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Stan Maiden – Draft Proof of Evi


  • pg 1
                         Case Reference No: 2032278

Stansted Airport Generation 1


        Traffic Forecasts

            April 2007
Air Traffic Forecasts – Proof of Evidence by Stan Maiden

    Chapter        Title                                             Page(s)

    1              Introduction                                      2
    2              Purpose and Scope of Evidence                     3-4
    3              Statement of Common Ground                        5-6

    Annual Forecast s

    4              Historic Growth in Passengers at SE Airports      7-8
    5              Forecasts Approach                                9
    6              Forecasts of Unconstrained Demand                 10 - 11
    7              Airport Capacity                                  12 - 14
    8              Distribution of South East Demand                 15 – 17
    9              The 25 mppa Case                                  18 - 20
    10             Aircraft Movement Forecasts                       21 – 23
    11             Air Cargo Forecasts                               24
    12             Summary of 25 and 35 mppa cases                   25

    Other Forecast Inputs to the SG1 Environmental Statement

    13             Terminal & Apron Forecasts                        26
    14             Inputs to Noise, Air Quality & Risk Assessments   27
    15             On – Airport Employment                           28 – 31
    16             Surface Access                                    32 – 34
    17             Car Parking Forecasts                             35

    Latest Forecasts and Conclusion

    18             Latest BAA Forecasts                              36 - 37
    19             Conclusion                                        38

1   Introduction

    1.1   My name is Stan Maiden and my position in BAA Ltd is that of Group
          Research Director, a post I have held for nearly 20 years. After spells in
          Planning and Finance I joined the department I now head in 1970.

    1.2   As Research Director my role, and that of my team, is to provide the
          following services for the BAA Group:-

          a)   air traffic analyses;

          b)   forecasts of air traffic and related activities such as airport
               employment and car parking;

          c)   market research among air passengers and other airport users;

          d)   operational research support.

    1.3   I have spent 38 years of my career in the field of air traffic research and
          forecasting and in the course of this time have worked extensively as a
          consultant to airport and airport-related organisations in the UK and
          overseas. I have chaired three international industry working groups
          and currently chair the Forecasts and Statistics Panel of ACI (the trade
          association of world airports, the airport equivalent of IATA). I was also
          the founding chairman of the UK Transport Statistics Users Group.

    1.4   I have contributed numerous articles to aviation and tourist industry
          journals and regularly lecture on the subject of traffic forecasting and
          market research to academic institutions and other bodies. I am on the
          Editorial Board of the Journal of Airport Management and am an
          external examiner for the Cranfield Institute of Technology‟s MSc course
          in Airport Planning and Management.

2   Purpose and Scope of Evidence

    2.1     The aim of my evidence is to explain the basis of the forecast advice
            upon which BAA relies to support its case for lifting the annual limits of
            25 million passengers (Condition MPPA1) and 241,000 air transport
            movements (Condition ATM1) at Stansted.

    2.2     The evidence is grouped into chapters with the bulk falling under two
            key headings: -

            Annual Forecasts
            (Passengers, Aircraft Movements, Cargo)                            Ch. 4 – 12

            Other forecast inputs to the SG1 Environmental Statement           Ch.13 – 17

            Latest Forecasts and Conclusion                                    Ch.18 - 19

    2.3     Chapters 4 to 17 of this Proof relate to the process of producing the
            forecasts that were published in the G1 Environmental Statement
            Volume 16 (CD/19). The bulk of this work was undertaken during 2004
            and 2005.

    2.4     BAA is presenting two main forecasts cases, along with 3 supporting
            sensitivities: -

      Case / Sensitivity       Description

      25 mppa case             Described in the Environmental Statement
      35 mppa case             Described in the Environmental Statement
      Fleet Mi x Sensitivity   Impact of heavier fleet at 264,000 ATMs per annum
      40 mppa Sensitivity      Impact of 40 mppa
      SH & E Sensitivity       Tests alternative passenger ground origins

    2.5     BAA regularly reviews and, if necessary, updates its forecasts in the
            light of changing circumstances. Indeed, it produces these forecasts as
            part of its annual Capital Investment Programme circulated to the
            airlines. As a result of current developments affecting the air transport
            industry (most notably concerning oil prices and the outlook for

      environmental taxes) BAA has recently prepared revised forecasts for
      all its airports and now considers that growth in air passenger
      throughput at Stansted will be marginally slower than was forecast at
      the time it made its planning application.

