SSE NEWS ARCHIVE - June to July 2004

Britannia, Thomas Cook, First Choice, My Travel and Monarch Airlines who together form the Charter Airline Group of the UK and who fly over 31 million passengers a year, have raised serious doubts over the viability of a new runway at BAA Stansted Airport.

The concern centres on the proposed funding for the new runway. In a joint letter to British Airport Authority, who own Stansted Airport, the Department for Transport and the Civil Aviation Authority, the CAG have objected to paying higher fees at London Gatwick and Heathrow in order for the proposed £4b new runway at Stansted to be constructed.

Recent events at Stansted involving Ryanair and their refusal to pay landing fees to the BAA have raised serious doubts within the industry that BAA will be able to fund the development of the new runway without cross subsidisation from other London airports.

Peter Brown, Managing Director of Monarch Airlines, said "We believe Stansted should only be developed if the users are willing to pay for it. We see no evidence that BAA can pay for this runway without cross subsidisation and we are left to make the conclusion that cross subsidy is the only way left to raise the money. Until this can be otherwise adequately demonstrated, work should continue on the case for a third runway at Heathrow and a second runway at Gatwick, the latter option being unconstrained by the environmental problems that plague Heathrow."

Kevin Hatton, MD of Britannia, added, "If Ryanair, who make up 63% of the traffic at Stansted, won't pay their current landing fees then what hope have the BAA got of raising the cash through increasing charges to fund a £4b pound development? We don't want to see our fees increased at other BAA airports to fund a white elephant that has little industry support. We support the Government's decision to expand airport capacity in the south east but firmly believe development should only go ahead if the BAA can show that Stansted users are willing to pay for the new runway and they will not have to resort to cross subsidy. The White Paper clearly states that new capacity should be paid for by airport users".

Unhappy landing for MPs' parking perk
Ben Webster, Transport Correspondent - The Times - 28 July 2004

BRITAIN'S biggest airport operator is preparing to strip MPs of their free parking passes after protests by shareholders. BAA gives a pass worth £1,300 a year to 847 MPs, peers and MEPs. They can be used at its seven British airports, including Heathrow, Gatwick and Stansted.

BAA has previously attempted to justify providing the passes on the ground that politicians of all parties can claim them. It has also claimed that the passes, collectively worth more than £1.1 million, are a "gesture of support for our parliamentary democracy".

The passes are meant to be used only when the holders are flying on parliamentary business. But BAA admitted yesterday that it did not carry out checks to prevent politicians from using the passes when going on holiday. The company has previously said that it was aware that some politicians had abused the passes in this way. BAA's directors faced a barrage of angry questions from shareholders about the passes at yesterday's annual general meeting of the company. BAA had blocked an attempt to raise the issue at last year's meeting.

A group of 150 small shareholders, led by campaigners against a second runway at Stansted, forced the company to debate a resolution on political donations. Brian Ross, a member of Stop Stansted Expansion, who drafted the resolution, said: "It is an absolute outrage that BAA is gifting over £1 million a year to curry favour with politicians. These are the very people who will ultimately make decisions about whether BAA can expand its airports or preserve its monopoly. If a company wants to make political donations it should get shareholders' approval and publish full details in its annual report, including the names of every politician who accepts."

Mr Ross proposed a resolution designed to force BAA to acknowledge that the passes were political donations. It did not call for the scrapping of the passes, but sought shareholders' authorisation for BAA "to make political donations of £1.25 million in the coming year".

The resolution was defeated, but a substantial minority of shareholders voted in favour. However, a BAA source said: "We will be reviewing our policy on the passes and the result is likely to be that we will get rid of them."

BAA reviews free car parking passes
Kevin Done, Aerospace Correspondent - Financial Times - 28 July 2004

The board of BAA, the UK airports group, is expected to review its policy of granting free airport car parking passes to MPs, MEPs and members of the House of Lords in the face of a significant shareholder revolt.

At least 17.3 per cent of shareholders voting, including several institutional investors, went against the BAA board recommendation to leave its present policy unchanged.

A significant minority of shareholders at yesterday's annual meeting voted against the board on a show of hands, with several speakers expressing opposition to a private company offering such concessions to politicians.

Marcus Agius, BAA chairman, blocked a vote on the issue at last year's AGM but was forced by shareholder pressure to accept a resolution this year.

He said: "We are listening to shareholders and will need to take account of what has been said."

The battle over the free passes has been led by Brian Ross, economics adviser to the Stop Stansted Expansion campaign, which is fighting BAA plans to build a second runway at Stansted and is using the parking issue to gain publicity for its fight against increasing capacity at Stansted.

The row has arisen because BAA resolutely refuses to recognise the free car parking passes as political donations. Mr Agius said it was a matter of legal interpretation and said advice from leading counsel had consistently backed the board's stance.

"These concessions, because they are given to parliamentarians of all parties for use in connection with parliamentary business, do not constitute political donations for which shareholder approval is required," he insisted.

He admitted that the board "did not know it was a cause of concern" and said he had not allowed the resolution a year ago because "we did not think there was any interest . . . This is not central to our policy of running airports".

Currently 847 of the 1,412 eligible politicians hold such passes, worth £5,245.20 for four-year concessions.

Sir

As a resident of North West Essex, can I just say how delighted I am to see Ryanair and BAA squabbling over landing and pipeline charges. We are being told that these two companies are going to be partners in a capital investment of up to £3 billion building a second runway at Stansted Airport.

It seems they cannot even agree how to split a round of drinks. Of course when it comes to the billions of pounds in supporting infrastructure, such as surface access, housing and social infrastructure for those who will work at the airport they are both remarkably silent at the moment. Like most major civil engineering projects, if the final cost were known at the beginning of the exercise they would never have bothered. And of course the taxpayer can always be relied upon to chip in a few billion to help companies the government likes.

The fact is that aviation is an expensive business. They always say that the only way to make a small fortune from aviation is to start with a large fortune. The recent boom in "low fares" airlines is simply a bubble exploiting underused assets, mostly - like Stansted Airport - built at taxpayer expense.

The government casually brushes aside the environmental damage that this explosion in aviation will cause, but one day someone will have to pick up the tab. Is Gordon Brown going to tax the rest of us to subsidise a few people so they can visit their holiday homes in the sun more often? I hope not, and I don't believe he is that stupid. But then it looks like BAA is going to have problems getting its airline "partners" to stump up.

Councillor John Murphy
Member for Great Dunmow (North)
Uttlesford District Council
Great Dunmow
Essex

Information given in the easyJet Trading Statement in May tells us :

"For the second half of this financial year, easyJet has approximately 55% of its fuel capped at US$301/tonne. For the first two months of the second half, the average fuel price was $360/tonne (before hedging). If this price continues, our results would be adversely affected by approximately £4m at current exchange rates."

For the statistically-minded, there are 1246 litres of aviation fuel per tonne and the current exchange rate is about $1.84 = £1. Hence, $301/tonne = 13.1p/litre and $360/tonne = 15.7p/litre. (Most of us would like to fill up our cars at that price!)

By studying the easyJet and Ryanair fuel costs for the 12 months to 31 March 2004 we can calculate some interesting figures.

For easyJet, fuel costs were £128.7m and for Ryanair £116.4m. Per passenger this was £5.90 and £5.04, respectively.

As a percentage of total costs the difference is much more stark. This is 13.9% for easyJet and 21.8% for Ryanair. This is because Ryanair's cost base elsewhere is much lower than easyJet and so fuel is a more significant item for Ryanair.

A 20% increase in the price of fuel would take fuel costs to about 16% of total costs in the case of easyJet and to about 25% in the case of Ryanair.

It is clear from these numbers that an emissions charge set at a level broadly equivalent to the price of fuel - as suggested by DfT - would be a major problem for low-cost carriers, especially Ryanair.

On the topical subject of airport charges, overall, easyJet pays £15.52 per passenger round trip and Ryanair pays £8.48. This is a major difference, no doubt linked to Ryanair's big discount at Stansted and its use of remote 'airstrips' in Europe.

Profit per passenger round trip is £6.78 for easyJet and £15.60 for Ryanair and so, it's actually easyJet who should be most nervous about increased landing charges - although Stansted is a smaller component of their business.

These statistics are fundamental to the future prospects for Ryanair, easyJet and for a second Stansted runway.

They also suggest that it is impossible for any low cost carrier to pay their proper environmental costs and offer such low fares. It raises the whole question of a viable sustainable aviation policy without realistic costings.

Ryanair, the low-cost airline headed by the outspoken Michael O'Leary, yesterday headed for a major battle with BAA, the owner of London's three major airports, over landing fees.

BAA said yesterday it would issue a writ against the airline after it failed to pay £1m in landing fees for Stansted airport in time to meet a 4pm deadline set by the airports operator.

The flashpoint follows weeks of fighting between the two parties, it was revealed yesterday, after Ryanair took issue with a number of charges which it feels it is unfairly being forced to pay, either directly to BAA or as a result of BAA policy. In protest, it ignored yesterday's deadline to come up with its latest landing fees bill of £1m, and said it planned to counter-sue the authority for overcharging on fuel levies at Stansted.

Whilst Ryanair will be allowedto use the airport as the dispute unfolds, BAA said it would withdraw the discounts it currently extends to the airline for all future landing fee bills - a move which could cost the budget carrier as much as £50m over the next two years.

The subsidies are granted by BAA to new airlines and for new routes, to ease start-up costs during the first few years. It is thought Ryanair qualified for the discounts at Stansted until 2007.

BAA, which is headed by chief executive Mike Clasper, said it was unable to provide specific details as to how much it charges Ryanair because the information is commercially sensitive. However, the average fee which it levies to airlines at Stansted is about £2.80 per passenger - more than £2 a head below the maximum it is permitted to charge according to UK regulations. With 12.5 million Ryanair passengers passing through Stansted every year, an increase to the maximum levy would set back the company about £25m a year.

A spokesman for BAA said: "They have repudiated their contract, which means they will no longer enjoy the current discounts on landing fees."

Ryanair disputes that BAA will be able to withdraw its discounts, arguing it has a binding contract with the authority until 2007, which means it cannot alter the airline's prearranged landing fees. However, BAA said the terms of the contract had been broken by Ryanair's failure to pay its landing fees. As a result, it said its agreement over subsidies no longer applied.

The Irish airline said its protest against BAA centred on fuel levies, which it charges to the principal supplier of fuel at its airports, and which are consequently being passed on directly to the airlines. BAA said this is a standard policy which it operates at all its airports. It said that fuel charges were an issue which airlines should take-up with the oil companies rather than the authority.

BAA added that Ryanair had also expressed dissatisfaction over other issues, but that it was unable to discuss details ahead of a potential court clash.

A statement issued for Ryanair yesterday evening read simply: "We are issuing our own proceedings against BAA for overcharging on fuel levies at Stansted over a 12-year period. As BAA is already aware, our agreement on charges is very specific and expires in 2007."

The feud is not Ryanair's first battle over fees this year. The European Commission ruled earlier this year that cheap fees which the airline had negotiated with Charleroi airport in Belgium had been illegal. The airline eventually came to an agreement with Charleroi which allowed it to continue paying the same levy, within the boundaries of European Union guidelines. However, it is still pursuing an appeal against the Commission's decision, and is refusing to pay back several million euros of European subsidies which are being demanded.

