In a much-heralded speech made on the 29th January about how the Labour Government will grow the UK economy, Rachel Reeves MP, Chancellor of The Exchequer, announced support for the concept of Heathrow Airport expansion, with the addition of a third runway.
https://www.gov.uk/government/news/government-backs-heathrow-expansion-to-kickstart-economic-growth
During her speech, she referred to the expansion plans of Luton and Gatwick airports. These applications are currently being reviewed by the Secretary of State for Transport, Heidi Alexander MP. Ms Reeves stated that a decision on these would be made “shortly” by Ms Alexander.
The owners of Luton Airport, Luton Rising (LR), and the airport operator, London Luton Airport Operations Ltd (LLAOL), responded by urging Ms Alexander to make a swift decision. https://www.bbc.co.uk/news/articles/ckgrzgrnrnlo – :~:text=Alberto%20Martin%2C%20chief%20executive%20of,expansion%20plans%2C%22%20she%20said.
A more detailed interview with LLAOL, would appear to show that they are fully committed to finance these expansion plans: https://www.travelandtourworld.com/news/article/london-luton-airport-backs-uk-chancellors-call-for-sustainable-growth/
In the opening statement by the CEO of LLAOL, Alberto Martin, references a figure of 53 pence/per £1 of passenger spend at the airport, being available to invest in local community causes by LR, and this being more than any other UK airport. This has always been a rather spurious comment, as no other airport of comparable size and passenger throughput as Luton, is owned by a Local Authority, so none of the other large airports in the UK, have any reasons to make such financial commitments.
Rodrigo Ruiz and Graeme Ferguson, then both comment on how LLAOL is committed to providing the “expertise and capital” to deliver the expansion plans. This is very kind of LLAOL, but we are extremely concerned as to what strings will be attached to any such financing, as they are a company driven by profits, and LR, and its sole owner Luton Borough Council (LBC), are shackled with circa £700 Million pounds of debts on LR projects at the airport, and aren’t really in a position to argue if it means income is at risk.
When Covid-19 hit, LLAOL enforced Force Majeure clauses in their Concession Agreement, which resulted in LR giving £45 Million over a three-year period from March 2021 to March 2023. LLAOL had suggested they would have had to shed around 250 jobs as income ceased, and hence LR made these payments. This money could have been spent in Luton, either directly into budgets, or via charitable groups, so surely a lesser figure could have been negotiated?
This could of course well have been the case; we will never know, though if LLAOL were so committed to LR and LBC in operating the airport, for the town and local community, surely that would have been the case? At the same time, LBC made around 450 staff redundant, or outsourced them, as its income stream had also been severely impacted.
Front line Council service jobs sacrificed for niche airport ones, does that sound a fair trade?
LLAOL were consultant and advisor in the DART rail-air link from Luton Parkway to the central terminal area; as the airport operator that is only to be expected. What is not to be expected is that they did not contribute anything financially to the project.
This project was undertaken solely by LR, because one of the three major airlines using Luton, when asked for their opinion on the project, said that it was crucial, as the then bus transfer operation would not be conducive to them expanding flights in the future.
This led to a project that has £240 Million of unrecoverable debts at this time.
Let us look in the round at these two topics:
LLAOL kept their staff in employment, and was gifted the advantages of the DART Link, which they now gain income from, for no cash outlay whatsoever. At the same time, LR/LBC picked up massive debt that has to be paid for, using revenue that could have ended up paying for LBC services. The profits LLAOL make go out of the UK to the USA and Spain, the parent countries of the LLAOL partners
LR have stated that environmental controls, named by LR as Green Controlled Growth, will control all expansion plans, but the events mentioned above, to us confirm that commercial income to LLAOL will trump all such controls, particularly as aircraft emissions have been excluded from the Green Controlled Growth strategy.
The DART being built because one single airline threatened no further growth, also clearly shows that LR/LBC will bend the knee to an airlines demand over environmental controls.
Time will of course tell, if Ms Alexander sees the same issues as us. We can but hope so.