London City Airport expansion plans stay grounded following Mayor Boris Johnson's U-turn

 
Kasmira Jefford
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The expansion came to a halt after London Mayor Boris Johnson ordered Newham council to veto plans
The battle for London City Airport is heating up. Less than a month has passed since its owners Global Infra­structure Partners (GIP) and Oak­tree Capital put the site to the east of the capital up for sale with a price tag of around £2bn. But already two heavyweight bidders have emerged, including one of the world’s largest sov­ereign wealth funds.

The Kuwait Investment Authority’s investment vehicle Wren House Infrastructure Management is reported to have teamed up with Canada’s Ontario Teachers’ Pension Plan and investment firm Hermes to make an offer for the airport.

The trio is likely to face competition from a number of other interested parties including Aust­ralian financial group Macquarie, which is also said to be eyeing an offer.

The airport thrives on business travellers bound to and from European cities. Although a minnow compared with Heathrow and Gatwick, its passenger numbers have been growing rapidly, from 2.8m in 2010 to 4.1m passengers this year.

There are currently around 70,000 take-offs and landings each year, but in 2009 its owners were granted permission to increase capacity to 120,000 flights. It also aims to serve six million visitors by 2023. The airport had core earnings of £45.8m in 2014, up 9.3 per cent on 2013.

It is also at the centre of one of London’s biggest development areas, which is set to bring more passengers through its gates. Chinese firm ABP is turning the nearby Royal Albert Docks into a new business district aimed at attracting Asian businesses that want to establish European headquarters. The £1.7bn scheme is expected to create 20,000 new jobs and deliver over 4.7m square feet of office space. Silvertown Quays will similarly boost passengers flying out of City with offices, restaurants and around 3,000 new homes being built.

However, its growth prospects depend largely on its £200m exp­ansion plans, which hit a wall earlier this year when London Mayor Boris Johnson intervened and ordered Newham council to veto the application over fears that it will create a “noise ghetto” for people living under the flight path.

His decision came after the council had initially approved the plans, which include extending the terminal, creating extra parking spaces for larger planes and building a new parallel taxi lane to make more efficient use of the existing runway. The move also goes against the mayor’s previous decision in 2009 to approve an increase in flight capacity to 120,000.

Last night, business groups attacked the Mayor’s apparent U-turn, amid reports that Johnson has secured £525,000 of public money to fight City Airport’s appeal – due in 2016.

David Leam, director of infrastructure policy at London First, said: “Resisting improvements to City Airport is a waste of public money that does nothing to help the capital get the air connectivity the economy needs. We have to make the most of the infrastructure we already have. The Mayor’s decision to spend money trying to block improvements at City Airport is perverse,” he said.

The London Chamber of Commerce and Industry’s (LCCI) director of policy & public affairs, Sean McKee, has also come out in support of the expansion plans: “The decision by the Mayor to block City Airport’s expansion and now to fight their appeal is extremely disappointing and runs counter to his often-stated objective to improve London’s connectivity with the world.”

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