In the competitive world of budget air travel, cut-throat behaviour is not uncommon. But yesterday, Michael O'Leary, the outspoken chief executive of Ryanair, took the battle to another level, accusing the company that runs Stansted airport of being "a bunch of overcharging rapists".

The boss of Europe's largest low-cost flight operator added that BAA, which also runs Heathrow and Gatwick airports, was "scamming" the airlines using Stansted by overcharging them on fuel costs. Mr O'Leary also accused BAA of abusing its allegedly monopolistic position by wasting hundreds of millions of pounds on "Taj Mahal palaces" and "Noddy trains" to upgrade its airports.

The stream of vitriol from Mr O'Leary came after the dispute over airport charges between Ryanair and BAA ­ Britain's largest airports operator ­ exploded into open war. Yesterday both sides followed through on threats voiced on Wednesday evening to take their disagreement to court. Ryanair issued a claim in the High Court accusing BAA of "abusing its dominant position" at Stansted and of breaching its contract with the Irish airline operator.

BAA countered with its own claim, demanding £1m in fees it says Ryanair has refused to pay for its 12.5 million passengers who use the Irish operator to fly to and from Stansted each year. The case could cost tens of millions of pounds in legal fees. Yet neither side is planning to blink first. Mr O'Leary made it clear he was already relishing his day in court. "Let the fucking games commence." he said.

BAA said it was reluctant to sue one of its most important customers, but had no choice because Ryanair was refusing to pay its full landing charges. At the heart of the dispute are the fuel charges BAA imposes on airlines flying in and out of Stansted. The operator, which is regulated by the Civil Aviation Authority, is allowed to recoup over 25 years the cost of building a state-of-the-art underground refuelling system.

According to Ryanair, not only is BAA on course to recoup the £12.5m it spent on the system, but it is making a profit because the charge is levied per customer, and Stansted gets more than previously forecast. BAA denies recouping more than the 8 per cent it is allowed under CAA rules.

The row could prove to be a sideshow to another dispute between Ryanair and BAA, which must renegotiate the range of fees the airline pays to use its airport by 2007.As an opening salvo in that battle, Mr O'Leary said he could take his business elsewhere, announcing Ryanair would beef up its flights going out of Luton, adding nine new European routes to the airport, which is run by BAA's rival TBI.

O'LEARY'S HOT AIR

*  "This isn't an airline, it's like a drug baron's business."

*  "We don't fall over ourselves if [customers wanting refunds] say, 'My granny fell ill.'  What part of no refund don't you understand? You are not getting a refund so fuck off."

*  "No, we shouldn't give you a cup of coffee. We only charge €19 for the ticket."

*  "It is much more fun when the world is falling apart than when it is going boringly well."

*  "Please don't ask me to feel sorry for rich people with second homes in France."

*  "I am not a cloud bunny. I am not an aerosexual. I don't like airplanes. I never wanted to be a pilot like those other platoons of goons who populate the air industry."

*  Bolloxology - definition (given on the Ryanair website); any procedure that other airlines claim is complex.

There's a difference in business between driving a hard bargain and not paying your bills, yet it is not a distinction which Michael O'Leary, the swashbuckling chief executive of Ryanair, seems willing to recognise. For months now, BAA has been trying to persuade him to give up at least a part of the discount he has been receiving for using London's Stansted Airport, his main UK hub. Mr O'Leary claims that his contracts with BAA see the discount through to at least 2007. BAA insists that he is already in breach of contract in not paying the higher rates sanctioned by the Civil Aviation Authority.

Mr O'Leary would like to portray his latest dogfight with BAA, now heading for the courts, as champion of low cost air travel versus big bad monopolist, with its stranglehold on London's airports. That's not the reality.

Mr O'Leary has got himself into an immensely powerful position at Stansted, accounting for something approaching 60 per cent of all the airport's business. As an early and substantial supporter of the airport, he was able to negotiate some big discounts for take-off and landing charges. In Mr O'Leary's eyes, he's made Stansted as much as Stansted has made him, so he's entitled to a little slack in return.

Ryanair's grip on Stansted was further strengthened by the company's acquisition last year of Buzz, bought not for the brand or its aircraft, but for its Stansted landing slots and the discounts they then commanded.

With Stansted now approaching full capacity, the discounts have come to an end. Mr O'Leary, on the other hand, seems to think his all-powerful position at the airport gives him the right to dictate the terms of trade, never mind the fact that all other airlines at the airport have accepted the new charges with relatively little argument.

For Mr O'Leary, the stakes are high. If charges were to rise to the maximum level mandated by the regulator, it would increase his costs at Stansted by £25m a year. At a time when passenger yields are falling and other costs, such as aviation fuel, are rising that's not an expense he's willing to tolerate. See you in court, is therefore his attitude and, by the way, we'll be counter suing for overcharging on fuel levies over a 12 year period.

In some respects, this is a similar dispute to the one Mr O'Leary was involved in over landing charges at Charleroi, near Brussels, where low landing charges subsidised by the local authority were successfully challenged through the European courts.

The key difference is that in the Charleroi case the airport authority wanted to persist with the discounts, whereas in the Stansted instance, the operator does not. Yet the principle is much the same. It is plainly unfair on other airlines that they be made to comply with contractually higher charges while Ryanair continues at a rate which is way below the cost of providing the runways and associated facilities.

Mr O'Leary will no doubt be rebutting BAA's writ in characteristically robust and belligerent manner when it is served on him today, but a contract is a contract. It is an extreme step for an organisation as conservatively run and image conscious as BAA to sue one of its major customers. Yet if there is a criticism to be made of BAA, it is perhaps that it didn't act sooner. Ryanair is not BAA's only customer. It should be forced to pay its fair share of Stansted's costs along with everyone else.

A fierce fares war among no-frills airlines seems inevitable this winter, with announcements of expansions at Birmingham, Coventry and Luton airports.

BMI's offshoot Bmibaby is to start flights from Birmingham, just 40 miles from its main hub at Nottingham East Midlands airport. From January, the airline will base three aircraft at Birmingham, which is already home to MyTravelLite and FlyBE.

Bmibaby has yet to announce routes, but there is certain to be duplication in destinations already served from Nottingham. Belfast, Cork and Edinburgh appear to be likely candidates in the UK and Ireland. A strong case can be made for Nice and Toulouse in France, not least because of the ski options these destinations open up. Routes to Iberian destinations such as Faro, Malaga, Murcia, Alicante and Barcelona will be tempting - though these would compete directly with MyTravelLite. Prague is another possibility, but it is already served 10 times each week from Birmingham by Czech Airlines.

Tony Davis, chief executive of Bmibaby, says he is not worried by existing competition: "We have been competing head to head since day one with Go, easyJet or Ryanair."

Twelve miles away at Coventry airport, a second airline is moving in to share with Thomsonfly. From 1 November, Hapag-Lloyd Express will connect the Warwickshire airport with Cologne. This replaces the Birmingham-Cologne link flown by Duo, which went bust earlier this year.

Ryanair is to step up competition at Luton against its arch-rival easyJet. At present Ryanair has one ageing Boeing 737 based at Luton. This will be replaced by four newer, bigger jets. Over the winter, five routes - to Dinard, Murcia, Vasteras, Esbjerg and Nîmes - will be transferred from Stansted, and four new destinations will be introduced in January: Rome and Treviso in Italy; Girona and Reus in Spain.

None of the new routes is currently served by easyJet. But Girona and Reus are being marketed by Ryanair as "Barcelona", whose main airport is served up to four times a day from Luton by easyJet.

Michael O'Leary is going to war again. With the mud of the campaigns against the "communist" officials of the European Commission and the iniquitous "high-fare" Air France at Strasbourg airport barely dried - the actions are currently locked in appeals - he is moving back into the field against a new target. And this time it is BAA, the UK airports group and operator of his main base at London Stansted airport.

Fresh from filing a writ at the High Court in London yesterday against BAA for alleged "monopoly abuse" at Stansted, he warned that the action was only the first skirmish in what would become "the mother and father of a war".

His record in the courts of Europe to date is patchy at best - although he can justifiably argue that few of the most notable actions have yet run their course, and that he has only suffered defeats along the way towards the hoped-for glorious victories in the final appeals.

The fight against the European Commission over alleged illegal subsidies at Charleroi airport is currently waiting a hearing before the European Court of First Instance. The battle over illegal subsidies at Strasbourg airport, started by Brit Air, a subsidiary of Air France, is being contested in France, with a later move to the European courts not ruled out.

The latest locking of horns with BAA is focused on the apparently innocuous issue of fuel levies, imposed years ago by BAA at Stansted to pay for aircraft fuelling systems, and neither removed nor reduced since.

Ryanair's unpaid bills are running to nearly £1m. The airline is withholding some payments to try to force BAA to honour what it claims were undertakings to reduce the levies. Ryanair alleged yesterday that BAA had already recovered £34m through the levies during 14 years for a facility that cost £12.5m.

BAA also yesterday filed a debt claim against Ryanair for £988,283 and £19,014.83 of interest - with the meter still ticking on the interest total. Ryanair issued its own claim against BAA, "alleging monopoly abuse of fuel levies".

Mr O'Leary made clear yesterday, however, that there is much more at stake. "This is just the start of it, get used to it. There is going to be lots more."

At stake later in the campaign are two big-ticket items for both companies. First is the renegotiation of Ryanair's deal on landing and passenger charges at Stansted, which is due to run out at the end of March 2007. And second is the huge issue of the expansion of Stansted airport, the building of a second runway and all the associated facilities.

The question is how much the bill will be for Stansted Generation 2 - and who will pay? Ryanair is BAA's most important customer at Stansted. It accounts for 63 per cent or 12.5m of the airport's total of 20m passengers a year. It has a share of 52 per cent of all the used take-off and landing slots at Stansted. This is more than double its closest rival EasyJet, which accounts for 25 per cent of the passengers and 20 per cent of the slots.

By the same token, Stansted is by far the most important base in Ryanair's European network. It is its main access to the south-east of England, the richest aviation market in Europe. Ryanair will fight to the end to keep its airport costs at Stansted to the lowest possible level. But as its routes and operations mature, the early wins from highly discounted deals are going to be more and more difficult to find.

At Stansted, Ryanair is believed to be paying about half the full tariff of £4.89 per passenger. But this is already rising in steps as part of its present six-year deal. And BAA has made clear that it intends to be charging airlines up to the full regulatory cap when the present low-cost deals unwind.

Mr O'Leary was on top form yesterday as he railed against BAA, describing them as "a bunch of overcharging rapists", and accusing them of building "marble palaces" at their airports and of installing an expensive "Noddy train set" at Stansted to move people instead of letting the passengers walk to the aircraft.

In the first fog of battle, investors took fright yesterday, with the Ryanair share price dropping by 5.1 per cent, or 25 cents, to close at €4.70. They are going to face many testing months ahead.

Ryanair took the first step yesterday towards reducing its dependence on BAA's London Stansted airport by announcing the expansion of operations at London Luton airport, the headquarters of EasyJet, its arch-rival.

