Politics may stand in the way of economics when it comes to airport expansion

Published

4 months ago

January 21, 2025

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It is no surprise to see a government that claims to be committed to making economic growth a priority giving the green light to expansion of Gatwick Airport and Luton Airport.

Nor, for that matter, would it be a surprise for a third runway at Heathrow Airport to be given the go-ahead by Sir Keir Starmer‘s government – particularly as Rachel Reeves, the chancellor, told the London Evening Standard in July last year that she had “nothing against expanding airport capacity… I want Heathrow to be that European hub for travel”.

Put in purely economic terms, airport expansion is a no-brainer.

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The economic case

The independent commission led by Sir Howard Davies, the former chairman of NatWest, and published as long ago as July 2015, concluded that “expanded airport capacity is crucial for the UK’s long-term prosperity”.

Gatwick, according to a report prepared for the airport by the independent economic consultancy Oxera, generated £5.5bn for the economy in 2023 and supported more than 76,000 jobs.

The airport’s owner estimates that expanding it to take annual capacity to 75 million by the mid-2030s, up from the £46.5m it hit in 2019, would create around 14,000 jobs and generate an extra £1bn a year in economic benefits.

Those numbers are difficult to verify – but it can be stated with confidence that anything which provides access to new markets for both consumers and businesses will be positive for growth.

Expanding the smaller Luton Airport would, similarly, be positive for growth.

The airport in 2019 – these pre-pandemic numbers are probably the most reliable given the upheaval of the last few years – is estimated to have supported 16,500 jobs in the local area and contributed £1.1bn to GDP. Expansion on the airport’s estimates creates up to 6,100 jobs and contributes an extra £900m to GDP.

Trumping them both, of course, is Heathrow.

The Davies Commission said that building a third runway to the northwest of the airport would provide for around 40 new destinations from Heathrow and would create more than 70,000 new jobs by 2050, adding some £147bn to GDP.

It stated: “Heathrow is best-placed to provide the type of capacity which is most urgently required: long-haul destinations to new markets. It provides the greatest benefits for business passengers, freight operators and the broader economy.”

It is worth noting that among the members of the commission was Sir John Armitt, the respected former chairman of the Olympic Delivery Authority, who is now chair of the National Infrastructure Commission.

His term of office was extended by Ms Reeves in October last year in order for him to oversee the 10-year strategy ordered by the chancellor and the establishment of the National Infrastructure and Service Transformation Authority.

He will be an influential voice in this debate.

However, while the economic case for airport expansion is unimpeachable, the bigger question, perhaps, is whether it is achievable.

Political considerations

Getting approval for the expansion of both Luton and Gatwick will be a major test of the new government’s commitment to overhauling planning regulations where they are an impediment to growth.

And here there are – for supporters of expansion – ominous signs.

A decision on whether or not to expand Luton was postponed for the third time just before Christmas so that Heidi Alexander, who had just succeeded the disgraced Louise Haigh as transport secretary, could be given time to assess the application.

Climate concerns

Tied into the planning hurdles are the inevitable environmental objections.

The Climate Change Committee, the government’s independent advisory body, has already said emissions savings would have to be made elsewhere in the economy were there to be a big expansion in airport passenger numbers.

The aviation industry will doubtless argue that it has already committed to becoming net zero by the middle of the century – but the environmental lobby has a long track record of successfully campaigning against airport expansion.

On top of that are the political obstacles.

Ms Reeves – and Ms Alexander, should she back expansion of Gatwick and Luton – will face implacable opposition from within their own cabinet, not least from Ed Miliband, the energy and climate change secretary.

Backing Heathrow expansion would be more controversial still.

Sadiq Khan, the London mayor, is strongly opposed to this and so are other senior Labour figures, among them Andy Burnham, the mayor of Greater Manchester.

He argues that a third runway at Heathrow would run counter to levelling-up proposals – although it is worth noting here that some of the UK’s biggest regional airports, such as Newcastle, support a third runway on the basis that it would boost international connectivity to their region.

That means leadership will ultimately have to come from Sir Keir Starmer who, it is worth noting, voted against a third runway at Heathrow in 2018.

