Brian Micklethwait

I spent the night before election day and the night of election day watching Boris Johnson get elected Mayor of London.  And I think it must have been in the rather testy TV interview he did for the BBC, after his official acceptance speech, that he said he favours moving Heathrow to the Thames Estuary.  I do as well, if only because it will make for such great aerial photos while it is being built, to say nothing of when it is finished.

I have mentioned this notion here before, although the only serious commenter on that thought the scheme nonsensical.  What I didn’t mention was that Boris is in favour of it.  So it may not go away just yet. 

Whether Kit Malthouse, the writer of the piece I originally linked to, is anything directly to do with Boris I do not know.  Ah.  At the bottom of that piece it says that “Kit Malthouse is a businessman and former Tory councillor and is standing for the London Assembly in 2008”, so I’m guessing: yes.  And I’m guessing he got in, if only because the Tories in general did so well.

Vote Conservative for better ways to waste public money!

Patrick Crozier

This is a complete rewrite of version 1 which didn’t really cut the mustard.  Ah well.

It rather looks like BAA, Britain’s largest airports operator and owner of Heathrow, Glasgow and Stanstead, will be forcibly broken up.  It doesn’t seem to have a lot of friends right now¹ and the regulator is starting to beat his “this is a monopoly” drum².

I can’t say I am exactly thrilled at the prospect.  For two reasons.  First of all, there’s a rather nasty whiff of nationalism here.  I can’t help but notice that things were awfully quiet until a bunch of foreigners bought up BAA.  Secondly, forcibly breaking things up involves, well, force and I am against force³.

I am, of course, all in favour of things being voluntarily broken up, if that is what owners want to do.  Indeed, that is precisely what BAA itself did in the case of Prestwick a few years ago.  They reckoned they couldn’t make a go of it, sold it off to some people who thought they could and, hey Prestwick! (so to speak) within a few years the airport was booming⁴.

The fact that BAA’s owners (and, for that matter, its owners before that) don’t think the same experiment should be tried with its London airports tends to suggest that they think the airports will make more money if owned by just the one operator.  This argument cuts a lot of ice with me because I think profits are a good thing⁵.

However, it’s impossible to avoid the complaints.  Personally, I rather like airports, Heathrow included.  But lots of people don’t.  Terminal 5’s teething difficulties⁶ aside people complain about the queues, the lost luggage and the general state of repair of the buildings.  Airlines have their own range of complaints but I have never been quite able to pin down just what they are.

But let’s assume for argument that BAA is not doing as good as job as it could or is reasonable to expect.  Why’s that?  Because free market theory tends to run along the lines: “Well, if companies attempt to abuse their monopoly position all that will happen is that competitors will enter the market.” And there are examples of this⁷.  So, if BAA really is doing a crap job it is either because the theory is wrong or something else is going on.

My guess is that it is more or less impossible to enter the market.  Try getting planning permission for a new airport in the South East.  With the current planning laws you can forget it⁸.  Well, you can but BAA might just be able to what with all its experience and contacts.  And buying up enough contiguous land might also pose difficulties⁹ even if I think they can be overcome. 

But maybe it’s not.  Maybe, it would indeed be impossible to build another airport in South East England.  But then the appropriate level of competition is not airports but regions.  Maybe a better airport somewhere else would draw in the investment and the people to compete with London (and in the process take BAA down a peg or two).  Of course, to do this developers would need to be able to build the buildings and infrastructure needed which again is impossible under current conditions.  But this just re-iterates the point: as far as we know it is government force that is causing the problem.

Just as an aside one argument that gets dragged up in this debate is the one about how BAA was privatised in the first place.  The argument goes that all our woes are down to the fact that it was privatised in one go.  If only the airports had been sold off one by one… Maybe, maybe, but if it had there would have been nothing (in a free market) to stop one of those airports gobbling up all the others and creating what we see today.  The point is that markets are discovery mechanisms.  Amongst the things they discover is how many companies should exist in a given market.  My guess is that BAA is the size it is because that is the optimum size in the prevailing conditions.  If it wasn’t it would have been broken up by now.

Notes

1.  Hey, even the libertarians at Samizdata don’t have much time for it.  Or, even Jeff Randall at the Telegraph.

2.  See Gatwick and Stansted are targets as BAA break-up looms, Telegraph, 23 April 2008

3.  See What I believe, InstaPatrick.

4.  See David Farrar’s article, Freedom and Whisky, 29 May 2003.

5.  See Profits in a Market Economy, Art Carden, Ludwig von Mises Institute, 18 January 2008, in which the author makes the point that profits are good and losses bad.

6.  At least, I hope they’re teething.

7.  See Against competition regulation, InstaPatrick.  Another short one

8.  Another reason to be against planning.  For some more, see Against Planning, InstaPatrick.

9.  I am, of course, against compulsory purchase.  See Against compulsory purchase, InstaPatrick.

Patrick Crozier

Earlier this week I heard (or did I read, or both?) that some commission or other (the Monopolies commission, perhaps?) had written a report saying that Britain’s biggest airport operator, BAA which owns Heathrow, Gatwick and Stanstead should be broken up.  It’s stifling competition or something, apparently.

This has met with almost universal approval¹.  But, I don’t care, I’m still against it².