2.6   A fuller description of the background and the reasons behind the latest
      forecasts is given in Chapter 18 to this Proof.

3     Statement of Common Ground

3.1    BAA‟s forecasts have been reviewed by Uttlesford DC‟s advisors,
       (SH&E), who also separately commented on air traffic forecasts
       produced by the ACC. SH&E‟s views on air traffic forecasts for Stansted
       are given in their „Review of BAA Traffic Forecasts for Stansted Airport,
       Feb 2006‟ (CD/133) and „Further Advice on Stansted Generation 1
       Traffic Forecasts, July 2006‟ (CD/134). Additional insight into SH&E‟s
       thinking is given in their memoranda to Uttlesford DC (see CD/135).

3.2    The comments made by SH&E highlight a strong degree of agreement
       between the two parties about the robustness of BAA‟s traffic forecasts .
       Their only material differences in view are outlined in para 3.5 below.

3.3    Uttlesford‟s planning officers also comment “it is considered the
       forecasts in the ES are robust” (CD/33: Report on UTT/0717/06/FUL to
       UDC Development Control Committee, 29 Nov 2006).

3.4    In their „Review of BAA Traffic Forecasts for Stansted Airport‟ (Feb
       2006) SH&E concluded “that the passenger forecasts produced by BAA
       for Stansted are reasonable” (page 37, para 5.6). SH&E also
       commented that BAA‟s aircraft fleet mix forecasts „represent a
       reasonable view of aircraft movements by type when Stansted operates
       at 35 mppa.‟

3.5    In their analysis SH&E suggested that there were two areas of BAA‟s
       forecasts where they held a different view. These were: -

       a) the proportion of Long Haul passengers in the 35 mppa case, and

       b) the zonal distribution of passenger ground origins in the 35 mppa

       However SH&E stated that these differences “are not material in the
       context of a long term traffic forecast” („Review of BAA Traffic Forecasts
       for Stansted Airport‟, Feb 2006, page 37, para 5.6).

3.6   BAA has examined these respective viewpoints through the use of
      sensitivities. The „fleet mix sensitivity‟ (BAA Environmental Statement,
      Volume 16, paragraphs 11.1.1 – 11.2.4) examines the noise impact of a
      heavier fleet at 264,000 ATMs per annum (including a higher Long Haul
      share, as suggested by SH&E) than that assumed for the 35 mppa
      case. The „SH&E sensitivity‟ (presented in Table 16.1 of this proof of
      evidence and reported on in the Addendum to the Transport
      Assessment) addresses the point about the zonal distribution of

3.7   In conclusion there is substantial agreement on forecasts between BAA
      and Uttlesford DC‟s specialist advisors. Where there are different
      viewpoints (albeit that these have not been deemed to be significant)
      the potential impact of alternative forecasts has been assessed through
      the development of sensitivities.

3.8   The Statement of Common Ground between BAA and Uttlesford DC
      provides initial commentary on air traffic forecasts at section 6.2. At
      para 6.2.3, UDC agree that “the air traffic forecasts set out in Volume 16
      of the G1 ES are a reasonable set of forecasts, save for:
      • The mix of long haul passengers
      • The zonal pattern of passenger origins / destinations”
      At para 6.2.5, UDC accept that “the air traffic forecasts produced in the
      sensitivity tests are a reasonable set of forecasts”.

4   Historic Growth in Passengers at South-East Airports

    4.1   Table 4.1 overleaf lists the growth in terminal passengers at the five
          major airports in the South-East of England over the period 1970 to
          2006. For comparison purposes it also shows the equivalent figures for
          the UK as a whole.

    4.2   Within the South-East traffic has grown at a compound rate of 5.2% p.a
          over the 20 year period to 2006 and over the whole period, 1970 –
          2006, with bouts of growth interrupted by events such as the major oil
          price hikes, wars in the Middle East and the aftermath of 9/11 and
          SARS. In only 4 out of 36 years did traffic fall between one year and
          another and only in one case (1973 – 75) did the subsequent year fail to
          see traffic levels in excess of the preceding year.

    4.3   It shows that while Heathrow has remained dominant among South -
          East airports throughout the period, Stansted has substantially
          increased its share of the total, particularly since the late 1990‟s. At the
          same time there has been a steady, but gradual, decline in the share of
          UK air traffic accounted for by airports in the South - East.

