The Future of Aviation

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More than 110 million passengers pass through London’s two biggest airports each year and the debate over the additional runway rumbles on. But what does UK plc really need from aviation to keep it competitive? And what are business leaders’ other main desires for the future of air travel from Britain?

Host: Lady Barbara Judge, Chairman, IoD

Russ Shaw, founder, Tech London Advocates
Graham Fish, founder and director, men-ü; chairman, Philip Kingsley

Saurav Chopra, co-founder and CEO, Perkbox

Dan Lewis, senior infrastructure adviser, IoD

 

LADY BARBARA JUDGE Welcome, everyone, to the IoD and this breakfast roundtable discussion about the future of aviation.

A third of our members fly at least six times a year, and over 90 per cent think that we need more airport capacity. There is definitely a feeling that this country ought to get on with making some decisions about what it’s going to do about giving us more airport capacity. But, of course, they have postponed the decision until after the referendum, yet again. We will talk about how business travel has changed over the years, our own experiences of aviation and what we need from aviation infrastructure in this country.

First of all, over to this morning’s co-host, Stewart Wingate, chief executive officer at Gatwick Airport.

STEWART WINGATE Back in the 2000s, a lot of policy work looked at whether or not the monopoly of airport ownership was working well for airlines and delivering for passengers. At the time, the British Airport Authority owned Heathrow, Gatwick and Stansted. Then a competition review, which took several years, found that common ownership didn’t seem to be working for airlines or passengers, and the remedy was the forced break-up of that BAA monopoly.

The thought at the time was, if the airports had separate ownership and management teams, they’d start to compete with one another and you’d get better service levels, more innovation, more investment in technology, more competition for routes, more marketing to different airlines. You’d see the airports grow faster, offering more choice and investing more in their infrastructure.

You’d also see the big airports wanting to expand, whereas monopoly ownership was always focused on Heathrow. In 2009, my challenge, with my new team at Gatwick, was to demonstrate that the Competition Commission findings would actually happen in reality. Now, in 2016, Gatwick has grown from 31 million passengers back in 2010 to 43.5 million passing through it this year. We’ve grown faster than any other London airport by quite a significant margin.

We serve more destinations today than Heathrow does, but with just the one runway. We are now connected to all the business and leisure destinations of Europe, and serve more than 50 long-haul destinations directly.

For the future, the case for Gatwick having a second runway is this: we’re full, and we’ve grown significantly faster in separate ownership than when Heathrow owned us; we’ve invested over £1.3bn in six years and transformed the service levels; our runway scheme is only about a third of the cost of Heathrow’s. It’s fully privately financed – we’re not looking for a penny of taxpayers’ subsidy. We can open our runway five years faster than Heathrow can deliver theirs.Gatwick Airport roundtable at the Institute of Directors

According to the Airports Commission, the UK gets the same number of short-haul and long-haul routes, irrespective of whether you expand Heathrow or Gatwick. We can do it with a fraction of the environmental impact: today we impact around three per cent of the number of people Heathrow impacts with noise. Gatwick has never, ever failed air-quality limits. We’re cleaner and we’re quieter. I’m looking forward to hearing your thoughts today.

JUDGE Thank you. How business travellers’ needs have changed from when we all started travelling…

SIMON GREENLY The proportion of time spent flying as opposed to the proportion of time spent actually getting to the airport and back has changed. It’s become a real pain from a businessman’s point of view, because you spend far too much time doing stuff that doesn’t add value to your business.

RUSS SHAW I would echo that. Getting to and from the airport is an important part of the journey, and when you arrive at the airport you want as little hassle as possible. I know the security process needs to be very robust, but I do my online check-in well in advance; I’ve got my boarding pass, and I want to go to a lounge, download emails, grab a bite to eat before I get on the plane. Many of the lounge experiences I’ve had in the world, they feel busier than the actual airport terminal.

JIM PRIOR I agree – saving time around the flight is hugely important… The other interesting thing is that more large corporations are buying flights and negotiating deals through procurement, rather than individually, so more and more decisions are getting made by the corporation, rather than the individual, as to which airline you fly with. So very competitively priced flights to major destinations are going to be compelling.

SAURAV CHOPRA For the start-up, obviously price is a big deal because of cashflow. As a mid-market start-up, it would be really interesting to understand what the long-haul options are for big-growth areas – Asia, Latin America. Is Gatwick looking at connecting to those regions, because that’s where a lot of attention for businesses in the UK is focused?

GRAHAM FISH Given the size of the industry, I think there’s a distinct lack of information in terms of prices and benefits – it’s just not widely available… Bearing in mind that information should be kind of readily available in this day and age, it just doesn’t seem to be there.

