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15 April 2021

Airports want to double traffic in 20 years – what do you tell them?

There is a continuous tendency for the aviation industry to believe that it is a special case. Airlines think they are so important that they expect governments to bail them out, and that growth in trade can only happen when just as many people are airborne as there were in 2019. How real is that?

Government ministers in most countries simply go blank when it comes to aviation, shrug their shoulders and allow airports and airlines to do just whatever the hell they like. Because no government yet has come up with a plan to phase out or even reduce CO2 from air travel – passenger, freight or otherwise.

It is almost as if air travel just has to be dealt with later, around 2040, or when another government is in power, because ministers cannot see an outcome that is good. The airlines of the world are seeking government support to help them through coronavirus, and in every case they fail to insert conditions relating to decarbonization.

Meanwhile innovators are trying hard to capture the attention of airline industry, showing planes that carry a low number of passengers, by which use alterative fuels, fuels based on waste or fuels based on electricity or hydrogen.

For any government to have a plan for aviation, they need to have reliable forecast of numbers that are not recycled rehashes from before the Pandemic, which more or less dictate that air travel will double over the next 20 years. That’s why they all believe they are a special case, and until talk of doubling in the next 20 years stops, expectations are going to be out of whack.

More sensible plans note that air travel is changing in multiple ways. The first to note is that global trade is changing. Global trade founds ways to continue through the pandemic with less than 50% of the transatlantic seats being filled. During the pandemic China overtook the US as the country with the most internal traffic, Europe is up there too, but all of it was 50% to 60% down, and remains that way, and will remain that way until the Pandemic is history. When will that be?

So any government that wishes to come up with a plan, has to both convince the rest of the world to go along with its plan, and have a clear idea when the pandemic will be over.

One thing that governments CAN do right now is stop the industry careening out of control. We do not need new airports urgently, we do not need bigger airports urgently, and we do not need more facilities at airports urgently. Which brings us to the UK, as our prime example for this story.

Here there are a large number of regional airports which are planning extensions – and an extended airport means more flights which at present means more CO2, more flights, more passengers, and traffic doubling over the next 20 years, and flights becoming cheaper. More flights pay more airport tax.

Unfortunately no-one in the industry has been given enough pushback to understand that a great big carbon tax on flying is coming, and coming soon – and that a full recovery from the pandemic is perhaps out as far as 2024, if indeed it ever recovers. Even airline thinktanks accept this.

We see in another story this week, the French government is pushing through a new law which will cut flights below 500 kilometers, because those destinations can be reached by trains. Our take on this is that this is a shame, because it won’t save much CO2 and it will deprive hydrogen flight of some short range services it can experiment with.

Intervention by government so often has such unintended consequences, and at Rethink Energy we tend to take the view that prevailing economic conditions, plus where it is necessary, imposing carbon taxation, usually sorts these issues out. This is the type of decision where we might reach agreement at COP 26, because one country on its own cannot introduce a carbon tax on flying.

Back to the UK – there is first and foremost Heathrow wanting another runway, and ignoring the Government’s advice over planning and wishes to raise passenger berths to around 110 million a year by 2030. Manchester wants to upgrade, spending £1 billion and lifting its capacity by 10 million passengers a year, in what is being called the biggest single construction project Greater Manchester has ever seen. Birmingham wants an upgrade of a similar magnitude and as we look at each airport in the UK, they are all assuming that passengers will double in the next 20 years.

There are a variety of plans, some which simply build more hotels at the airport, or more parking or more terminals or a new business park. This takes in Aberdeen, Newquay, Exeter, Bournemouth, Leeds Bradford and Bristol which had its planning permission refused, but which is appealing that decision and wants to build 3,000 new car parking spaces on green belt land.

It goes on, Doncaster & Sheffield wants to triple passengers and want to build a new £300 million station which will “reduce emissions”

And there is Belfast and Aberdeen and Durham, and Newcastle and Southampton and Liverpool – who would collectively add another 10 million customers, as would Cardiff, Edinburgh and Glasgow – all in the name of doing more trade, post-Brexit. And this is without other London plans with Stanstead wanting to add 16 million extra passengers, Luton planning to double numbers, and London City airport the same.

It is clear that if they build all this by 2025 and the pandemic remains at play up to that point, that the airports and the councils and banks that have loaned and granted tax incentives, will all be massively out of pocket – bankrupt. How can they not see that? Because they are convinced aviation is a special case, and numbers will double.