    4.4   In the 10 year period from 1996 to 2006 Stansted has increased its
          share of traffic from 5% of the South-East total (3.5% of UK) to 17% of
          the South-East (10.0% of UK).

Table 4.1

                        PASSENGER GROWTH at SOUTH EAST AIRPORTS 1970-2006

                  Heathrow                 Gatwick               Stansted               Luton             London City         Total South East   TOTAL UK
                              % of                  % of                  % of                  % of                % of                 % of
                 000s      South East    000s    South East    000s    South East   000s    South East   000s    South East     000s      UK      000s

   1970          15,415      71.5       3,684      17.1        496        2.3       1,964       9.1       0         0.0        21,559    68.7     31,397

   1971          16,175      67.3       4,655      19.4        493        2.1       2,703       11.3      0         0.0        24,026    69.1     34,760

   1972          18,294      67.7       5,309      19.7        309        1.1       3,096       11.5      0         0.0        27,008    69.4     38,943

   1973          20,329      68.9       5,765      19.6        176        0.6       3,216       10.9      0         0.0        29,486    68.6     42,982

   1974          20,076      72.9       5,230      19.0        199        0.7       2,023       7.3       0         0.0        27,528    68.8     40,011

   1975          21,295      74.1       5,344      18.6        238        0.8       1,869       6.5       0         0.0        28,746    68.7     41,846

   1976          23,242      74.9       5,715      18.4        268        0.9       1,807       5.8       0         0.0        31,032    69.5     44,666

   1977          23,386      72.6       6,588      20.4        300        0.9       1,947       6.0       0         0.0        32,221    70.2     45,927

   1978          26,488      72.3       7,761      21.2        317        0.9       2,058       5.6       0         0.0        36,624    69.3     52,829

   1979          27,979      71.3       8,701      22.2        347        0.9       2,207       5.6       0         0.0        39,234    68.8     56,992

   1980          27,472      69.5       9,707      24.5        275        0.7       2,088       5.3       0         0.0        39,542    68.3     57,882

   1981          26,401      67.1       10,730     27.3        262        0.7       1,971       5.0       0         0.0        39,364    68.1     57,771

   1982          26,406      66.6       11,154     28.1        300        0.8       1,800       4.5       0         0.0        39,660    67.5     58,771

   1983          26,749      64.8       12,477     30.2        342        0.8       1,708       4.1       0         0.0        41,276    67.6     61,100

   1984          29,147      64.2       13,954     30.7        527        1.2       1,795       4.0       0         0.0        45,423    67.2     67,572

   1985          31,289      64.8       14,883     30.8        514        1.1       1,586       3.3       0         0.0        48,272    68.5     70,434

   1986          31,315      62.5       16,309     32.5        545        1.1       1,962       3.9       0         0.0        50,131    66.7     75,161

   1987          34,742      60.5       19,373     33.7        712        1.2       2,585       4.5       15        0.0        57,427    66.7     86,041

   1988          37,525      60.3       20,761     33.3       1,045       1.7       2,797       4.5      133        0.2        62,261    66.8     93,162

   1989          39,611      60.8       21,183     32.5       1,322       2.0       2,828       4.3      216        0.3        65,160    65.9     98,913

   1990          42,647      62.9       21,047     31.1       1,154       1.7       2,679       4.0      230        0.3        67,757    66.2    102,418

   1991          40,248      64.1       18,690     29.8       1,684       2.7       1,957       3.1      172        0.3        62,751    65.5     95,768

   1992          44,964      64.9       19,842     28.6       2,332       3.4       1,943       2.8      186        0.3        69,267    65.3    106,123

   1993          47,602      65.7       20,065     27.7       2,671       3.7       1,851       2.6      244        0.3        72,433    64.5    112,280

   1994          51,362      65.9       21,051     27.0       3,258       4.2       1,804       2.3      478        0.6        77,953    63.7    122,364

   1995          54,107      65.4       22,382     27.1       3,890       4.7       1,810       2.2      554        0.7        82,743    63.9    129,586

   1996          55,723      63.5       24,106     27.5       4,811       5.5       2,406       2.7      724        0.8        87,770    64.6    135,792

   1997          57,808      61.3       26,796     28.4       5,367       5.7       3,217       3.4      1,159      1.2        94,347    64.3    146,654