It has reached an agreement with TBI, the UK regional airports group that operates Luton, to locate another three aircraft and open nine more routes from Luton in addition to its existing services to Dublin and Milan/Bergamo. The Irish airline said the expansion at Luton would "create and sustain" more than 1,000 jobs in the area as it opened routes to Barcelona/Gerona and Barcelona/Reus and Murcia in Spain, Dinard and Nimes in France, Rome and Venice/Treviso in Italy, Esbjerg in Denmark, and Stockholm/Skavsta in Sweden.

On some of the routes, it will be in head-to-head competition with EasyJet or will be operating to airports outside the main city. Mr O'Leary denied that Ryanair had any intention of pulling out of Stansted, its main London base, but said that its business there was "fully-grown" and that Stansted was already approaching capacity at peak hours.

Confirmation that the low-cost airline expansion in Europe still has a long way to run came yesterday with BMIBaby's announcement that it would open a base at Birmingham airport with the launch of up to 20 routes, initially with three aircraft, starting from January. Investors are still backing the sector. SkyEurope Airlines, a recent entrant based in eastern Europe, said it had raised a further €10m (£8.2m) in a placing with institutional investors in the UK and continental Europe. EasyJet is also adding more aircraft to its Luton and Berlin bases this winter.

Ryanair
Another day, another enemy. Michael O'leary's latest foe is BAA which operates British airports including Heathrow and Stansted. Ryanair is suing BAA over monopoly abuse of fuel levies which cost the airline £5m per year. BAA has countered by threatening to sue over £1.1m of increases it says Ryanair has refused to pay. BAA says contracts that give Ryanair a 50 per cent discount to published charges per passenger are no longer valid. This is, of course, countered by Mr O'Leary. He says contracts are watertight until 2007 with charges fixed according to how long Ryanair has been operating a particular route.

The spats are a proxy for a broader battle. Mr O'Leary does not want to pay for an expensive expansion of Stansted. Ryanair is BAA's biggest customer at the airport bringing it over 60 per cent of its passengers. But Stansted is also Ryanair's most important base - 40 per cent of all Ryanair's passengers travel through it, although the Irish carrier is working to reduce this to 20 per cent by 2007.

Whatever the legal outcome of these first rounds, a mudslinging match will do more damage to Ryanair than BAA in the short term. A tough year is forecast in the European low-cost sector as price wars precede consolidation and investors are already worried about Ryanair's ability to keep cutting costs. Mr O'Leary's case against expensive expansion is a compelling one. But by taking a characteristically aggressive stance, he risks not being heard in the din.

BAA, the UK airports group, is today expected to sue Ryanair - Europe's leading low-cost airline and one of its most important customers - over the alleged non-payment of part of its aeronautical charges at London Stansted airport.

BAA is expected to issue a writ today in the High Court in London suing for the repayment of £1.1m that it alleges Ryanair has refused to pay, with some of the debt outstanding since the first half of last year.

Ryanair said last night that it was issuing its own proceedings against BAA for overcharging on fuel levies at Stansted for the past 12 years.

BAA's recourse to legal action follows Ryanair's failure to settle the debt by 4.0 p.m. yesterday, a deadline that had been set by the airports group.

BAA has further raised the stakes by informing Ryanair that it regards the airline's failure to settle the debt as a repudiation of its present contract with Stansted. As a result it maintains that Ryuanair will still be able to use the airport but will forfeit its discount of about 50% and will have to pay the airport's full tariff rate, in effect doubling its charges at the most important base in its European network.

Ryanair is by far the most important operator at Stansted, accounting for about 63% or 12.5m of the 20m passengers who use the airport each year. It has about 52% of all used take-off and landing slots at Stansted - more than double its closest rival EasyJet.

The Irish carrier countered the threat of losing its discounts by declaring last night: "BAA is already aware our agreement is very specific and expires in 2007".

The row with BAA is the latest in a spate of legal actions involving Ryanair, including its dispute with the European Commission over illegal subsidies received at Charleroi airport in Belgium, and a disability discrimination suit over the level of wheel chair charges in Stansted.

The seriousness of the dispute underlines the scale of the problems that could be ahead for BAA in dealing with its main customer at Stansted, where it has ambitious plans for expansion. This includes the controversial building of a second runway.

BAA have already made it clear that landing and passenger charges will have to rise sharply to pay for the new infrastructure which has been estimated to cost about £2bn. BAA said Ryanair had been refusing to pay the increase of 50p per departing passenger that fell due from April 1st this year under the terms of its 6 year agreement which was due to run until March 2008.

BAA said Ryanair was refusing to pay debts until the airports group reduced the levy on fuel that it charged the oil companies at Stansted, which they passed on to airlines.

OUR COMMENT: One can sympathise with any company faced with non-payment of charges (allegedly) owed by its major customer. BUT, in the world of low-cost flying the sharpest operator wins and Ryanair has not succeeded in achieving its position without driving hard bargains all over Europe. Those who agree to cut price deals have to take the risk that the returns may not be sufficient to meet the costs.

What is clear is that BAA Stansted cannot afford to expand - (and who suggested it would only cost £2bn? Figures up to £12bn have been suggested when the costs of rail and road improvements are included, much of which would have to be met by BAA) - without raising the present charges, which we are told are subsidised by Heathrow, and such cross subsidies will soon be forbidden by the CAA. So, there is a real dilemma both for BAA and for the low-cost carriers who rely on finding airports who will award them the biggest discounts.

We can suggest part of the answer - don't expand! Make the most of the present limits. There is still space for better paying airlines such as an interested airline from California - the local press has reported that a business group from San Jose are visiting Stansted to see what the facilities are. It is suggested that they are interested because Stansted may be expanding. Since Stansted has permission for another 5 mppa and another 70,000 flights there should be an immediate welcome available.

Pat Dale

This is a consultation on studies proposed by BAA to consider the environmental effects of Stansted, within its single runway capacity. It is required for most proposed major developments under the Town and Country Planning (Environmental Assessment Impact Assessment) Regulations 1999.

As BAA inform us in the introduction, they anticipate that the present limit of 25 mppa will be reached by 2006, so, as "the fastest growing major airport in Europe" they need to be able to expand to utilise the full capacity of the existing runway, which they estimate as 35 mppa, though many would suggest that this figure might later rise to 40 mppa and, when the likely number of flights are considered, cargo planes have to be added.

BAA's estimate is that this new capacity would be reached by 2012, and that it would involve 280,000 ATMs annually including 21,000 cargo movements - a rise from the present 172,000 ATMs of which 12,000 are cargo.

They say that they will have "extensive consultations" with key stakeholders during the preparation of the Planning application. A Consultation document will be prepared and an exhibition will tour local towns and villages.

The Scoping Report is sent out for comments to the statutory consultees, the most important being the Local Authority in which the airport is situated, Uttlesford District Council. Other groups are invited to make their views known but, if sent to BAA, will be forwarded to the District Council.

Since the impact of any further expansion is of immediate concern to all local, and not so local residents, and businesses, the quality of the impact assessment is not only of direct interest to all but also will form the basis of any decision by the Planning authority. We will be back in the business of defining "sustainable development". We already know that the economic aspects have a habit of becoming vital national needs whereas the disbenefits, notably the environmental effects, tend to be regarded as "local" problems requiring plans for mitigation, rather than avoiding the problems in the first place.

Mitigation is a dangerous concept because it demolishes the precautionary principle - it implies that the problems can be avoided if certain specified steps are taken, or may be possible in the future. It is then assumed that the problems will be dealt with and the claimed economic benefits will justify the development and enable the magic word "sustainable development" to be used . The truth is that it is very doubtful if any of the adverse environmental effects can ever be neutralised and that it would be better if all parties accepted this and the many disadvantages were fairly set against the claimed advantages.

BAA's Proposals

These are prefaced with a brief account of the present situation in relation to the permission given for the facilities required for the expansion to 25 mppa. We are reminded that BAA agreed to 169 conditions and obligations, of which 29 have been met. They included a (generous) limit on ATMs of 241,000 and a CAP on air noise (a limit on the area within the 57dBA noise contour).

The new application will not require further satellite developments or another terminal building and any additional facilities will be accommodated within the existing boundary. These are not specified. More ATMs will be needed to meet the increase to 35 mppa.

BAA will appoint studies by specialists to identify and analyse the effects of the additional passengers and flights and the as yet unlisted extra facilities, and to recommend mitigation measures. The list of proposed studies is the same as that produced for the application to 25 mppa. Some details of what might be included are given in an Appendix.

Air Noise

New predicted noise contours for a 16 hour (day) LAeq will be produced at 57dBA, and at 3 dBA intervals up to 72 dBA using mid-June to mid-September (the busiest part of the year). Sensitive buildings will be identified.

Obviously a lot depends on the future fleet mix and the choice of the consultants as to what planes the airlines are likely to be using in 2012.

Data will be provided on night flights, at present controlled by the official quota system and under review at the moment.

BAA's expectation is that the present CAP will not be exceeded. This may be very dependent on the future fleet mix and therefore on how much the airlines are able/prepared to invest in planes with improved technology. This will need clarification.

Ground Noise

Much has already been said and agreed in relation to the 25 mppa negotiations. There is much more that needs doing and this is listed out - APUs, taxiing behaviour, ground running of engines and noise from airside vehicles. Much of this requires very strict rules to secure a significant reduction in noise and should have been improved before.

Reference is made to PPG24 (which contains very little on airport noise) and WHO guidance. However, there are also new EU Directives that need to be considered, and the possibility of using Lden instead of Leq (this takes account of the greater annoyance of noise in the evenings and at night) or even of including direct measurements under flight paths (LAmax). WHO guidelines are lower than 57dB - 54dB or even 50dB. Can BAA be thinking of adopting a new improved standard?

Air Quality

Predictions will be calculated to establish future ground levels of the main pollutants, mainly nitrogen oxides, PM10, benzene and 1,3 – butadiene. (No mention of PM 2.5, the more damaging finer particles.) Again, much depends on the choice of the future fleet mix and the policies of airlines both in relation to the purchase of less polluting aircraft and the operational behaviour of pilots on take-off and landing. Airside vehicles must be included and also local traffic that is airport related as well as the effects of local weather patterns.

Nothing is said about the effects on vegetation generally, although Hatfield Forest and Eastend Wood are to be considered.

The effects will be compared with the targets set out in the National Air Quality Strategy. No mention of the EU Directive on Air Quality which cannot be by-passed simply by producing a strategy. The government has already admitted that new developments that breach the Directive would not be acceptable.

Airspace Considerations

This is NATS responsibility but BAA will endeavour to find out if increased traffic will mean that flight paths have to be changed. This is very basic information since so much depends on the position of the flight paths. It is rather surprising that such information has not been clarified before an expansion is even considered!

Public Safety

New Public Safety Zones will have to be established.

Public Health

A rather inadequate promise is made to explore existing data and information. No mention of the existing requirement to carry out a proper Health Impact Assessment. This is a serious defect in the proposals.

Nature Conservation

A repetition of much of what has been said in many reports in the past. It includes the reference to Hatfield Forest.

Surface Access

This is a key question and a full traffic impact analysis is proposed but it would appear to concentrate mostly on road traffic when the effects on the rail network are likely to be considerable.