Government unlikely to ever get credit

Supporting airport expansion is often difficult for governments – quite apart from the environmental objections and the inevitable planning hurdles – because it takes so long to add capacity and ministers are therefore unlikely to receive credit for it during their political lifetime.

For example, the two main airport expansion projects currently under way in Europe, the new Luis de Camoes airport in Lisbon and the new Solidarity superhub in Warsaw, are unlikely to be completed until the mid-2030s.

But the latter, in particular, highlights how other European governments have no hesitation in seeing airport expansion as a major generator of growth.

It is not alone. Amsterdam’s Schiphol Airport, an increasingly important competitor to Heathrow, is currently investing some €6bn in upgrades with the aim of expanding both passenger and flight numbers. Budapest, an airport once owned by BAA, the former parent of Heathrow and Gatwick, is looking to build a third terminal that would generate an extra three million passengers by the end of the decade.

These examples highlight how other European governments are less squeamish about putting airport expansion over environmental considerations in the name of pursuing economic growth.

You can be sure that the international investors who own Heathrow, Gatwick and Luton will be looking to the UK to do likewise.

Business

Concierge firm founded by Queen’s nephew hunts buyer

Published

18 hours ago

May 17, 2025

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Concierge firm founded by Queen's nephew hunts buyer

Quintessentially, the luxury concierge service founded by the Queen’s nephew, is in talks to find a buyer months after it warned of “material uncertainty” over its future.

Sky News has learned that the company, which was set up by Sir Ben Elliot and his business partners in 1999, is working with advisers on a process aimed at finding a new owner or investors.

City sources said this weekend that Quintessentially was already in discussions with prospective buyers and was anticipating receipt of a number of firm offers.

Sir Ben, the former Conservative Party co-chairman under Boris Johnson, owns a significant minority stake in the company.

The Quintessentially group operates a number of businesses, although its core activity remains the provision of lifestyle support to high net worth individuals including celebrities, royalty, and leading businesspeople.

It also counts major companies among its clients and offers services such as organising private jet flights and performances by top musicians.

The sale process is being overseen by a firm called Beyond, although further details, including the price that the business might fetch, were unclear on Saturday.

One insider said parties who had been contacted by Beyond were being offered the option to buy a controlling interest in Quintessentially.

This could be implemented through a combination of the repayment of outstanding loans, an injection of new funding into the business, and the purchase of existing shareholders’ interests, they added.

Quintessentially’s founders, including Sir Ben, are thought to be keen to retain an equity interest in the company after any deal.

In January 2022, newspaper reports suggested that Quintessentially had been put up for sale with a valuation of £140m.

Deloitte, the accountancy firm, was charged with finding a buyer at the time but a transaction failed to materialise.

Sir Ben, who was knighted in Mr Johnson’s resignation honours list, turned to one of Quintessentially’s shareholders for financial support during the pandemic.

World Fuel Services, an energy and aviation services company, is owed £15.5m as well as £3.5m in accrued interest, according to one person close to the process.

The loan is said to include a warrant to convert it into equity upon repayment.

Quintessentially does not disclose the number or identities of many of its clients, although it said in annual accounts filed at Companies House in January that it had increased turnover to £29.6m in the year to 30 April 2024.

The accounts suggested the company was seeing growth in demand from clients internationally.

“During the last year, we have not only renewed important corporate contracts like Mastercard, but have also expanded by adding new corporate clients like Swiss4 in the UK, R360 in India, and Visa in the Middle East and South America,” they said.

In its experiences and events division, it won a contract to work with the Red Sea Film Festival and to provide corporate concierge services to the Saudi Premier League.

It added that Allianz, the German insurer, BMW, and South African lender Standard Bank were among other clients with which it had signed contracts.

The accounts included the warning of a “risk that the pace and level at which business returns could be materially less than forecast, requiring the group and company to obtain external funding which may not be forthcoming and therefore this creates material uncertainty that may cast ultimately cast doubt about the … ability to continue as a going concern”.

This weekend, a Quintessentially spokesman declined to comment on the sale process.

Business

Superstar Adele joins backers of music royalties platform Audoo

Published

1 day ago

May 16, 2025

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Superstar Adele joins backers of music royalties platform Audoo

Adele, the Grammy award-winning artist, has joined the list of music superstars investing in Audoo, a music technology company which helps artists to receive fairer royalty payments.

