, handling a third of the country's non-EU exports through established connections with emerging markets.

"After Brexit, the case for Heathrow is stronger because it is the airport which links the UK to markets outside Europe,"said Mr Howard Davies, who backed Heathrow following his three-year government-commissioned independent inquiry. "There is a very great need... for the country to set a direction."

Airlines also prefer expansion at Europe's largest hub airport, a title Heathrow is set to lose to France by 2020. "We struggle to see any business case for the expansion of Gatwick," Mr Willie Walsh, the head of IAG, the owner of British Airways, Heathrow's biggest airline, told an industry conference in June.

He prefers Heathrow, but says he will only support expansion where the costs are kept low.

Heathrow, 24km from central London, faces greater scrutiny after some of its air monitors breached air quality limits in 2014. Mrs May's constituency lies under the flight path, but she is giving little away, including whether to put the decision to Parliament.

Mr Davies' recommendation for Heathrow came after it agreed to abide by a list of conditions over night flights, noise and air quality, providing some reassurance to residents.

"A third runway with conditions is much better than a third runway without conditions," said Mr John Stewart, the chairman of the Heathrow Association for the Control of Aircraft Noise.

But those changes have not silenced all the critics and a group of councils near to Heathrow have already brought in lawyers.

Gatwick, 64km south of London and mostly surrounded by countryside, says its stronger environmental position bolsters the case for its runway to go ahead, as the two airports battle to be given permission to deliver expansion by 2025.

However, Gatwick protesters say they would also launch a legal challenge if it is given the green light.

For some, the demands for new connections after Brexit would warrant Mrs May approving new runways at both Heathrow and Gatwick. "The possibility that the government will support both runways is not so far-fetched," said Mr Duncan Field, the head of planning at law firm Norton Rose Fulbright.

But building at both would conflict with Mr Davies' warning that only one new runway was justifiable given climate change targets.

Both Heathrow, owned by Spanish infrastructure company Ferrovial, Qatar Holding, China Investment Corp plus others, and Gatwick, owned by investment fund Global Infrastructure Partners, Abu Dhabi Investment Authority and others, say expansion can be funded without government money.

But the required road and rail changes at Heathrow would need public funds to top up what its owners are prepared to spend. These are estimated by Mr Davies at 5 billion pounds, and by Heathrow at around 2 billion pounds. Gatwick's new links would cost 800 million pounds, but the airport would fund them itself.

Some of the funding for expansion is expected to come from an increase in airport charges to the airlines, which puts Gatwick at a disadvantage as its main airline users are low-cost carriers like easyJet rather than the full-service carriers who are Heathrow's client base.

In a bid to win the industry's backing, Gatwick Chief Executive Stewart Wingate has said the airport would cap charges at 15 pounds per departing passenger, compared with current fees of 9 pounds, by phasing the building work.

When asked about future charges, Heathrow said only that its charge is currently about 22 pounds and charges are calculated under a framework agreed with the UK regulator in consultation with airlines.

Analysts said the June vote to leave the EU, and the uncertainty that had sparked about the health of the economy, meant a decision was now urgent.

"The imperative to do something and to be seen to do something, from being open for business and open for investment... is now much higher than it was," said KPMG UK aviation head James Stamp. "Twelve months ago, we were all despairing of them ever making a decision."