The last comment says "Consideration will be given to the need for improvements to surface access as mitigation for the proposed development". This is a big understatement. "Mitigation" could involve major improvements to both rail and road, with costs far exceeding those extra facilities required within the airport. Other agencies are involved and an apportionment of costs. Who pays? The other agencies should be actively involved in the assessment and not presented with a fait accompli from BAA's consultants.

Landscape and Visual Impacts

Again, much repetition from past reports. There is/was a Master Plan and this has already been impaired by the new A120 and the associated earthworks as well as the new car park and the plans for the new hotel and multi-storey short stay car park. Action to mediate the visual effects is already overdue.

Employment and Housing Effects

The process carried out for 25 mppa and reflected in the White Paper will be repeated with all the figures for direct, indirect, and induced employment possibly reproduced, together with estimates of where they will be living and whether local people will change their present job to work in the larger Stansted or whether more will have to be recruited from North London.

We need to remember that these figures have been slowly reduced once it became clear that employees would either want local houses or would have to add to the traffic congestion when travelling to work. Predicted figures in the past have been massaged down with the excuse of "productivity increase".

Economic Effects

A study will be commissioned to review the importance of air transport to economic activity. It will also involve reviewing the Regional Economic Strategy in the emerging Regional Plan and identifying how an expanding airport fits in with this Plan and can attract more economic activity to the area.

This study could be a key study, but economic reviews often tend to reflect the desires of those that commission the exercise. The remit and content of this study needs very careful consideration.

Archaeology

Nothing new. BAA have honoured such obligations in the past. As they claim not to be providing many new facilities such activities will be minimal anyway.

Water Management

This is a vital question and it is dismissed in a few words. There is already a possible water shortage in the Region and we read of desalination plants in the Thames and grey water policies in new housing estates. It is essential that a proper estimate of needs and available resources are matched up, remembering that there will be additional houses in the area and that other industries, notably agriculture, require water as well.

Waste Management

BAA Stansted has lagged behind Uttlesford Council in provision for recycling and also behind Essex County Council targets. If there is to be a serious study to improve the situation rather than handing over the problem to a Waste company that needs mixed waste to supply an incinerator, there may be one benefit arising from the impact assessment.

Energy Management

This is also dismissed in a few words and should merit a full study especially considering the part that could be played by renewable energy, biofuels, changes in airside vehicles, etc - all of which serve to reduce emissions as well.

Construction

Nearly a whole page is devoted to listing the ways in which the effects of construction can be mitigated. Yet we are told that there will be very little new building.

The Report finishes with three maps of the existing airport. Copies can be obtained from the Business Development and Planning Department of Stansted Air port at 01279 663104.

Pat Dale

Ryanair is to take its "no frills" travel philosophy to a new level by banning passengers from stowing luggage in the hold of its aircraft, a move it claims will eliminate the need for check-in desks.

The Irish budget airline's chief executive, Michael O'Leary, said yesterday he hoped to introduce charges of up to £50 a bag next year, with a view to phasing out hold luggage.

"The purpose is not to make money from checked-in luggage - the purpose is to get rid of it altogether," Mr O'Leary said.

In future, he said he wanted passengers to print out boarding passes when they booked tickets on the internet, allowing them to go directly to their departure gate on arrival at the airport.

Ryanair believes the change could cut €50m (£33m) from its €150m annual airport costs. It wants to work towards reducing its costs per passenger by £5.

Mr O'Leary said the need for luggage was simply a "state of mind" for many passengers. "Will it piss off people who are going on a two-week holiday to Ibiza? Yes, it probably will. But we don't fly to those charter holiday destinations anyway."

The flamboyant millionaire revealed his intentions as he donned a snowman outfit in London to launch a "winter sale" of a million tickets, which will be available from today at 99p for flights between September and January.

In preparation for scrapping checked-in bags, Ryanair recently doubled its charge for excess baggage to €7 per kilogramme and increased the permitted weight of bags in aircraft cabins from seven to 10kgs.

The airline said less than half its 27 million passengers a year checked in luggage. Most were going on trips with a stay of less than two days.

Consumer representatives criticised Ryanair's plans. James Freemantle of the Air Transport Users Council said: "It's disappointing that an airline would want to introduce a policy restricting who could fly on its planes. This reduces passengers' choice - especially for families with children and lots of bags who wouldn't be able to travel without checking in their luggage."

In a separate initiative, Ryanair intends to introduce in-flight entertainment next summer.

But the airline's strained relationship with trade unions looks set to take a turn for the worse after reports of a letter to pilots from a senior executive. Warwick Brady, one of Ryanair's managers at Stansted airport, is alleged to have told cockpit crew that they "might just as well join the Taliban" as sign up to the British Airline Pilots' Association (Balpa).

Ryanair has always refused to negotiate with unions and has no obligation to do so in its native Ireland. A recognition vote by Balpa among British-based pilots failed three years ago, but the union is canvassing for support for a second attempt once a statutory time limit expires this autumn.

JOBLESS people across east London will now be able to share in the benefits from the expansion of Stansted Airport.

A new £1.3million scheme, launched yesterday will give unemployed people in Barking and Dagenham, Tower Hamlets, Newham and many surrounding areas the chance to get one of the 5,000 jobs being created at the airport over the next five years.

Extra baggage and freight handlers, check-in staff, flight attendants, security, shop workers, bar staff and cleaners are needed to cope with growing passenger numbers, which are expected to rise from around 20million per year currently to more than 31million per year by 2010.

Under the scheme, which has been set up by the Thames Gateway London Stansted Partnership, participants will undergo a free four-week training course to work on interview techniques, CV writing and various other job-hunting skills.

All those taking part are guaranteed a job interview at the end of the course and successful candidates will be given a year's free transport to Stansted from Stratford station with National Express coaches using the Airport Travel Card.

Thirty training places are available each month over the two-year life of the project that aims to place at least 200 participants into work at Stansted or close to the airport. Trial training courses have been running since March and have proved to be a great success as 16 trainees have already been offered jobs at the airport and another seven have secured jobs with local firms.

Terry Morgan, managing director of Stansted Airport, said: "BAA Stansted is delighted to have such an active involvement and we very much look forward to welcoming successful new members of staff and helping them to continue to further develop their skills and experience."

Those interested should apply through their local job centre.

OUR COMMENT: In an area of full employment extra jobs can only be filled by people travelling in from outside the area or by building extra houses so more can live in the area. This has happened already as Stansted has already attracted jobseekers from London and the allowance of airport related houses are still being built. Travelling such a distance to work is not the best way to live and it is a pity that the Thames Gateway partnership is not doing what we thought its remit was, establishing a new sustainable community along the north side of the Thames.

John Prescott has been very clear on this point - new sustainable communities means jobs near home, so why are they promoting Stansted as a job opportunity? The money and effort should be put in at Dagenham and Barking. Free travel passes by public transport are an excellent idea BUT they will first have to get to Stratford - it's a long journey to travel, especially as much of the work will be shift and not in the higher pay range.

Nevertheless job opportunities for the long term unemployed, even if unsustainable, must be welcomed. 200 jobs will help fill vacancies if passengers continue to rise up to the permitted 25 mppa. Beyond that, BAA should not assume they have won the battle!

Pat Dale

EVER since its creation nearly a century ago, the commercial-airline industry has been prone to abrupt ups and downs. Changing aircraft technology, big capital investments and the shifting priorities of governments have repeatedly forced airline operators to scramble to stay aloft. Yet few of these periods of change have promised to transform air travel as thoroughly as the wave of increased competition, new entrants and aggressive price cutting now sweeping through the airline business in both Europe and America. A slew of new low-cost airlines is attacking big incumbent network carriers, some of whom will probably not survive. What shape the industry will take after this shake-out remains unclear, but one thing seems certain: passengers are already being offered more choice and better prices.

When low-cost airlines were first launched in Europe after the liberalisation of Europe's domestic airline market was completed in 1997, Ryanair and easyJet, the pioneers, explicitly and expertly mimicked American budget airlines such as Southwest and ValuJet (now AirTran). The essential elements of the business model were: a single-type fleet of planes; fast turn-rounds; use of cheap secondary airports; no frills - definitely no moisturiser in the toilets; and enticingly low fares that rose only as a flight filled up.

But today the American and European budget-airline sectors have somewhat diverged. Partly this reflects the relative maturity of the concept in America and its youth in Europe. But intriguingly, the differences go deeper than that. America's budget airlines are starting to move upmarket in service quality, whereas Europe's give every impression of moving relentlessly downmarket. They emphasise dirt-cheap tickets, yet they are also expanding as they try to fend off start-up competitors. At the same time, both of Europe's leading low-cost airlines have blurred the simplicity of the original business model they adopted from their American predecessors.

A generation after deregulation of America's airlines in 1978, low-cost carriers have seized control of the domestic market. It was not always thus. Of the 34 newcomers created after deregulation, 32 soon went bust. Those were the days when the strong, incumbent firms such as American Airlines could simply unleash even lower fares whenever a low-cost upstart invaded its market. Before the antitrust authorities could do anything about it, the competitor was crushed.

Low-cost airlines may now be mature as a concept in America, but the market remains in flux. Since September 11th 2001, the six largest network carriers have slashed costs and reduced capacity by one-fifth as they have struggled to stay financially solvent. Even before the terrorist attacks, however, budget airlines were on a roll. Since 2000 they have expanded capacity by 44%. Low-cost carriers currently have 400 orders out for new planes, whereas the old network carriers have only 150 planes on order.

Most of the expansion has come from JetBlue, Frontier and AirTran; Southwest, which accounts for nearly half the sector, has been obliged by the wider air-travel recession to check its expansion, although it is now returning to its former growth path of 10% a year. Southwest is the fourth-largest American airline by passenger numbers, and so was bound to suffer more than younger budget carriers.

Behind the current recovery there lies a bitter truth for network carriers. Though their passenger numbers are rising, revenues remain flat because they cannot raise prices. As the cost of jet fuel soared in the spring, some network carriers tried to compensate by raising ticket prices, only to give up within days. Budget airlines control pricing in the market.

The cost advantages enjoyed by low-cost carriers are striking. Flexible workforces mean that airlines such as Southwest need only 80 workers to fly and support each aircraft, compared with 115 or more at a traditional network carrier. For passengers, the clearest evidence of the rival cost structures is the way the cabin staff of low-cost carriers parade rubbish bags before and after each landing, performing the task assigned by the network carriers to an expensive, standby cleaning crew.

Some big carriers have tried to mimic the low-cost airlines' business model. Song and Ted are owned respectively by Delta Air Lines and United Airlines. Even Hooters, a chain of restaurants that features buxom waitresses, has joined the fray with a niche airline of the same name. And yet until recently, there had only been one highly successful low-cost start-up, JetBlue. That is now changing.

Last month Independence Air was relaunched, having transformed itself from Atlantic Coast Airlines, which had previously run sub-contracted feeder services for United. Sir Richard Branson, a British entrepreneur, then formally announced the launch next year of Virgin America. His Virgin group will own half the airline. American private-equity investors will own the rest (federal law restricts foreigners to owning no more than 49% of the economic equity and 24.9% of the voting shares in any American carrier).

