Economic Theory

The never-ending saga of airport expansion


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When I was writing my paper on airport expansion in 2013, I had a nagging fear that it would soon be overtaken by events, and rendered out of date. I thought that if the Airport Commission quickly came to a final verdict, and if the government then got behind that verdict, the paper would go straight from the printer to the storage room.

But at that time, I also still believed that Game of Thrones author George R.R. Martin would soon finish his book The Winds of Winter, and that Universal Credit was about to be rolled out nationwide. I had not quite realised yet that some projects are just not meant to ever be finished, even if the people involved maintain the illusion that they are on the verge of completion.

Airport expansion is one of them. In 2006, a White Paper published by the Department for Transport stated:

“The Government continues to support the development of a third runway at Heathrow […]

Demand at Heathrow is now far in excess of runway capacity […] Heathrow is in an increasingly uncompetitive position in relation to other major European airports. Although it handles more passengers per year […] it has less runway capacity than competing major European hub airports […]

As a result, Heathrow’s route network is now largely static. Without additional runway capacity, Heathrow’s competitive position will diminish to the disadvantage of the UK economy”

Ten years on, that problem has only gotten worse, and it has spread to Gatwick Airport as well. And yet, Theresa May has, once again, kicked the issue into the long grass. The Prime Minister is expected to endorse an expansion option rhetorically (probably a third runway at Heathrow), but then do nothing about it until 2018.

The problem is one of political incentives. The government has little to gain, and a lot to lose, from coming to a decision. Make up your mind, and you risk legal battles, internal party strife and hounding by the press. Delay the issue further and nothing special will happen. Sure, airports will get even more crowded, flight delays and cancellations will become more common, fares will go up, new routes that would otherwise have been opened will not be opened, and so on. But here’s the thing: people will not link that to any particular government decision (or lack thereof). They will blame the airport operator, or bad luck, or they may not even be aware of what they are missing out on. No particular party or politician will be held to account.

That is one reason why we need to take the politics out of this process as far as possible, and come to an arrangement where the aviation industry can directly enter negotiations with those affected by noise and other adverse effects of airport expansion. Compensate them, come to a mutually beneficial agreement, and move on.

I know that airlines and airport operators have reservations about this idea. What if it creates a ‘compensation culture’? What if, after a while, everybody feels entitled to some compensation, which ultimately makes it too expensive to buy off opponents?

That is indeed a theoretical possibility. But if US experience is anything to go by, opposition to airports is often driven by a small minority of obstructionists, for whom obstructing things is a way of life. In the US, airports operate special hotlines and online forms where residents can raise issues to do with noise. Calls and online submissions are logged, and, as with websites, it is possible to differentiate between ‘hits’ and ‘unique visitors’.

In a paper by George Mason University’s Mercatus Center, Eli Dourado and Raymond Russell have done that to derive the ‘market share’ of the most vigorous complainers. At Los Angeles International Airport, one single person alone accounts for half of all complaints received. At Denver International Airport and Ronald Reagan Washington National Airport, three out of four complaints come from one and the same person. And at Las Vegas McCarran International Airport (LAS), virtually the whole complaints department exists for the sole purpose of keeping one troublemaker busy throughout the day.

 

Share of complaints accounted for by the most frequent complainer

Airport %
Seattle-Tacoma International Airport 42%
Los Angeles International Airport 50%
Denver International Airport 73%
Ronald Reagan Washington National Airport 78%[1]
Washington Dulles International Airport 84%
Las Vegas McCarran International Airport 98%

-based on Dourado and Russel (2016)

 

Does this mean that aircraft noise is not an issue at all? No. Other people may have justified complaints, and just voice them in other ways. Others may not raise them at all, given that in these cases, the runways are already there. Here in the Southeast of England, the issue is increments in noise levels, not the existing level. So the total number of people with objections is almost certainly vastly greater, and most of those objections will be genuine.

But the data nonetheless tell us something about the distribution of the intensity of opposition. We see a few protest letters published in the Evening Standard, or a small protest outside of parliament, and too quickly we jump to the conclusion that ‘the local community’ is fiercely opposed.

That is not the say that the >99.9% who neither protest nor write letters are enthusiastic about an increase in noise. But let’s put it this way: I find the construction noise outside of my office window annoying, and if I could stop it by signing a petition, or voting for a candidate who promises to stop it, I would do it. But if I had a choice between

a.) putting up with the noise, and receiving a £30 compensation, or

b.) stopping the noise, and receiving nothing,

I would rather take the £30. Why? Because noise, while a nuisance, is not the end of the world. Raise the opportunity cost of opposing the project just a little bit, and I would gladly betray my fellow anti-noise NIMBYs, and take the bribe from the dark side. Give me 30 pieces of silver, and I’ll become the Judas of Westminster.

A ‘Coasean’ framework for decision-making would work, because for most residents, opposition to airport expansion is a matter of trade-offs, not absolutes. A Coasean framework would subtly raise the opportunity cost of opposing the project, thus turning the pragmatic majority against the obstructionist minority.

The political process is too clumsy to come up with such a near-win-win solution. It creates a theoretical winner-takes-it-all situation – except that there is no winner, and nobody takes anything. Airport operators are hoping to get the green light without having to compensate residents, and protesters are hoping to quash the project for good. But what we really get is a permanent limbo, in which the project gets neither the final approval nor the death knell.

Nobody wins. Except me – because I’ll always find excuses to peddle my old airports paper once again.

Dr Kristian Niemietz is the author of the IEA Discussion Paper ‘Depoliticising airport expansion. Market-oriented responses to the global and local externalities of aviation’.

[1] These are two individuals, living at the same address



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