   1998          60,337      59.3       29,034     28.6       6,831       6.7       4,110       4.0      1,358      1.3       101,670    64.0    158,808

   1999           61,975     57.2       30,407     28.0       9,420       8.7       5,246       4.8      1,384      1.3       108,432    64.4    168,286

   2000           64,266     55.5       31,936     27.6       11,854     10.2       6,164       5.3      1,581      1.4       115,801    64.4    179,824

   2001           60,431     53.3       31,098     27.4       13,650     12.0       6,540       5.8      1,619      1.4       113,338    62.6    181,195

   2002           63,012     54.0       29,519     25.3       16,044     13.8       6,474       5.5      1,602      1.4       116,651    61.8    188,748

   2003           63,200     52.6       29,895     24.9       18,712     15.6       6,786       5.7      1,471      1.2       120,064    60.0    199,952

   2004           67,111     52.2       31,389     24.4       20,905     16.3       7,520       5.8      1,675      1.3       128,600    59.6    215,681

   2005           67,687     50.7       32,703     24.5       22,014     16.5       9,135       6.8      1,996      1.5       133,535    58.5    228,214

   2006           67,343     49.2       34,092     24.9       23,682     17.3       9,415       6.9      2,358      1.7       136,890    58.2    235,139

Source BAA Ltd

5   The Forecast Approach

     5.1       In its medium-long term forecasts of traffic for the South-East BAA uses
               a „top down‟ approach which begins by making forecasts of
               unconstrained 1 demand for either the BAA airports or all airports in the
               South-East. The reason for initially considering the collective demand
               for airports in the South - East is to reflect their close physical proximity
               with overlapping catchment areas. It also makes it easier to deal with
               the issue of passengers being deflected away from their airport of first

     5.2        As well as preparing forecasts of unconstrained demand BAA has also
               established the annualised capacities of the various airports in the
               system. This involves estimating the annual equivalent of the maximum
               flow of traffic that can be handled in busy periods by critical elements of
               airport infrastructure (e.g. runways, apron area and terminal).

     5.3       Drawing on evidence about the way in which passengers originating
               from, or destined for, different geographical zones make use of existing
               airport capacity in the South-East (and monitoring how this has changed
               over time and by passenger type) we have devised a series of „rules‟
               which apportion predicted demand to individual BAA airports. Where
               this demand in any year exceeds our previously assessed capacity we
               have applied other „rules‟ which determine which elements of initially
               allocated demand would overspill in such circumstances of excess
               demand and what their expected subsequent option would be.

     5.4       The forecast demand for Stansted is therefore a combination of
               indigenous demand and a small element of „spillover‟ traffic which might
               otherwise have used Heathrow or Gatwick (approximately 2% of total
               Stansted traffic by the date 35 mppa is reached). Both elements are
               then adjusted to reflect future changes in the cost of operating from

     (Demand for travel at a future date assuming physical and statutory constraints are no more restrictive than at
     the point the forecast is made)

6   Forecasts of Unconstrained Demand

    6.1   In common with UK bodies such as the DfT and CAA, as well as leading
          airlines and aircraft manufacturers, BAA relies on an econometric
          modelling approach to predict the future demand for air travel. In other
          words BAA believes that consumer demand for air travel is driven by the
          desire to travel, fuelled or tempered by the cost of that travel (and
          associated expenses) and the rate of economic growth.

    6.2   The key assumptions which drive the model are largely economic. The
          rate of GDP or consumers‟ expenditure growth are key factors
          influencing the medium – long term demand for leisure travel, while
          foreign trade growth is a prominent driver of international business

    6.3   The changing cost of air travel is a particularly important factor
          influencing leisure demand.      Everything else being equal, falling air
          fares act as a stimulus to growth and rising fares as a depressant. The
          movement of air fares is a function of the degree of competition between
          airlines, (sometimes with competing modes), and the airlines‟ own
          operating costs which includes the cost of fuel, staff, distribution, airport
          handling and landing charges.

    6.4   The cost of oil and hence aviation gasoline, is of fundamental
          importance because it both comprises a substantial proportion of airline
          operating costs and, through its wider macro-economic effects, is pivotal
          in determining the rate of GDP growth and the discretionary spending of

    6.5   Assumptions concerning future trends of both sets of influencing factors,
          the „income‟ drivers such as GDP and consumers‟ expenditure and the
          „price‟ driver (air fares) are moderated in the model via the use of
          „elasticity‟ factors. In effect these represent the gearing between the
          respective economic drivers and the output demand.