The business model for low-cost carriers is becoming increasingly varied. Song and Ted are following in the flight path of failed network-carrier offshoots in the past, such as Shuttle by United (beaten by Southwest in the west-coast market in the 1990s) and Continental Lite. Song's debut is still dogged by the ongoing labour and financial problems of its parent, while Ted is a highly specialised airline running mainly on holiday routes from United's hubs, such as Chicago.

A nice, cheap package

Meanwhile, the transformation of charter airlines (which run flights tied exclusively to holiday packages) into leisure-market low-cost scheduled carriers is mirroring what has been happening to charter airlines in Europe. The traditional market for package holidays has been undermined by the sheer variety of destinations now served by low-cost carriers and by customers' ability to book accommodation over the internet. People can create their own packages now. In Europe, 99% of low-cost booking are made through the internet, compared with 75% in America.

Another category of low-cost carrier in America is the regional airline that has converted itself, often while also extending its range: Frontier and America West are the best examples. A result is that few local or regional markets are now free of a low-cost competitor. It is estimated that low-cost competition exists on 70% of American routes. Low-cost carriers have seen their market share in recent years grow to around 30% nationally. Competition is thus increasingly between the low-cost carriers themselves.

In response, leading budget airlines have altered their image. Southwest and JetBlue have developed strong brands, offering a well-defined service rather than just low prices. They are attracting business passengers, and sometimes they even offer a separate business cabin. The emphasis at JetBlue is on slick and stylish service and an enviable punctuality record.

But the bigger these carriers grow, and the more they offer such features, the less distinguishable they become from network carriers. Southwest's coverage of the nation is now so complete that 20% of its passengers actually make transfers between its own flights, while at JetBlue 10% similarly transfer. Imagine watching a time-exposure photograph that shows a budget carrier transforming itself into a kind of network carrier, albeit one inherently leaner and more economical.

Another clue as to how America's low-cost carriers are evolving comes from the role played by hub airports. Once anathema to the budget airlines, and the major feature of their network rivals, hubs have increasingly become part of the business model for some low-cost carriers as well. AirTran and Frontier run what amount to hub-based services out of their respective bases in Atlanta and Denver. The deeper the low-cost carriers have delved into out-of-the-way point-to-point routes, the more they are starting to find themselves developing hubs - albeit of a sort.

For instance, JetBlue is now buying 100-seater regional jets from Embraer, a Brazilian manufacturer, to add to its fleet of Airbus A320s. This will enable it to run new routes to smaller markets and to add flights on routes to bigger ones. But the combination of small and larger jets could lead to a situation in which JetBlue is feeding traffic into bigger airports, then transferring passengers to its Airbuses from the little regional jets.

The most radical approach has been adopted by Independence Air, a new low-cost carrier operating from Washington's Dulles airport. From September it will have 300 daily flights to 35 destinations, with more services to follow. But this is a new kind of low-cost carrier, operating from one hub, rather than a string of point-to-point routes across the country. Despite scepticism in the industry, some think the airline is so focused that it can succeed.

But perhaps the biggest change in the business model is that some of America's low-cost carriers are moving upmarket. In the process they clash with the beleaguered network carriers (never very customer-friendly at the best of times) moving downmarket as they desperately seek to cut costs. For some years, in-flight food on a domestic network-carrier has been a shrink-wrapped disaster lobbed from several rows away by a sullen and stressed cabin attendant. Low-cost airlines such as Southwest and JetBlue have studiously avoided the problem: where they do offer food, it is with style and smiles.

Nevertheless, the headlong growth of America's low-cost carriers will almost inevitably face problems. Southwest has excellent labour relations and a cheery, family-style culture, reinforced by lots of company events. But recently its cabin attendants have been seeking new contracts that, if granted, would include some of the conditions that their counterparts enjoy on network carriers.

What would happen if these employees start to take a bigger slice of the corporate cake? The sheer pace of the low-cost sector's expansion is enough to induce vertigo. JetBlue, for instance, doubled in 2002, grew by 66% last year and will grow by around one-third this year. AirTran has also been growing at more than 20% in successive years. It cannot last.

Europe's turmoil

The biggest difference between low-cost carriers in America and Europe is that they have existed in Europe for less than ten years. No surprise then: Europe is in the shake-out phase. Loads of new carriers have sprung up. But most of these will disappear rapidly, just as their American equivalents did. The splurge of new carriers explains the over-capacity, but not the price war that is going on in Europe. Intense competition is taking its toll not just among the doomed newcomers, but on the industry leaders as well.

The shares of Europe's two leading budget airlines, Ryanair and easyJet, have fallen steeply in recent months, after both companies issued profit warnings. Michael O'Leary, Ryanair's vocal and aggressive boss, has warned of a "bloodbath" in the low-cost market. Both he and the bosses of easyJet have complained about crazy pricing by start-up budget carriers that have no hope of surviving. EasyJet confirmed this week that one option its founder and biggest shareholder, Stelios Haji-Ioannou, might consider is to take the group private with the aid of a private-equity investor.

The trouble is that the low-cost-carrier sector in Europe faces serious challenges. At present an all-out war rages between airlines in general. Europe has around 50 low-cost carriers, although that total changes from week to week as new ones are launched and others go bust. Low interest rates, a glut of second-hand airplanes, off-the-shelf software and the example of the successful market leaders have lured others into the market.

Another factor has been this year's expansion of the European Union to include ten more countries. In joining the EU, these countries also joined its deregulated domestic aviation market, giving entrepreneurs their first chance to fly in and out of them. As a bonus, the market leaders have so far shown remarkably little interest in central Europe. But they have responded to competition with their own crazy fares - off-peak return flights from London to Rome or Malaga are sometimes less than the £10 ($18) airport tax levied in London.

Nor is the war entirely among low-cost carriers. Network carriers such as bmi and British Airways (as well as one formerly stodgy flag carrier, Aer Lingus, that has re-made itself as a sort of low-cost carrier), have successfully adopted the internet-selling and yield-management techniques of low-cost rivals. They are not always as cheap as the likes of easyJet and Ryanair, but often at busy periods their fares to holiday resorts compare well. The traditional airlines also offer business travellers a wider range of flights to helpful destinations at prices from London Heathrow that are competitive with low-cost carriers flying from London's more distant airports, Stansted and Luton.

There is, however, something slightly disingenuous about Ryanair and easyJet moaning about over-capacity. Both carriers have ordered huge quantities of aircraft, tempted by fantastically low prices offered by Boeing and Airbus when orders were scarce. Ryanair has about 100 Boeing 737s on order, while easyJet has ordered 107 A319s from Airbus.

Keith McMullan of Aviation Economics, a London consultancy, has calculated that each of these aircraft would have to carry 250,000 passengers a year to earn their keep. In 2003 easyJet carried 21.1m passengers, while in the year ending in March 2004 Ryanair carried 23.1m. In order to fill up all the new planes, already arriving in their fleets at the rate of one every fortnight from now until the end of 2008, Ryanair and easyJet will need between them to attract 52m new passengers a year, more than double their current numbers.

Finding those extra passengers could prove difficult for two reasons. The first is that the current pattern of low-cost carrier traffic in Europe is essentially a British/Irish phenomenon. Ryanair first expanded by flying Irish expatriates and their kin between England and Ireland. This is what airlines called "VFR" (visiting friends and relatives) traffic. Much of it widens the market to people who had never flown before, or did so very seldom because of the high cost of tickets. But VFR travel is much more prevalent in a big homogeneous market such as America than in a fragmented one such as Europe.

Chart 2 in the report shows the obstacles to low-cost carriers expanding across Europe. The comparison illustrates how the London airports are dominated by low-cost traffic, with the sector's share at almost 40%, against only 12% in Paris and less than 20% in Frankfurt's airports. EasyJet and Ryanair have a measly 7% of intra-European flights at Paris Charles de Gaulle, Orly and Beauvais combined. EasyJet has complained about discrimination at Charles de Gaulle, where it pays the same landing fees as Air France, but is relegated to Terminal Three, a bus ride away from the main airport.

Ray Webster, easyJet's chief executive, is also trying to challenge the way slots are allocated at Orly, the second Paris airport. He contracted to buy his Airbuses around the time that Air Lib, a failed French carrier, was going under, and he assumed that he could pick up many of its landing slots. Indeed, some sources suggest the collapse of Air Lib was a condition in the Airbus contract. But when that duly came about, French airport officials handed most of the slots to Air France. Mr Webster's message to the French government for the past year or so has been blunt: "We bought your bloody aircraft, now give us somewhere to land them."

New routes wanted

Most of the bases operated by easyJet and Ryanair are in Ireland or Britain. Unless they can gain greater access to airports in France and Germany (where they are making some progress) and so tap new markets, both will struggle to maintain their growth. It is not much use having open skies without open airports. To cope with this impasse, Mr McMullan suggests that the leading pair will have to continue their bitter price war against upstarts.

Other strategies that dilute the purity of the original American model have already been tried, with the takeover of Buzz by Ryanair and of Go by easyJet; easyJet's use of London Gatwick as a base; and Ryanair's decision to fly to Rome's Ciampino airport despite the expense. Perhaps it is also time for them to consider joint-ventures with local airlines of the kind successfully undertaken in Asia by Tony Fernandes of AirAsia.

Bosses of Europe's leading low-cost carriers are also still trying to customise their formats. Ryanair, for instance, is considering two initiatives that would differentiate its service. At the same time as it is stopping its seats from reclining (fixed seats are cheaper and need less maintenance) it might also equip the seats with high-tech backs that allow customers with credit cards to watch movies or gamble during their journey (an upmarket move?). And, more ambitiously, it might try to slash costs again, perhaps by making planes more like trains and allowing only cabin baggage (seriously downmarket).

Whatever strategies the budget airlines choose, it is clear that the original business model is evolving on both sides of the Atlantic. As they move upmarket in America to fill the void left by big network carriers, and as they move to more expensive airports in Europe, the risk is that low-cost carriers everywhere will start to acquire the very same high costs that made their network competitors so vulnerable.

The global scheduled airline industry has made total net losses of $30.9bn in the last 3 years, according to estimates by the International Civil Aviation Organisation (Icao).

The airline industry has only begun to emerge in recent months from the deepest recession in its history, and the high oil price is threatening to leave the industry in loss again in 2004 for a fourth year in succession despite a gradual recovery in traffic levels.

According to Icao, an agency of the UN, scheduled airlines from its 1288 member states suffered a net loss of $6.6bn down from $11.3bn in 2002 and $13bn in 2001.

The report goes on to list the various causes of the losses, the terrorist attack on 9/11, the war in Iraq and the Sars epidemic.

"The recovery in 2003 would have been stronger, said Icao, but demand for air travel was adversely affected by continuing security concerns, as well as by the Sars outbreak and the conflict in the middle east."

"Passenger traffic reached its lowest level last year in May, after which it started a steady recovery."

The report concludes by analysing the losses according to the world's regions, the biggest losses were suffered in North America. The Director General of Icao warned that the financial recovery of the airline industry was also in jeopardy for 2004.

The world aviation industry is in profitless recovery. Traffic is sharply up as the sector rebounds from the effects of Sars and the war on Iraq. But this increase is not leading through into any broad rise in yields, because oil prices are raising costs and the established legacy airlines are under growing challenge from low-cost carriers in the US, Europe and even parts of Asia. Clearly there is overcapacity and a need for a radical shake-ouy, in spite of certain features of the industry that make restructuring particularly difficult.