JUDGE For me, I want to get dressed on the plane after I’ve gone to sleep – you want to go straight to work on arrival – but they’ve never had a woman go in the bathroom, I think, when they’ve designed the plane… Somebody once told me, you never know who you’re going to meet on an airplane and you’ve got to look like a businessperson when you board and arrive.

PRIOR Airports are exactly the same. There are very few places that you can go in an airport and get changed out of the suit, into something that you’re going to sleep in. You end up in the bathrooms.

JUDGE So true. If we broaden this out, what are the UK’s needs for aviation infrastructure?

Lady Barbara Judge at the Gatwick Airport roundtableDAN LEWIS I think the starting point is that London’s blessed to have all the airports it does have. It actually has 14 per cent more connections than the next [best-connected] city, New York. London is a unique aviation market because there are so many people within reach of so many connections. We have long-term planning issues about adding runways, but there’s also the issue about adding infrastructure to get people [to airports] and how long it takes. Increasingly, what we’re seeing is a drive towards bringing people to the airport via public transport, but that costs money too. Making the journey as smooth as possible is something we need to think about much more going forward.

GREENLY Also, being able to use the time as well. Being able to add value while you’re spending 14 hours or however many hours it is, as opposed to sitting there doing things that bore you to tears and don’t add any value.

WINGATE The research we’ve done suggests time is absolutely critical. The clock actually starts as you leave your front door [and runs] until you reach the doorstep of wherever you’re going to do your business. That means that access to and from airports is really quite important, as well as the actual transit time through the airport itself, and, of course, the experience that you get on board the aircraft.

We’re starting to see the full benefits of Thameslink being delivered. Between now and 2018, we’ll actually see a doubling of the capacity going to and from the airport. The new carriages that are coming have WiFi on board. We’ve lobbied for them, and the franchise agreements have been put in place by the Department for Transport. All of the old Gatwick Express carriages will be retired by the end of this July.

GREENLY I take South West Trains, which goes through Woking to get to Heathrow, and the carriages are not designed to have baggage spaces, so we see all these people struggling like crazy. The overhead lockers are not big enough.

WINGATE The carriages that we work with the rail companies to deliver, they’ve actually been designed specifically with those sorts of points in mind. So, for example, I don’t know if you’ve travelled on the old Gatwick Express carriages… they were dreadful. Passengers have told us they need very wide vestibule areas. Secondly, they want accessibility to luggage racks so you can just put your bag down and take your seat. On the old Gatwick Express carriages the doors were right at the end of the carriages, exactly the wrong place. If you want to get people on and off a train quickly you put the doors a third and two-thirds down the train… We’ll have a train going in the direction of London, leaving Gatwick, once every two-and-a-half minutes.

Once at the airport, we have a campus-wide commitment which is that we just hate queues, whether it’s in the check-in area, the security area or waiting to get beauty products. We’ve spent six years looking at how to reduce the cycle time that people spend dropping a bag, going through security, or coming through immigration. So what you see in Gatwick today is the most automated of the London airports. We’ve got the world’s biggest self-bag-drop area, award-winning security – 97.5 per cent of the time you get through in less than five minutes. We’ve got technology that measures the security zones.

And technology changes to the aircraft are really significant. It is now possible for an aircraft to set off from Gatwick, for example, and in one go reach Perth, Australia, without stopping. They’re now using carbon composite materials so they’re a lot lighter, very environmentally friendly and they’ve got less fuel burn. They’ve actually reduced the size of the aircraft. Aircraft manufacturers have done that to enable more agile point-to-point travel so you get greater choice in the marketplace. More long-haul routes become very viable from the likes of Gatwick, Stansted, Birmingham and Manchester, because the airlines have opted for that style of aircraft. That’s why we’re seeing our long-haul routes flourish – because the Dreamliners have come into service. Norwegian, our third-biggest carrier, has told us it’ll increase its current order of about 35 Dreamliners to over 50, and place all 50 at Gatwick.

SHAW It sounds like good progress has been made, but are you potentially building a business case around one carrier who could have misfortunes down the line? Also, do we need to build up this capacity if you have these big Middle Eastern carriers who are putting in the big
A380s and using Dubai or Doha as big connecting hubs?

Dan Lewis at the Gatwick Airport roundtableLEWIS That’s a fascinating development because we’re a national organisation, and we have regional branches in the north. A lot of them hub through Amsterdam, but that’s going to compete in the future with the rise of these long-range aircraft. You just wonder what proportion is going to become point-to-point, and what proportion is going to be hubbing. It’s a fascinating, evolving market.