6.6   In the case of „income‟ drivers the elasticity values represent the
      sensitivity of demand to changes in levels of discretionary income. As
      such they can be altered over time to represent growing maturity or
      saturation of demand. They therefore potentially var y according to the
      particular market segment they are associated with and over time. Price
      elasticities also vary according to market segment, with business travel
      less sensitive to air fare changes than leisure travel.

6.7   Other,      non-economic,   factors   included   in   BAA‟s   model   were
      adjustments to reflect the impact of greater competition from rail
      services for non-connecting Domestic traffic, the impact of the
      completed UK fast link to St Pancras from the Channel Tunnel on short
      haul international routes and growing competition from UK regional

7   Airport Capacity

    7.1    In the context of BAA‟s passenger forecasting process airport capacities
           are expressed in terms of millions of passengers per annum (MPPA).
           The derivation of these capacity figures stems from analysis of hourly or
           short term factors and entails the consideration of three main issues: -

           a) Critical Capacities – an airport consists of various infrastructure
                elements (runway, apron, terminal and ground access) each of
                which will have a more or less finite capacity, and each of which may
                act as a bottleneck (with the most limiting element dictating the
                capacity of the airport as a whole).

           b) Peaking Patterns – different airports will have different combinations
                of traffic and therefore may exhibit a different pattern of operation
                (over the course of a day, week, season, year). However there is an
                observed tendency in mature large scale airports for airport peaking
                to diminish gradually over time, with growth in demand increasingly
                being accommodated at hitherto off – peak periods.

           c) Service Standards – implicit in assessing the hourly capacity offered
                by a piece of airport infrastructure is a measure of the service
                standards that will be experienced at a given level of hourly flow (for
                example the level of delay likely to be experienced by arriving and
                departing aircraft).

    The capacity of Stansted in 2014/15

    7.2    In BAA‟s opinion the single runway will represent the most limiting factor
           dictating overall airport capacity in the chosen assessment year of

    7.3    The capacity of the runway, expressed in terms of millions of
           passengers per annum, is arrived at through the following stages: -

           a)     Calculation of the daytime hourly capacity of the runway (in terms
                  of the average number           of slots   available)   given safety
                  requirements and the application of acceptable queuing levels for
                  aircraft in the air and on the ground.

           b)       Calculation of the volume of daytime slots available across the
                    year, plus the number of movements available in the night quota
                    period (which combine to generate a theoretical maximum number
                    of runway slots available per annum)

           c)       Estimate of the proportion of this capacity likely to be taken up by
                    aircraft movements (ie slot utilisation)

           d)       Assessment of the proportion of total aircraft movements likely to
                    be accounted for by Passenger Air Transport Movements (PATMs)

           e)       Assumptions about the average number of passengers likely to be
                    carried on PATMs (ie Pax per PATM), multiplied by the volume of

7.4        BAA‟s assessment of the annual runway capacity at Stansted in
           2014/15, compared to that in 2005/6, is illustrated below: -

Table 7.1

                           Night     Theor etical      Slot       Total
                  Av       Quota      Slots pa      Utilisation   Flights   PATMs    CATMs    NATMs    Pax /
 Y ear          Hourly *   (000s)      (000s)           %         (000s)    (000s)   (000s)   (000s)   PATM    MPPA
 2005/6           42        12          280             70         196       169      11       16      132     22.2
 2014/15          47        12          313             88         274       243      21       11      144     35.0

* Daytime hours ie 0500 – 2229 GMT

7.5        The main assumptions are: -

           a)       No increase to peak runway movements (currently 50 slots per
                    hour), but increase in the number of hours at which this number of
                    slots is made available

           b)       General increase in off – peak slots

           c)       Increase in the annual utilisation of runway slots, to about 88% by

           d)       Majority of new slots taken up by Passenger ATMs
           e)         Increase in passengers per PATM, based on BAA‟s assumptions
                      about fleet mix and % load factor development

7.6        For the purposes of comparison the same calculation has been applied
           to Gatwick in 2005/6, where the single runway handled just under 33
           million passengers per annum: -

Table 7.2
             Av         Night    Theor etical      Slot       Total
           Hourly *     Quota     Slots pa      Utilisation   Flights   PATMs    CATMs    NATMs    Pax /
Y ear    Capacity       (000s)     (000s)           %         (000s)    (000s)   (000s)   (000s)   PATM    MPPA
2005/6       46          14          307            86         263       252       2        9      131     32.8

* Daytime hours ie 0500 – 2229 GMT

7.7        Airport capacity, when expressed in terms of millions of passengers per
           annum, will change over time (typically increasing). The 35 mppa value
           represents our best assessment of the runway – constrained capacity
           that will exist in 2014/15. BAA has offered to accept a condition limiting
           the annual passenger throughput of the single runway to this level.