One of these is low barriers to entry, at least in the deregulated US and European markets. Start-ups can lease aircraft and entire crews. But the burden of operating is considerable, especially for the legacy carriers which have inherited expensive in-house servicing operations and pension costs. They find this inheritance difficult to shed because of opposition from unions of pilots and mechanics. Nor can they lightly take on strikes from their employees because, like newspapers, flights are a perishable commodity that, once lost, cannot be regained.

These factors produce many lame ducks – more than in many other industries. One reason special to the US is chapter 11 bankruptcy legislation, enabling airlines to stagger on under court protection from creditors. But common to airlines the world over is the fact that they have some unusually compliant creditors. Aircraft manufacturers are ready to offer credit, while banks are often less troubled at lending on aircraft than on other less moblie assets. Airlines have another source of credit: their passengers, in contrast to many other service sectors, they get paid by their customers before they have to deliver the service. Barriers to exit in the airline industry may not be high, but the compulsion to exit is certainly low.

The US shows how slow airline restructuring can be. Deregulation began there in the late 1970s. Since then some airlines were allowed to go bust, but not so far in the downturn following September 2001. This may now change, given that United has had its second request for a federal loan guarantee refused.

In Europe there is, arguably, even greater overcapacity and even greater need for restructuring. Yet deregulation there started more than a decade later than in the US. Brussels has recently tried to accelerate restructuring by being tough on public money to airlines. But it now faces a test case on Alitalia's request for state aid. Established airlines in Asia's largely regulated skies are more complacent about their ability to withstand low-cost competition. But the latter is beginning to emerge in south-east Asia, and China talks of opening up to budget airlines.

The lesson is that government intervention to help lame ducks only damages the health of other airlines. The sooner governments forswear further aid to airlines the better.

OUR COMMENT: After this bruising analysis one wonders how anyone could contemplate investing billions in expanding airports to meet the needs of a questionable predicted massive expansion of air travel?

Pat Dale

The Managing Director, Terry Morgan, welcomed everyone and presented the image of a successful airport dominating the local news, the 50th busiest in the world and the fastest growing in Europe. It dominated the UK leisure market and was important for the Eastern Region. The plans for expansion were ambitious and controversial but had been presented to BAA by the government as a firm policy directive. It was necessary to talk to the local community and to make the best of the airport for the benefit of all. Noise would feature large in discussions.

He referred to the Home Owners' Support Scheme and said that the many representations were still being analysed but it was hoped to make an announcement within the next month or so. He reminded all that noise becomes less as planes become more efficient! Stansted wants to work with the community!

John Williams, the chair of the Noise and Track Keeping Working Group presented the Annual Report for 2003: The record for the last year was good. Stansted airlines were using the most modern aircraft and this had helped reduce noise, as well as the ban on chapter 2 aircraft. Noise was of great concern to the community. Only 2% of aircraft taking off were outside the NPRs and this year's target of 98% aircraft on track at 3000 feet had been achieved. This year's target was 98% at 4000 feet. Flagrant deviations were fined £500. He favoured constant persuasion rather than higher fines. This policy was leading to the dramatic fall in noise, though flights had increased in number. Noise levels are measured at various points round the airport, but not further away.

In answer to a question he said that it was not practical to impose noise limits on arrivals. Neither was it BAA's responsibility to measure noise at Dedham Vale, an area that suffered from aircraft noise. Planes flying over Dedham were all arrivals. (This was disputed by a local resident.) The local Council should be asked to monitor noise in the Vale.

Ground noise was being measured at the moment and progress was being made to improving the situation in accordance with the section 106 agreement made with the planning permission for expansion to 25 mppa.

The Flight Evaluation Unit had done great work. The criteria of breaking the NPR "code" was straying outside the buffer zone (a 3Kms swathe) without good reason.

Roberta McWatt, from the Aviation Environment Division, DfT, spoke on the Consultation on Night Noise: The result of the Consultation was still not published so she was unable to say what was in it, except that it will be different. The present regime, which was extended, will finish in October 2005.

She believed it would be helpful to consider what had happened in relation to noise regulation during the last two years. In July 2003 the judgement of the European Court of Human Rights was given which ruled, on Appeal, that noise from night flights did not contravene the human rights of local residents.

There have been two European Directives on noise. The first 2002/30/EC is concerned with noise related operating restrictions and the second, 2002/49/EC on the Assessment and Management of Environmental Noise.

The Aviation White Paper itself says very little about controls on noise except that there must be a fair balance between the economic requirements and the effects on the community.

What do the Directives require? 2002/30 has 4 main elements:

Reduce noise at source
Consider noise in land-use planning
Noise abatement measures
Operating Restrictions

Directive 2002/49 covers all sources of noise and includes airports. It requires noise contour maps to be produced by 30th June 2007. The noise should be measured using the Lden measuring system, which weights night and evening noise, covering the whole 24 hours. Other measuring techniques will, though, be allowed.

Annex 11 of the 2002/30 Directive requires a full inventory of the present situation, the objectives, noise contours and measurements together with forecasts for the future with and without suggested new measures which, in turn, have to be assessed including a cost benefit analysis and an overview of the environmental; effects.

In answer to a question about Lden she described it as providing contours that rose at 5 decibel intervals from 55dB with weightings of plus 5 decibels in the evening and 10 decibels at night. This meant that the total area included in the contour map would be larger than when using the traditional 57Leq system.

There will be a consultation on these new measures - it will probably be published at the end of July.

Andrew Burke, Head of Terminal Control Operational Support, London Terminal Control Centre, spoke on Continuous Descent Approaches (CDA): He explained the reason for advocating a smooth controlled descent - the noise emitted was much reduced. It had been decided that it was not practicable to set noise limits, but a working group was set up in 2000 to devise a Code of Practice and to give advice to pilots. This applies to all airports. The ideal approach is to descend by 3° from 6000 feet. There should be no level flight of over 50 feet in any 2 miles. Pilots are given ATC assistance over the minimum use of flap, which also reduces noise.

He accepted that CDA was not possible at Stansted when planes were landing from the south as the descent crossed a major east west "highway" used by Heathrow and the City airport. This meant that 30% of arrivals could not use the Code of Practice to reduce noise.

Richard Currie, Head of Communications, UPS Express Ltd. Cargo flights: He described the work of this freight company which specialises in express deliveries between America, the UK and Europe. Their main European airports are the East Midlands airport, and Frankfurt, followed by Stansted and Edinburgh. The main connecting flight from Frankfurt to Stansted has to arrive at 3.0 a.m. in order to reach customers at the start of the working day. Deliveries are trucked into sub depots and then delivered locally. The company has 4 movements at Stansted including the night flight. All the planes are chapter 4. If there is too much freight for one plane then a larger plane is used rather than two planes, which would mean two flights. The company is well aware of the problems of noise, especially at night and they take great care to conform to all the best operating practices.

Dr Darren Rhodes, Environmental Research Consultancy Division, CAA - Alternative ways of mapping noise: Dr Rhodes recalled the history of noise contour maps. They came into being after the Wilson Committee in 1961 and were introduced at Heathrow in 1972, at Gatwick in '74 . In 1994 the Leq system of measurement was introduced after various investigations and surveys. The previous12 hour index was upped to 16 hours.

Various alternatives have been proposed the problem being to relate the meaning of average noise exposures to the individual's experience. Much work has been done in Australia in developing a Personal Events Index. Noise measurements are taken at various points round the airport and the individual noise events from overflying aircraft that are recorded as being over 70 dB are counted. 70 dB is chosen because this is the level of noise that interferes with normal conversation. The number of events can then be plotted as a map which can also be related to the time of the year. It is then possible to see at any one site how many such noise events would be experienced during the course of the year. Another index is used in the USA, a Time Above measurement, how many minutes does the noise of the plane overhead last?

The seminar finished with a series of questions, many concerning the local experiences of residents, such as the number of flights arriving in the late evening hour of 10 to 11 pm. Unfortunately this is a feature of a low cost airline. Quick turn-arounds allow as many as four trips to and from the destinations and the last arrival will inevitably be just before the night period.

There was a request for a similar seminar on air quality - Terry Morgan agreed that one would be arranged.

OUR COMMENT: This kind of conference/discussion does help to clarify the issues and it becomes clear what is possible, and what is not possible, however well intentioned the airport management. The business of flying cannot be conducted without disturbing local residents. The question that is left wide open is what should the limits be to development? Future technological developments will reduce noise even further but, as was commented on during the question and answer session, not only is there a limit when improvements are overtaken by more flights creating more noise, there is also no guarantee that airlines will purchase technically improved aircraft. Such aircraft are likely to be much more expensive. Is more banning of noisier aircraft an answer? Most of us would say limit the number of flights! No more expansion! We have reached the limits of reasonable (and sustainable) development at Stansted!

Pat Dale

BOEING is being forced to rethink the design of its new jet after admitting that its distinctive shape would waste fuel.

The company had claimed that the 7E7 Dreamliner, expected to make its maiden flight in 2007, would be the most eye-catching aircraft in the skies. But First Choice, the holiday company that yesterday revealed it was ordering six Dreamliners, said that it would be pressing Boeing to redesign the plane.

Chris Browne, managing director of First Choice, said that passengers did not care what the plane looked like as long as fares were cheap and the interior was comfortable.

She added: "Aerodynamics are far more important than the appearance. While it might be nice to look different, the key issue is to reduce fuel consumption."

As a launch customer, First Choice has the right to negotiate with Boeing over the design of the Dreamliner.

The present design has an elongated nose and a tail fin that curves out of the fuselage rather than jutting upwards. It looks sleeker than existing snub-nosed aircraft, but tests by Boeing's engineers have shown that it causes more drag and therefore increases fuel consumption.

Boeing has already been criticised by environmental groups for sacrificing efficiency for the sake of appearance.

Lord Faulkner of Worcester, chairman of the Parliamentary Sustainable Aviation Group, has written to Sir Michael Jenkins, Boeing's UK president.

In the letter, he accused Boeing of "deliberately and calculatedly manufacturing an aircraft with less than optimum fuel consumption".

He added: "Do you not agree that we need new aircraft that reduce exhaust emissions to an absolute minimum if we are ever to get air transport's climate change contribution under control?" Jeff Hawk, Boeing's director of environment, said: "There is a trade-off in the design, in which we lose a little in terms of overall efficiency. We wanted people to recognise the plane so they could identify with the brand."

But Randy Baseler, Boeing's head of marketing, said that the manufacturer would be prepared to reconsider the design if airlines raised concerns. "Airlines are saying to us - We want to bring back the magic of flight. They want something recognisable, but we realise they don't want to pay a big fuel penalty for it," he said. "The tail is being studied very carefully and it could have some changes."

Mr Baseler said that aspects of the Dreamliner's design, including extensive use of composite materials, would make it 20 per cent more efficient than existing airliners.

Boeing also claims that the Dreamliner, which will have between 200 and 300 seats, will be more fuel-efficient than a 550-seat Airbus A380.