WINGATE I have here the Davies Commission report report into destinations that are served in the event of Gatwick or Heathrow being expanded. When he [Sir Howard  Davies] started his work in 2011, London had 107 long-haul destinations served directly. By 2050, the projections are that if you expand Heathrow we’ll serve 133 long-haul destinations, so 26 more. But if you expand Gatwick, you connect to 131, so you can’t put a cigarette paper between the two cases in terms of long haul.

From a European basis, though, if you develop Gatwick, you serve two more destinations than if you develop Heathrow. So, in total, it doesn’t matter which one you develop – according to Davies both schemes mean that the UK in 2050 will serve 405 different destinations. So the London market is primarily point-to-point already, has been for years, and will always be.

JUDGE Well, thank you for explaining why you think Gatwick is the right place for us to be looking. At the IoD we’re not making any judgements; we just want another runway – we want better connectivity for London because we think it’s more competitive for us as a country. This is a subject that we obviously all have a very important interest in.

PRIOR I’m unconvinced by the broader economic arguments for why we need additional runways. I think we’d survive perfectly well with what we’ve got, and we need to fix it when we need to fix it. From a selfish business traveller standpoint, I think there’s a significant difference between airport facilities generally and the needs of the business traveller, so I would love to see Gatwick or any other airport provide a competitive and superior experience to Heathrow because nowhere, for me, delivers well at the moment.

I think there’s a challenge to segment out what the needs of the business traveller are – on the train, in the airport, on the plane – versus the experience of somebody going on holiday. I think it’s a great opportunity for an airport to grasp the initiative and rethink the experience quite fundamentally.

FISH I like options, so I kind of favour Gatwick versus having all our eggs in one basket with regard to Heathrow. There’s always going to be options but I think so many decisions get made in order to say, ‘Well, this is going to be the future’ – biodiesel was going to be the future with cars, then suddenly, ‘Oh, maybe that’s not the right sort of way forward’.

Planes, certainly in the years I’ve been travelling, have become a lot more reliable and I don’t think incur so many in-flight incidents either. But I do come back to this thing about information, because I just feel that nobody seems to have all the answers. And I certainly have concerns about things like air quality at Heathrow – from a personal point of view, I don’t think I’d want to live too close.

LEWIS One of the points we put to the Davies Commission was that, here at the IoD, we always like competition and it’s a paradox that, when you have privately financed infrastructure, you tend not to have very much spare capacity which you really need to have that competition. I’m just wondering, looking round the world, how we compare on that.

CHOPRA From my perspective, I think that obviously competition is fantastic. In any industry it drives better prices and innovation, and both of them together deliver a much better user experience – something which in our business, tech, you’re always obsessed about. I’d love to have a connected experience where I have an app on my phone that tells me, ‘Hey, you know, you need to get to the airport, this is your flight, this is your quickest option.’

When I’m in the airport I’d love for the same app to tell me my gates have been changed, the security times, the clearance times. I’m looking for more innovation and I think competition will drive it.

JUDGE The worst thing is when your plane is delayed and you don’t know why, or how long the delay is, or whether you should book on another airline. If things are wrong, tell us what it is, so we have a choice.

Simon Greenly at the Gatwick Airport roundtableGREENLY Three points from me: first of all, can we have joined-up thinking in infrastructure – trains, roads and airports. Secondly, we can’t carry on abusing the environment. And thirdly, I believe Davies tried to look 60 years into the future in his scenarios for this business. But what is going to be the effect of technology, and so in 30 years’ time, how long is a runway going to need to be?

SHAW I was part of the London 2036 commission, led by Boris Johnson. Over the next 15 to 20 years, London will become a city of 10 million instead of 8.5 million. That has a huge impact on all aspects of infrastructure. I talk to the tech community, who would clearly love to see another runway at Gatwick. And I have also been very vocal to say that I actually think both Gatwick and Heathrow need additional airport capacity if we’re going to be adequately prepared for the next 20 or 30 years. I’m concerned about the environmental impact, but I’m confident that aircraft manufacturers are designing engines that are becoming greener over time, so I do worry about that. But I think we’re kidding ourselves if we don’t add more runway capacity at both of our leading airports.

WINGATE We’ll keep our airport charges at around a third of the price of Heathrow’s, we’ll get it [a new runway] open by 2025 and we’ll be cleaner and quieter from an environmental perspective.

JUDGE Well, I think you’ve done a brilliant job answering all these diverse and important points. On behalf of the IoD, thank you all very much for attending. Come back and join us again.

Gatwick Airport CEO Stewart Wingate sums up the roundtable (advertorial)

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