Notes

1.  See Situation Normal, All F**ked Up by Johnathan Pearce on Samizdata.
2.  See:

Should BAA be broken up? in which I argue that, no, it shouldn’t.

The ASI was wrong in which I argue that monopolies aren’t a problem so long as you have free markets.

Against competition regulation.  This is an InstaPatrick article and is woefully short but it makes many of the same points.

What do you mean by a monopoly? in which I argue that everything has some competition.

Patrick Crozier

By now, most readers will be perfectly well aware of the problems at Heathrow’s new Terminal 5 which have led to cancelled flights and passengers being separated from their luggage.  Readers will also be perfectly familiar with the media’s calm, measured and sober reporting of the issues involved.

Glancing at the background it appears that what’s happened is that a number of small problems combined to make one big one.  The good news is that most of these are “soft” issues - to do with staffing and training and therefore reasonably easy to sort out - rather than “hard” issues - to do with the infrastructure and computer systems - which would take ages.

Terminal 5 was a massive project brought in on time and on budget.  This says some pretty good things about the people involved. 

I suspect Terminal 5 will be working pretty well pretty soon.

Brian Micklethwait

Weirdness blogger deputy dog doesn’t do capital letters, but on the plus side collects strange structures and circumstances.  His latest weirdness is Funchal Airport, in Madeira, which is mostly not on the ground, but up in the air on pillars.  Lots of pillars.  It was on the ground, but was too short for comfort, and this was how they made it longer, apparently.  Underneath, there’s a big car park, which makes sense.

DD has photos of this, but the best photo of it that I found was this, on Flickr:

Whenever you find an interesting object, it’s worth looking for it on Flickr, I find.

This elaborate contraption - which looks rather like an aircraft carrier, I think – illustrates what an economic impact aviation can have on a region.  This is the trouble they are prepared to go to just to have airplanes serving them satisfactorily.  See also: Heathrow.

Brian Micklethwait

From time to time I buy The Week, and via the latest edition I came across a piece by Kit Malthouse, saying that Heathrow should be moved.  This makes a lot of sense to me.  This was published ten days ago, but far better to link to this late rather than never.

You need two vital ingredients for a successful international airport: the right wind and loads of space. Heathrow has neither. The prevailing wind in London is westerly. Aircraft have to land into wind; so all those massive beasts (and they are getting bigger every year) have to turn in right over Central London. The noise they cause means only a limited number of flights can land before 6am or after 11.30pm. But as the residents of Wandsworth or Ealing will tell you, it only takes one plane coming over at 4am to wake you up and ruin your day.

Heathrow is also trapped. Hemmed in by the M4, M25 and the A30, surrounded by thousands of residents, our premier airport has nowhere to go and can only cram more and more into what little space is available.

Add to this some truly idiotic planning decisions from the 1950s (Who decided to put the terminals in the middle of the airfield, so the main access had to be through a tiny tunnel?) and you have what is commonly regarded as one of Britain’s greatest planning disasters.

Adding Terminal 5 and also a third runway and a sixth terminal, as the Government wants in its proposals published yesterday, will only make the airport even more of a mess and nuisance. So let’s move it.

The Thames Estuary, he reckons, is where London’s main airport should be.

The Thames estuary is only four metres deep in parts and it would be relatively simple and cheap to construct an artificial island with a beautiful modern airport on it. All the planes would come in to land over the North Sea, which would mean a 24-hour operation, with no disturbance while expanding capacity, at a stroke. In fact, the airport could easily accommodate all the flights from Gatwick as well, meaning we could probably close it too.

A bullet train on stilts or in a tunnel could link the airport to Central London in 20 minutes or so, and a branch line from the new high-speed Eurostar link nearby could connect the airport with the Continent.

Malthouse reckons that the receipts from selling Heathrow off to housing developers might even cover the immense cost of all this.

Patrick Crozier

I did not know that but apparently it’s true.  Which would go a long way to explaining the queues and why they’ve turned the place into a shopping mall.  Several shopping malls, indeed.  It’s awfully reminiscent of Railtrack with their station re-developments - Paddington being the prime example - and, for that matter, some of Japan’s private railways with their penchant for department stores and resorts.

If people are not allowed to make money out of their primary business they’ll neglect it and find ways to make money out of secondary businesses.

Not, that Japan’s railways neglect the train business.

Further reading

Why are Japanese trains so overcrowded?, Transport Blog, 6 February 2004.

Patrick Crozier

A queue

Things are not going well at Britain’s airports.  Queues so long people are missing their flights.  Millions of bags going missing.  And yellow signage.  Jeff Randall - usually as robust a free-marketeer as you get in the national press - is calling for BAA* to be broken up.

This causes me some difficulty.  I am not usually in favour of enforced competition (warning: short).  But there does seem to be a problem here.  Usually when there is a market failure it turns out that it is in fact a cunningly disguised government failure.  The railways are a good example of this.

But, if so, what has the government done to produce this fiasco?  I suspect the answer lies in planning (again), in that if you wanted to go into competition with BAA you’d have to spend the rest of your life just getting the planning permission.  But I am not sure.

Any other suggestions?

* Does BAA still stand for British Airports Authority?

Update.  It seems that it doesn’t.  It’s one of those acronyms that has outgrown its constituent words and taken on a life of its own.

Update 25/04/08

Version 2 of this posting is now available.