Passenger Throughput at the other London airports in 2014/15

7.8        BAA assumed the following annual passenger throughput volumes for
           the other London airports coincident with our forecast of a 35 mppa
           throughput at Stansted in 2014/15. The figures for Heathrow and
           Gatwick are estimates by BAA, and the figures for Luton and London
           City reflect our understanding of the long term capacities at those
           airports prior to the publication of their respective airport master plans
           during 2006.

Table 7.3
 Airport                   Capacity, MPPA
 Heat hrow                           87
 Gatwick                             42
 Stansted                            35
 Luton                               12
 London City                         3

8   Distribution of South-East Demand

    8.1   Having established the level of passenger demand for airports in the
          South - East and the anticipated annual capacity of the individual
          airports in the region, the next step is to predict how that demand is
          likely to distribute itself.

    8.2   BAA uses the CAA‟s Origin and Destination surveys to identify the
          factors that cause passengers to choose one airport over another. The
          major determining factors have been found to be location (or more
          precisely accessibility) and airline service frequency although different
          passenger segments are not equally sensitive to these factors and may
          also be influenced by the availability of low airfares or frequent flyer
          programmes etc.

    8.3    The CAA data can also be used to define airport catchment areas. It
          tells us how many passenger trips to specific airports are made to and
          from zones within the South - East. These zones are at borough level
          within the Greater London area and at county level beyond.

    8.4    Having created a matrix of trips from zones to airports we define a zone
          as belonging to a particular airports catchment when the proportion it
          accounts for of that airport‟s total traffic is greater than the share it
          accounts for any of the other airports in the system.

    8.5   With the catchments defined in this way it is then possible to measure
          the extent to which different passenger segments originating in the
          different catchments currently choose to use the airports in the system.
          This reveals that different segments respond differently to the attractions
          of individual airports. Table 8.1 below illustrates, using recent CAA
          survey data, the difference in airport choice by UK leisure passengers
          and overseas resident business travellers.

Table 8.1
Choice of Airport by Catchment Area

                 UK Lei sure                            %    Foreign Busine ss               %

                         Airport Used                                Airport Used

 Airport          LHR        LGW        STN      TOTAL        LHR        LGW        STN   TOTAL
 LHR                50        36         14         100         86       10          4     100
 LGW                25        65         10         100         63       33          4     100
 STN                27        31         42         100         65       10         25     100
 TOTAL              36        42         22         100         74       14         12     100

Source: BAA analysis of CAA survey data covering period Jan – Dec 2003

8.6      It shows that UK leisure travellers, who have the widest choice of the
         kind of service they favour, are more likely to use the airport in whose
         catchment they are originating or destined for. Given the greater
         frequency of service offered from Heathrow, which is known to be of
         particular importance to business passengers, it is not surprising that,
         irrespective of their origin such passengers tend to choose Heathrow
         more often than the other airports combined.

8.7      Informed by this sort of analysis and observing how the patterns change
         over time, BAA then predicts how the matrix might look in 2015, in the
         first instance assuming no change in the level of restraint asserted by
         each airport on demand through physical or statutory constraints.

8.8      A comparison of the demand with capacity at a specified future date
         then reveals whether that level of demand can be accommodated.
         Having identified the amount of excess demand a process of re-
         allocation then follows which works by specifying the relative propensity
         of different passenger segments to switch to another airport. These
         „attrition factors‟ are applied to any excess demand at any airport and
         form the composition of the spillover demand.

8.9    As an illustration the rules of the model assume that international to
       international transfer passengers are eight times more likely to switch to
       another airport (UK or overseas) than UK resident business passengers
       with origins inside the airport‟s catchment area.