The Stockholm Environment Institute (SEI) is an independent international research organisation committed to the implementation of practices supportive of global sustainable development. SEI conducts a comprehensive research, consulting and training programme which focuses on the links between the ecological, social and economic systems at global, regional, national and local levels.

The Institute was established in 1989 following an initiative by the Swedish government to develop an international environment and development research organisation. It is overseen by an international board and an executive committee. Its headquarters is in Stockholm with centres in Boston, York and Tallinn.

Its mission is to support decision-making and induce change towards sustainable development around the world.

Professor Whitelegg was the author of one of the first reports to draw attention to the environmental dangers of encouraging air transport expansion. "The Plane Truth, Aviation and the Environment" was commissioned and published by the Ashden Trust and Transport 2000. Nick Williams, an environmental housing consultant also contributed and Chris Evans was the editor.

Over the past 50 years global demand for air travel has risen by 9 per cent per annum (pa) and growth (at a reduced rate of 3-7 per cent) is predicted for the next 20 years. The world's airlines currently carry about 1.6 billion people and 30 million tonnes of freight each year. The number of kilometres flown is expected to triple and aircraft numbers double over the next 20 years.

The structure of the aviation industry is changing with the advent of low cost "no-frill" carriers, the growth of short-haul flights, the growth of airfreight and the decline of military aviation as a proportion of total aviation.

On a regional level, the market for air travel is growing strongly in Europe and the Asia Pacific region, as is the market for air travel between these two regions. Aviation demand in China is growing at 10 per cent pa compared to 2 per cent pa in the USA. Flying is still strongly entrenched in North America with 80 per cent of trips accounted for on domestic routes. Growth rates as high as 15 per cent pa have been reported (e.g. Vietnam). Africa currently has a very low level of aviation demand with most activity concentrated in South Africa and linked to tourism or the shipment of perishable food products to Europe.

The world's airlines burn 205 million tonnes of aviation fuel (kerosene) a year and produce 300 million tonnes of greenhouse gases.

The environmental impact of aviation is wide-ranging and significant at the local, regional and global levels, with most attention focusing on noise (local) and climate change (global). These impacts are severe, and because growth rates in aviation are so great technological progress cannot keep up with the growth in demand. Consumption cancels out technological gain.

Aviation is responsible for 1-2 per cent of anthropogenic greenhouse gas emissions but these gases are injected at relatively high levels in the atmosphere and have a radiative forcing impact of 3. This means that the emissions are approximately three times more damaging in terms of climate change than if they had been emitted at ground level. Aviation is expected to account for up to 15 per cent of the total contribution to climate change by 2050.

Greenhouse gases from international aviation are excluded from national inventories and from the Kyoto process.

Local air pollution around airports is also an environmental and public health problem. Expansion plans for London's Heathrow Airport have been made conditional on reducing nitrogen oxide (NOx) levels. NOx at levels above World Health Organisation threshold values is associated with respiratory disease.

Noise is still a significant problem around the world's airports and under flight paths. It is associated with a number of health problems and also with damage to the cognitive development of children. Noise levels from individual aircraft and engines have reduced as a result of technological change and regulation, but the growth in numbers of aircraft and flights has ensured that noise levels above WHO recommended values still affect millions of people. In the UK, one in eight people is affected by aircraft noise.

The environmental and wider sustainable development impacts of aviation have largely been supported and encouraged by supportive governments through taxation advantages and through the planning system. In the UK, aviation receives an annual subsidy of £9 billion pa, and globally it benefits from no taxation on fuel, spin-off R&D from military developments and generous assistance with new airports and surface transport infrastructure. This is at odds with the principles of sustainable development, for example, the polluter pays principle, the requirement to improve public health and the requirement to reduce greenhouse gases by 60 per cent by 2050.

Managing the growth in demand for aviation, reducing growth rates and reducing absolute levels of flying have been excluded from policy debate. This is not compatible with the policy commitment to sustainable development. Demand management is a well-established part of the overall approach to dealing with the growth of car and lorry traffic and dealing with energy consumption (e.g. energy conservation and least cost planning). Demand management in aviation could embrace three main "pillars": the internalisation of external costs to make "prices tell the ecological truth"; the transfer of passengers from air trips to rail trips for those journeys where this is appropriate (45 per cent of all flights in the EU are less than 500km in length); electronic substitution and the use of videoconferencing and related technologies as a substitute for physical travel.

This report makes nine recommendations all of which are aimed at recognising the sustainable development agenda and ensuring that aviation plays its full proportionate part in delivering sustainability.

1. The establishment of a wide-ranging dialogue that brings together regulators, government, the industry, citizens and NGOs.

2. The implementation of the internalisation of external costs.

3. The adoption of World Health Organisation recommended values on noise thresholds and implementing polices to deliver a healthy noise environment.

4. The implementation of surface access strategies that can deliver at least 50 per cent of all passengers to and from airports by non-car modes of transport.

5. The adoption of the "environmental bubble" concept to give airports clear quantitative limits for a small set of pollutants.

6. A ban on night-time flights (2300-0700 hrs) to protect human health.

7. Air tickets subject to VAT (in Europe) and its equivalent in non-European countries.

8. Governmentally supported strategies delivered by clearly defined partnerships to shift passengers from air transport to rail for journeys of up to 500km in length.

9. Improved methods for recording and monitoring the greenhouse gas emissions from aviation globally, and the incorporation of aviation's emissions in national and international reduction strategies to achieve a 60 per cent reduction in greenhouse gases from aviation by 2050.

We write as former environment ministers to call upon the government to take tough measures to tackle the increasing threat of global climate change. The alarm bells are ringing loud and clear, and cannot be ignored.

Over recent months a panel of leading scientists have predicted that climate change may lead to extinction of a quarter of the world's species by 2050; the World Health Organisation has warned that the health of millions of people will be damaged if world temperatures continue to rise; and the government's chief scientific adviser, Sir David King, says that climate change is a far greater threat to the world than international terrorism.

The Prime Minister says that climate change is the most important environmental issue facing the world, but must back his words with firm action. One important area is industrial emissions. The government's proposals under the EU emissions trading regime could result in an increase in climate changing emissions from industry.

This is unacceptable, and sets a dangerous precedent.

Failure to tackle industrial emissions will require much bigger cuts from other sectors to meet our climate targets. This will include transport and domestic sectors, both of which have seen carbon dioxide emissions rise over the past 10 years.

We applaud the Prime Minister for continuing the UK's leading international role on climate change, but a failure to take decisive action will undermine the UK's credibility. The EU emissions trading scheme is his big test, and he must not fail it.

OUR COMMENT: A welcome intervention from two experienced politicians. They could though have also asked that emissions from air transport be included in the EU trading scheme.

The Prime Minister was giving evidence before a committee of senior MPs, the chairs of the Select Committees, (July 6th). He is reported as saying that the evidence was now overwhelming that climate change was the single biggest long-term problem facing the country, and conceded that the world was nowhere near finding a mechanism to cut carbon dioxide emissions by the government's target of 60% by 2050.

What did he suggest might be the answer? No suggestions that everyone might have to change a few habits, have fewer holidays abroad, walk further, use public transport, support wind farms, pay a little more for electricity to help reduce pollution from power stations, and of course, stop expanding airports.

He is going to reconsider the question of building more nuclear power stations, in spite of their excessive costs and the continued failure to solve the problem of the disposal of nuclear waste. He still believes we can have our cakes and eat them as well!

Tony Blair's warning to the House of Commons Liaison Committee today that "Climate change is the biggest problem facing the world" was welcomed by Friends of the Earth. But the environmental campaign group warned that Government ministers‚ policies are actually making the situation worse. Carbon dioxide levels have not fallen since Tony Blair came to power in 1997, despite Government promises to make significant cuts in greenhouse gas pollution.

Government policies which will increase climate change emissions include:

* Weak targets on emissions from industry (including the power sector). Under the EU Emission Trading Scheme the UK is proposing to allow industry to increase its emissions from current levels.

* Increased spending on roads, including reported widening of the M6 motorway. Research has repeatedly shown that extra road capacity will lead to rises in traffic levels. Increases in traffic are outstripping improvements in car efficiency, causing more CO2 emissions from transport.

* Giving the green light to more airport runways. It is estimated that Government agreement to allow a huge increase in air travel will result in a 250 per cent increase in emissions from this sector by 2030.

Friends of the Earth has repeatedly welcomed Tony Blair's efforts on the international stage on climate change, but is concerned that without decisive action at home his words will be increasingly ignored by foreign governments. The government has promised a 20 per cent reduction in carbon dioxide by 2010 (based on 1990 levels).

Friends of the Earth's Campaigns Director Mike Childs said: "The Prime Minister may be genuinely concerned about climate change, but unless his Government starts delivering policies that will tackle the problem, people will doubt his sincerity. Allowing industry to increase emissions, building more roads and allowing a massive expansion in air travel and are not the way forward. Unless Tony Blair and his ministers put the long-term future of the planet ahead of short-termism the situation will only get worse, and seriously undermine our ability to persuade other world leaders to take action on climate change."

Friends of the Earth has also warned that reverting to nuclear power would be a huge mistake. Nuclear power is not only extremely expensive it also poses a unique security threat and leaves a radioactive waste nightmare for future generations.

Pat Dale

Mr. John Randall (Uxbridge) (Con): "I am grateful to have the opportunity of airing this subject this afternoon. We should all be concerned about air quality, but because it is something that we cannot immediately see, or even feel, it has not been at the top of many people's lists of priorities over the years. I am just about old enough to remember my father coming home from work in the smogs of the late '50s and early '60s. At that time, pollutants in the air were visible - they formed smog - and their nature meant that they caused deaths, which would have been headline news. We can be proud of our record over the years of removing the smoke from our city centres and of the fact that, after restoration work, our buildings are no longer covered in ash and other pollutants. Today's air pollution is of a different nature, which in many ways makes it more dangerous.

We see many media articles about the problem, and the House of Commons Library has produced a good debate pack - well up to its usual high standards - which outlines many of the problems caused by increasing air pollution, such as climate change. Recently, my elder son saw the film "The Day After Tomorrow." Although it shows a worst-case scenario, when I showed him some of the information that I had received about climate change he was rather shocked to see that the fantasy was not so far removed from the reality revealed by the figures. We would all do ourselves a lot of good to realise that the situation is serious and cannot be lightly put aside.

However important it is, I want to concentrate today not on climate change in relation to air quality, but on the problems of air quality affecting those of us who live in west London, especially my Uxbridge constituency. Not so many years ago, relatively speaking, Uxbridge, West Drayton, Hayes and Harlington were almost in the country; they would have been regarded as semi-rural only 60 or 70 years ago. People came to our area from central London because they wanted fresh air. That was one of the area's big selling points and the reason why people started using the Metropolitan line to go to Uxbridge - incidentally, the line celebrates 100 years of going to Uxbridge this weekend. Metroland was an oasis for people escaping the smoke of central London.

