Monday 16 June 2008

The case for airport expansion, including the third runway at Heathrow, is based on the premise that there will be more air passengers in future than the UK's airports can currently handle.

The research reworked the government's air passenger forecasts for 2030, examining the impacts of a more realistic price of oil, the knock-on effect this could have on the UK's gross domestic product and the potential introduction of policies encouraging a switch towards alternatives.

Higher oil prices, fewer air passengers
Combined, these factors produce an estimated figure of 350 million air passengers in 2030 - nearly 150 million less than the Government assumes will be taking to the skies and well within the current UK airport capacity of around 425 million passengers per year.

The government's air passenger forecast assumes that oil prices today are only US$60 a barrel and will fall to US$53 by 2012 and remain at that level indefinitely. At present, oil costs US$136 a barrel, with some analysts forecasting prices as high as US$200 in the near future.

By doubling the Government's estimate to a conservative assumption of US$106 a barrel in 2030, the impact of the increased oil price on air fares alone would cause an estimated 15% reduction in the growth of air passengers.

"The government's current projections for passenger numbers are pie in the sky, based on estimated oil prices which border on the fantast," said the head of transport policy at WWF-UK, Peter Lockley.

"What's more, the government hasn't even examined a scenario where it makes an effort to promote alternatives to flying such as videoconferencing," he added.

Inaccurate economic analysis
The research also examines the economic modelling used by the government specifically to justify the third runway at Heathrow.

By applying a few simple and reasonable adjustments to the government's model - raising the projected price of carbon, only counting the benefits to UK passengers rather than non-UK ones and not counting taxes as a benefit - the £5 billion benefit claimed by the government swiftly becomes a £5 billion loss.

"Expanding the UK's airports means locking the UK into a carbon-intensive future that is incompatible with the Government's climate change targets," said Lockley.
"If passengers start turning away from planes thanks to high oil prices and better alternatives, or we look a little more closely at the government's calculations behind projected profits, then the economic case for putting added pressure on the climate begins to look extremely shaky," he explained.

WWF-UK calculates that greater use of videoconferencing and alternative methods of travel combined could serve to reduce passenger growth by up to 13%.

These figures are backed up by their recent report, Travelling Light, which discovered that 89% of major businesses expect to cut their flights in the future and that a similar number believe videoconferencing is the key way to achieve this.

WWF-UK is currently asking businesses to take the One in Five Challenge, and reduce their flights by 20% within five years, as part of its One Planet Future campaign and strongly urges government agencies and departments to sign up to the campaign and commit to cutting their flights.