8.10   The spillover traffic is then re-allocated using another set of rules that
       vary according to passenger type. Not all of this spillover traffic is
       assumed to remain within the South-East system. Some of the „lost‟
       traffic may switch to other airports or simply not fly.

8.11   The process is repeated until excess demand is eliminated and airports
       are either at or below their estimated capacity.

8.12   The theoretical approach to the concept of spillover described above is
       based in part on BAA‟s observation of the way in which changes in the
       level of constraint at one airport in the London area have in the past
       caused an upturn in the growth experienced elsewhere in the South
       East. Figure 1 to Appendix A illustrates what happened to Heathrow‟s
       share of South East traffic during the period from 1978 to 1990 when the
       constraint applied was a statutory ban on the ability of airlines not
       already using Heathrow to develop new international services at the

8.13   The result was that over that period while Heathrow grew at an average
       compound rate of 4.0% per annum, Gatwick increased at a rate of 8.7%
       pa. Over the five year period following the lifting of the ban Heathrow‟s
       traffic rose by 27%, Gatwick‟s by 6%.

8.14   The fact that at a time when Heathrow was statutorily constrained there
       was sufficient capacity at Gatwick to attract and accommodate a
       substantial part of the frustrated demand for Heathrow has clear
       parallels with the role that Stansted will increasingly play in respect to
       approaching capacity constraints at Heathrow and Gatwick. With 25-
       30% of the surface trips to the three largest London airports being
       generated in zones most accessible to Stansted, the lifting of the 25
       million condition would make the London airport system more balanced
       in terms of supply and demand since it would permit some 22% of
       demand to use it, rather than the figure of 17% possible were the
       condition not to be lifted. (Table 1 of ES Vol 16).

9   Developing the 25 mppa case

    9.1   Air traffic forecasts for the 25 mppa case are presented in Volume 16 of
          BAA‟s Environmental Statement.

    9.2   The 25 mppa case assumes the continuation of condition MPPA1 which
          currently restricts the airport to a passenger throughput of 25 mppa. The
          25 mppa case identifies the characteristics of such an airport operating
          in 2014/15, having been constrained to 25 mppa for some 6 – 7 years.
          The 25 mppa case requires consideration of how the airport would
          develop over time with a 25 mppa restriction on passenger numbers.

    9.3   We have approached the issue employing a logic which can be
          summarised      as   considering      three   different   models   of   airport
          development, as follows: -

    a)    Airport operating without annual constraint (physical or statutory) on
          either aircraft movements or passengers. In this case airlines can be
          expected to respond to and/or encourage a growth in customer demand
          by a combination of increases in destinations served, flight frequency,
          and aircraft size.

    b)    Airport operating with a physical or statutory constraint on aircraft
          movements. In this instance airlines are not able, collectively, to
          increase flight frequency but might be in a position to do so on specific
          routes. The reduced scope for competition and rising potential for
          demand to exceed supply will tend to enable airlines to increase
          average ticket prices and there will be a greater incentive for them to
          increase the size of aircraft used.

    c)    Airport operating with a limit on annual passenger numbers. In this case,
          the Stansted 25 mppa scenario, one lever that airlines can pull to
          develop their businesses is to increase average ticket prices (through
          added value services and/or as a result of a tightening demand / supply
          position). Part of the added value, particularly to attract a greater share
          of higher spending business passengers, would be by increasing flight
          frequency faster than would be the case under normal operating

9.4   It was against this background that the 25 mppa forecasts given in
      Volume 16 of the Environmental Statement show, relative to the 35
      mppa case: -

      -   a higher share for the low cost sector (as a 25 mppa cap would
          lessen BAA‟s incentive to market Stansted to new types of carriers,
          especially Long Haul, mainly through the less attractive network
          possibilities of a constrained airport)

      -   a lower aircraft movement volume to handle 25 mppa in 2014/15
          than is assumed to be the case when 25 mppa is first attained in

      -   a smaller proportion of transfer passengers reflecting the relatively
          lower opportunity to connect between flights at Stansted

      -   a higher proportion of business travellers as a result of the increase
          in scarcity value of seats from Stansted

      -   a higher concentration of passenger origins and destinations to /
          from zones relatively local to Stansted.

      -   a higher volume of cargo and non – commercial flights (as it would
          heighten BAA‟s commercial interest to develop non – passenger
          related income streams)

9.5   The unique aspects of the 25 mppa case were discussed with SH & E
      (in their role as advisors to Uttlesford DC) during the development of the
      forecasts, and comments made by SH & E were subsequently reflected
      in the final 25 mppa case forecasts.