Sky News has learnt that the British musician and Adam Clayton, the U2 bassist, have injected money into Audoo as part of a £7m funding round.

The pair join Sir Elton John, Sir Paul McCartney and ABBA’s Bjorn Ulvaeus as shareholders in the company.

Changes to Audoo’s share register were filed at Companies House in recent days.

Audoo, which was established by former musician Ryan Edwards, is trying to address the perennial issue of public performance royalties, in order to ensure musicians are rewarded when their work is played in public venues.

Mr Edwards is reported to have been motivated to set up the company after hearing his own music played at football stadia and in bars, without any payment for it.

Estimates suggest that artists lose out on billions of dollars of unaccounted royalties each year.

London-based Audoo uses a monitoring device – which it calls an Audio Meter – to recognise songs played in public venues, and which is said to have a 99% success rate.

It has struck what it describes as industry-first partnerships with organisations including the music licensing company PPL/PRS to track and report songs played in public performance locations such as cafes, hair salons, shops and gyms.

“At Audoo, we’re incredibly proud of the continued support we’re receiving as we work to make music royalties fairer and more transparent for artists and rights-holders around the world through our pioneering technology,” Mr Edwards told Sky News in a statement on Friday.

“We have successfully reached £7m in our latest funding round.

“This funding marks a pivotal moment for Audoo as we focus on our growth in North America and across Europe, bringing us closer to our mission of revolutionising the global royalty landscape.”

Sources said the new capital would be used partly to finance Audoo’s growth in the US.

The latest funding round takes the total amount of money raised by the company since its launch to more than $30m.

Mr Edwards has spoken of his desire to establish a major presence in Europe and the US because of their status as the world’s biggest recorded music markets.

Adele’s management company did not respond to an enquiry from Sky News.

Business

The Sunday Times Rich List: Billionaires fall as King rises to match Rishi Sunak

Published

1 day ago

May 16, 2025

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The Sunday Times Rich List: Billionaires fall as King rises to match Rishi Sunak

The King’s personal fortune has shot up by £30m to put him on par with Rishi Sunak and his wife Akshata Murty, while the overall number of billionaires in the UK has plummeted, according to The Sunday Times Rich List.

The 2025 list, published on Friday, shows the King’s personal wealth grew from £610m to £640m, taking him up 20 places to 258 – level with former prime minister Mr Sunak and his wife.

The number of overall UK billionaires has fallen to 156 from 165 in 2024, marking the biggest drop since the rich list began 37 years ago.

Gopi Hinduja and his family, behind the Indian conglomerate Hinduja Group, topped the list for the fourth year running with £35.3bn.

Meanwhile, founder and chairman of global chemicals company Ineos Sir Jim Ratcliffe, who became part owner of Manchester United last year, dropped from fourth place to seventh after his reported wealth went from £23.5bn to £17.05bn.

Sir Jim’s £6.47bn losses marked the biggest on the list, while Russian-born brothers Igor and Dmitry Bukhman, who built a fortune on mobile games such as Gardenscapes and Fishdom, made the biggest gains with nearly £6.2bn.

New entries included makeup mogul Charlotte Tilbury with £350m and Ellen DeGeneres, who left the US for the Cotswolds last year.

The Sunday Times said the list was one of its toughest to compile due to Donald Trump’s tariffs and the subsequent stock market turbulence, adding many from previous years had dropped off the list and others were no longer eligible having fled Britain after Labour’s non-dom crackdown.

Overall, the combined wealth of those on the list stood at £772.8bn – down 3% from the last list.

Speaking to Anna Jones on Sky News Breakfast, Rich List compiler Rob Watts highlighted the story of Tom and Phil Beahon, who own sportswear clothing brand Castore which is now worth £1bn, as one of his favourites.

The brothers from Wirral have debuted at joint 345 on the list with an estimated wealth of £350m.

Calling their story “inspiring”, Mr Watts said: “They dreamed of being sportsmen as lads – one of them got onto the books of Tranmere Rovers and the other played cricket for Lancashire, but their sporting careers were over in their early 20s.

“And they say that failure was critical to driving them to create this £1bn sports kit business that you’ll now see being worn by the England cricket team and the England rugby team.”