Luton airport abandons expansion plans

Government plans to expand the Luton airport in the south-east of England suffered a serious blow when Luton Airport announced early this month that it had scrapped proposals to treble in size. Spanish infrastructure major Abertis, which bought the company that runs the airport in 2005, decided to trash an expansion plan that would have enabled it to handle 30 million passengers a year within 25 years.

Abertis announced two years ago that it hoped to increase Luton's capacity to 15 million passengers a year by 2012, by expanding facilities within the airport's existing footprint. But it also said it would later replace the current runway with a longer strip on a new site, to increase capacity to 30 million passengers a year by 2030.

Albertis chairman Demetrio Ullastres later said that his company has a 30-year lease on Luton that is due to expire in 2028, and there wasn't sufficient time to earn a decent return on the £1.5 billion ($3 billion / Rs12,405 crore) investment the expansion would require.

Abertis will now come up with a new development plan for Luton, focused only on the current site, before the end of the year. Even if the original 2012 target is met, the airport will in future offer just half the capacity that it originally planned for.

The development is a problem for the Department of Transport, which is trying to solve the growing air traffic congestion in southern England. It expects passenger numbers in the UK to increase by 250 per cent between 2002 and 2020, and that two-thirds of the traffic will pass through airports in south-east England. A government White Paper published in 2004 backed plans for expansion at Luton, which is expected to handle 10 million passengers this year.

To make matters worse, DoT's plans for expansion at Heathrow and Stansted have come up against serious opposition from environmental campaigners and local residents. But the government continues to support the building of a second runway at Stansted as well as a third runway at Heathrow, if local environmental obstacles can be overcome.

Of the three airports, Stansted leads in development. But proposals to increase capacity from 25 million to 35 million passengers a year have to pass a public inquiry. BAA, the airport's owner, has applied to build a second runway at Stansted, but is expected to meet fierce opposition. At Heathrow, BAA plans to build a third runway, which would be shorter than the existing two strips and served by a sixth passenger terminal. But the airport is already Europe's busiest; it handled more than 67 million passengers last year, and further expansion is going to face opposition.

Abertis's change of heart is a serious blow to budget airlines like EasyJet and Ryanair, which use Lutonairport for many of their flights. Shares in EasyJet, which uses Luton as its main hub in England, fell almost 3 per cent on the announcement that the expansion plans had been dropped.