Should the UK government intervene to stop these planned expansions primarily to meet legally binding environmental targets and avoid the worst impacts of the climate crisis? Or should it step in, in the interests of sanity to ensure that the UK does not prepare for a future that does not exist, and create bankrupt airports.

It is clear that 2021’s airline revenue pool will be less than half of 2019’s. This in turn will create multiple crises, and this will result in industry wide consolidation. But that’s the near term effect.

This is also happening in France, Germany, all of Europe, the US, Latin America, Africa and fewer people are crossing the Atlantic on a weekly basis, but more and more people are travelling from China to Asia Pacific destinations, and on short haul flights within China, as its economy comes back far faster than any other.

This is the perfect situation to create a cash crisis, and yet many destinations which have least ready access to vaccines, are going to remain out of bounds throughout 2022, perhaps beyond 2023, unless the coronavirus just curls up its toes and disappears like SARS – which we know it won’t. What is actually going to happen is that one or more variants are going to emerge, which will create one or more further lockdowns, in one or more major regions, which will see flights to that regions go back to almost zero.

Which is why no politician is saying “Let’s put this industry under more and more pressure to decarbonize” – because quite frankly it is too delicate right now. So why are airports preparing to spend $billions upgrading for this wonderful new future which is almost certain never to arrive?

As climate change gets worse, more and more pressure will be brought onto aviation. Only merger after merger, will see anything like a semblance of an airline industry survive.

And those merged entities will then be asked to “rebuild their fleets” with decarbonized craft, by 2050. They will only have the money for some of that build out, and the effects of climate change by then will be so great that no-one will feel like letting them off the hook – as they have been recently – as the exception to the CO2 rules.

This is when Governments will need to take out their checkbook and help out, not by lamely allowing every regional airport in Europe and the US prepare for the return of the business traveler who has deserted airlines, for zoom calls. Tickets will certainly rise in price too, spreading more cost over less travelers and disincentivizing long distance travel. Why would an airport burden the airlines, with their own costs of expanding, as well. If anything airports should be getting smaller and getting used to the need to be downsized, lowering costs on travellers.

One idea we have been pushing is the idea of an Hyperloop as a form of transport – see here.

The concept is fundamentally a tube with little or no air in it, so there is no air resistance, in which a capsule full of people can travel unimpeded using very little energy, over long distances, very fast. Once people realized how dangerous and difficult it is to maintain a real vacuum, they reduced this to the air pressure experienced on the outside of high altitude flights, although it is still not a breathable amount of air, and the idea remained unlikely until many safety aspects were designed in, namely how people can breathe safely if the atmosphere in the capsule is mixed with the very thin atmosphere outside it.

Elon Musk was very enamored of the idea to build one in 2012 from San Francisco to Los Angeles, but then abandoned it, open sourcing his thoughts to anyone who wanted them – and there remain about 4 companies determined to build the first one.

It is very much to trains what the EV is to cars. It costs around 40% of the cost of a railway line to build, and it runs on almost nothing in terms of energy, probably just solar around some parts of the tube, since there is so little energy wasted fighting air resistance.

Without going into it in detail, what if some of those airports got together and funded a hyperloop link from one location to the other, or to one of the main intercontinental airports. They might spend less than they would on expansion, and almost be able to do away with the aircraft. A hyperloop is point to point, only economic for 500 kilometers, and runs entirely without combustion of any kind. Zero CO2. Just a thought.

We also have to remember that there is going to be a backlash against any government which bails out airlines because they have shares in them, like the French government and Air France.

But more important than any of that is to have a plan, one which accommodates the new reality of less people flying, less intercontinental flight and building airports which instead of having 100s of airlines, all competing with one another and all losing money, is to accommodate business models that work over the next 4 or 5 years, and which lead to decarbonization.

We need a new kind of aviation entrepreneur that can fill far fewer planes, taking off less often lowering the CO2 per passenger. We need to embrace the rise in the number of aircraft that are now geared up for freight, because ordering online is not going to go away post lockdown.

And a carbon tax is coming to all those airlines who survive, and it should rise with the number of passengers carried and fall dramatically with the number that are carried with zero carbon.

The only major aircraft designer that is even thinking about decarbonization yet is Airbus, which says that circa 2035 it can have widebody planes which burn hydrogen. Governments should support this collectively, pointing the way for Boeing and the Chinese to join in, and then mandate its accelerated arrival, and at the same time its adoption at pace, prior to 2050.

And then we can think about airport expansion, and not a moment sooner.