Over the years, however, the area has changed. Perhaps because I am getting older or becoming more cynical - in the seven years since I have been an MP, the latter has become more and more true - but I believe that I can now tell the difference in the air quality around my home and those of my constituents and neighbours. Like many people, I suffer minor symptoms of such pollution - I find myself increasingly bothered by nasal congestion, for example. In the local area, the incidence of respiratory disease and asthma seems to have increased. Some of the evidence may be anecdotal, and some of it - perhaps in the case of asthma - might have emerged because more is known these days; inhalers and so forth were not around a while ago. However, when I go around schools, I see that more and more of our young people are suffering from such conditions, and I think that air quality has a large part to play in that. When I escape to a rural area - perhaps not one in this country - I can taste fresh air much more than I did before. It concerns me that a lot of people in and around our cities have to put up with air that, if they knew what was in it, they would be unhappy about."

He went on to say that understandable information on local air quality was very important but not easily available. In west London ever increasing traffic was a major problem but the biggest and most immediate problem was Heathrow. There was a very real threat of a third runway.

"Suffice it to say that my constituents, the hon. Gentleman's and others are unhappy about how air quality is monitored. The issue is one of confidence. DEFRA is monitoring air quality, but locally we have our worries about whether the monitoring is rigorous enough and done properly. I am not accusing the Department of doing anything underhand, but the process is of such importance to our constituents that we must have confidence in it.

I recently wrote to the Under-Secretary of State for Health, the hon. Member for Welwyn Hatfield (Miss Johnson), because I found it strange that the Department of Health did not have any input into the monitoring of air pollution - after all, it has to pick up the bill in the end. Although I understand that officials from the Department's health protection, toxicology and radiation branch are in regular contact with the air and environment quality division of DEFRA, I would prefer the Department of Health to have a larger role.

At the moment, there seems to be one monitoring site at Harlington. The hon. Member for Hayes and Harlington might have something to say about that, but I am beginning to wonder whether the site is big enough for the job. I also want to be reassured that the monitoring work does not have any link to the aviation industry. Again, it is a question of confidence. It is not that I necessarily distrust the monitoring, but I need to be convinced as a local resident that the air quality figures for Heathrow are not being produced to help a particular case. We all know how statistics can be used. That is all I have to say on the matter."

Norman Baker (Lewes) (LD): "I have sympathy with the hon. Gentleman's comments. Does he agree that the important question is not simply whether the air quality is monitored properly, but what the real results are? Does he share my concern that the number of flights touching down at Heathrow will increase far beyond the aviation industry's capacity to reduce aircraft emissions by efficiency measures? Air quality is likely to get worse in the next few years."

Mr. Randall: "The hon. Gentleman is absolutely right. There are some serious questions and it would be good if we could have a more joined-up debate with other Departments. I would not lumber the poor old Minister with transport matters, as I am sure that the Departments involved have enough discussions.

The hon. Gentleman and I recently attended a launch of a paper by the Sustainable Development Commission. It contained some alarming facts and some interesting solutions. At it, the hon. Gentleman mentioned something that I did not know. We are always told that we cannot tax flights, but internal flights in the United States are taxed, so there may be some merit in the proposal. That strays into the transport aspect of the debate, and although it is important I will not go down that line, particularly bearing in mind the number of hon. Members who want to speak."

He then spoke a third concern, a plan for an incinerator at Colnbrook and described the local situation with reference to problems of dealing with waste, recycling the ever increasing mountain of packaging waste all of which led to a demand for the simplest solution, burn it, which had dangers for air quality and health. He finished: "We have to persuade people using the real facts about air quality, and we have to do something to improve it. After all - I was about to add, 'without being too dramatic', but it does sound dramatic - if we are not careful, air pollution will be a silent killer."

David Taylor (North-West Leicestershire) (Lab/Co-op): "Several hon. Members present are here because of aviation, and that is the topic on which I shall focus. We recently received the air transport White Paper, which anticipates a growth in airports until 2030 and in the allocation to airports in the United Kingdom. It does that using a fairly straightforward econometric model, which shows that the growth will lead to significant increases in emissions from all airport-related sources. That will diminish local air quality around those airports, particularly those that are set to expand rapidly. Airport growth means more flights and more car and truck movements. Where increases in volume outpace technological improvements that could control and reduce pollutants, we have a serious problem. The hon. Member for Uxbridge (Mr. Randall) referred to that.

It would be unfair to say that all airports will have poorer air quality to the extent of breaching legal limits. We are saying that, in terms of tonnes per year of NOx and particulate matter of all sizes - the two pollutants that have the greatest health impact - and where there are tough legal limits, the volumes emitted will increase. Ground level ozone will also be a problem, although pollutants such as carbon monoxide will probably decrease, as will sulphur dioxide, because of better combustion from vehicles and clean fuels.

Modelling exercises estimate the quantities of pollutants from all sources. At airports, those sources are: aircraft during take off, landing, taxiing, holding and so on; airport operations; airside vehicles; staff transportation; airport-related traffic - passenger vehicles, public transport and so on - and internal operations, such as combined heat and power plants and standby generators. I realise that the Minister here today is not heavily involved in those matters, but I am sure that he will write to me after consulting his ministerial colleagues. One of the difficulties with environmental issues is that they are, by their very nature, cross-cutting, and so are difficult to handle.

At most airports the hot spots for air quality problems - focused, as I said, on NOx and particulate matter - occur in the immediate vicinity of runway ends and the terminal road access interface. That is particularly true of what I must now, reluctantly, call Nottingham East Midlands airport in the northern part of my constituency. The area around the airport is straddled by the M1, the M42, which links Birmingham to Nottingham, and the Derby southern bypass; it is very much the transport nexus of the east midlands, focused in a small area, and a quantifiable human health impact is occurring. Domestic properties and the people who live in them are being affected.

I ask the Minister either to respond to the following point or write to me about it. When pollutants breach limits, residents and their houses are affected. Schools are also affected and there are schools fairly close to airports in all parts of the country. There are other at-risk groups: elderly people in care homes, for example. Where the mix of residents and the land-use patterns are as I have described, surely a local authority has a duty of care to invoke an air quality management zone? Will the Minister say where responsibility for that lies? Only by the use of air quality management zones can we begin to address the methods of controlling and reducing pollution, whatever the source.

The air transport White Paper and the associated background paper state that some airports could have significant air quality problems in future. The hon. Member for Uxbridge and my hon. Friend the Member for Hayes and Harlington (John McDonnell) know more about it than I, but I believe that there is an air quality management zone in force at Heathrow. Fairly horrific air quality is possible if and when end-of-runway alternations happen, and it would be even worse if there was a third runway.

At the moment, Manchester airport has a small problem, which arises from the fact that there is development right up to the boundary, a closely spaced two-runway layout with very tightly packed terminal buildings, and a significant road network. At the moment, it does not have an air quality management zone, but many believe that it ought to. There might be political problems with that, given that Manchester airport is owned by local authorities in the Greater Manchester area.

Birmingham airport is close to where I live. I believe that its management will proceed with great care when considering the possible second runway. The air transport White Paper indicates that there could be air quality problems owing to factors not dissimilar to those affecting Manchester. The site is confined and closely spaced and a second runway has been proposed. There is poor dispersal, with dwellings in fairly close proximity. If the second runway went ahead, an air quality management zone would be needed without doubt.

Finally, I turn to my own airport, if I may refer to it in that proprietorial fashion. I have described the geographical setting of Nottingham East Midlands airport. Its likely growth, as envisaged by the air transport White Paper, will - or could; I have to be fair - have a serious effect on the surrounding settlements and villages, such as Kegworth, Castle Donington and the smaller villages around. If so, North West Leicestershire district council, the local authority with responsibility, will have to rack up the air quality monitoring and management. It does that work now, but much more is necessary.

I conclude with a couple of broad themes to put things into perspective. I think that we all agree that generally dumping more known pollutants on to people is not a sparkling idea, but that will be one of the outcomes of airport expansion on the scale envisaged in the White Paper. I am not sure that the research on the impact on air quality that was carried out in parallel with the production of the White Paper was adequate. Recent background papers have made me feel uneasy. The trouble is that although the campaigning organisations - local community groups, the Campaign to Protect Rural England, Greenpeace, Friends of the Earth and others - have some resources, they do not have enough to undertake the scale of research that is necessary to analyse, predict and tackle some of the air quality problems.

There is an absence of technological solutions to reduce air pollution from fossil fuel sources that cause problems around airports. If that continues, the only way to control the huge increases in NOx and particulate matter is to remove or reduce the road traffic contribution to the problem, stop or restrain the increase in flights, or introduce a contribution of both measures. It is important that the Government and airport operators commit to major public transport access to the facilities that airports and aviation provide.

The hon. Member for Uxbridge did not want to be labelled a swivel-eyed right winger blaming everything on the EU; nor do I. I am sceptical about things European from time to time, but not about the positive impact of the EU in terms of driving up environmental standards in western Europe. I welcome that, and I predict that today's EU air quality standards are likely to become much tougher over the next 30 years, which is the period covered by the air transport White Paper.

In the light of that, I hope that all Ministers who have an influence on how aviation is developed in the United Kingdom will take the fabled precautionary approach. We are talking about a period of three decades and the likelihood of minimum standards of air quality rising significantly. Let us not take decisions or sanction development now that will make it impossible to hit those targets in the years to come."

John McDonnell (Hayes and Harlington) (Lab): "I congratulate my friend and near neighbour the hon. Member for Uxbridge (Mr. Randall) on securing the debate.

I come to the debate in desperation, because I am not sure where else to go. A few weeks ago we had a debate on aviation during which I raised a number of points about air pollution and urged a ministerial response. Today, I am asking again. I plead at an early stage in my speech for a meeting with the Minister, his advisers and perhaps some of his colleagues in other Departments to examine the specific problems with air pollution that are occurring in my constituency, because they exemplify the potential problems throughout the country.

We in my constituency suffer from the worst air pollution in the country, comparable only with inner City area of London itself. My constituents endure the prospect of that situation worsening and being poisoned by the air that they breathe, a continuous process from now until the prospects of runway development are clear, and forever afterward. I am here in desperation. I want someone to talk to me about the potential Government solutions, because I do not know where else to go.

My constituents live in an area with a lethal cocktail of air polluters. There are three sources: industry, the airport and the aviation industry, and motor vehicles that go along our local roads, in particular, the combination of the M4, M25 and M40 and the minor roads associated with them. They combine to pollute the atmosphere in such a way that certain parts of my constituency will soon be rendered unliveable in - not just by definitions of quality of life, but on health grounds as set by the standards of the European Union and the present Government. I come here asking questions, because I am now desperate for solutions to my constituents' problems."

He then described the situation with local industry and a number of pollution problems to which no answer had been found. He also referred to the threatened incinerator and was concerned about an increase in the number of birth defects in his area which should be investigated and could be linked with the existing methods of burning of hazardous waste. He continued:

"Industry is the first source of pollution in my constituency. The second, obviously, is Heathrow airport. At present, based on the Government's own statistics and assuming the most aggressive use of abatement measures that the Government can identify, and without any further development at Heathrow - terminal 5 is already under construction, and the cap of 480,000 air traffic movements remains - it is predicted that in the next 11 years, 5,000 of my constituents will be poisoned by nitrogen dioxide at levels above the EU's legal limits. If we said that we were going to poison 5,000 people elsewhere in the world, particularly in the developing world it would sound like Halabja to me. People lost their homes to flooding in the Ilisu dam project; if thousands of people were g