9.6   BAA is confident that the 25 mppa case represents a robust scenario.
      To highlight this assertion Stansted handled 23.8 mppa in 2006/7, with
      208,300 aircraft movements (total including cargo and non – commercial
      flights). Our expectation is that a 25 mppa throughput is likely to be
      reached late in 2008, supported by about 219,000 aircraft movements.

9.7   This compares favourably with BAA‟s forecast of 216,000 annual aircraft
      movements in the 25 mppa case. Furthermore this accentuates the gap
      between the number of movements required to support 35 mppa and 25
      mppa respectively (as the 25 mppa case assumes a lower number of
      movements than we believe Stansted will be handling, with 25 mppa,
      late in 2008).

10   Aircraft Movement Forecasts

     10.1   BAA‟s air transport movement forecasts are presented in Volume 16 of
            BAA‟s Environmental Statement, see section 3.

     10.2   The forecast aircraft load characteristics are presented and explained in
            Volume 16 of BAA‟s Environmental Statement, see para 3.3.1 – 3.3.3

     Fleet Mix

     10.3   Forecasts of the aircraft fleet mix in the 25 mppa and 35 mppa cases
            are given in Volume 16 of BAA‟s Environmental Statement, see
            Appendix A5.

     10.4   Fleet mix forecasts have been generated separately for the Passenger
            ATM, Cargo ATM and Non – Commercial ATM fleets, and then
            combined as a means to assess the environmental impacts of the
            proposed development.

     10.5   The mix of aircraft types in the PATM fleet (which accounts for 83% and
            89% of the 25 mppa and 35 mppa cases respectively) has been
            projected in light of the expected market and airline mix composition at
            2014/15 in both cases. The Domestic and European markets at
            Stansted are currently dominated by Ryanair and Easyjet who have firm
            commitments to the medium – sized Boeing 737 – 800 and Airbus A319
            respectively. This is illustrated in Table 10.1 below, which demonstrates
            the current prevalence of medium – sized aircraft at Stansted. The
            forecasts for both cases in 2014/15 are driven to a substantial extent by
            the assumption that these two carriers will retain that commitment to
            these respective aircraft types.

Table 10.1
Stansted PATM Fleet Mix, by stand size type (000s)

 Size Type           2006               %
 A380                 0.0              0.0
 Jumbo                0.0              0.0
 Large                1.0              0.6
 Medium Wide          2.9              1.6
 Medium              156.3             87.3
 Small                18.6             10.4
 TOTAL               178.9             100.0

10.6     The other key factor underpinning BAA‟s fleet mix forecasts is the
         assumed development of Long Haul services, utilising larger aircraft
         types (on average) than those used in the Domestic and European
         markets. Long Haul movements account for 3% and 6% of the 25 mppa
         and 35 mppa Passenger ATM forecasts respectively.

10.7     From the PATM fleet mixes an assessment can be made of the
         proportion of airline capacity forecast to be used by air passengers. This
         measure, the % load factor, is derived by dividing the volume of seats
         forecast to be offered by airlines by the passenger volume forecast. The
         volume of seats on offer is the product of BAA‟s movement forecasts for
         individual aircraft types multiplied by an assumed number of seats per
         aircraft type. This in turn has been derived with reference to the current
         characteristics at Stansted (for example the Boeing 737 – 800 is
         assumed to provide 189 seats per flight).

10.8     The % load factor forecasts are illustrated below: -

Table 10.2
                             % Load
   Year / Case                Factor
          2006                 77
    25 mppa case               80
    35 mppa case               83

10.9     For comparison the equivalent values at Heathrow and Gatwick were as
         follows in 2006: -

Table 10.3
                        % Load
      Airport            Factor
     Heathrow              73
      Gatwick              77

10.10 In both cases the % load factor at Stansted is assumed to be greater in
       2014/15 than at present. However load factors in the 35 mppa case are
       forecast to be higher than those of the 25 mppa case.

10.11 This is principally a reflection of the different contexts in which the two
       cases are assumed to operate. In the 25 mppa case we have assumed
       that the continued imposition of condition MPPA1, limiting the
       passenger numbers to 25 mppa, would disincentivise passenger volume
       growth for airlines at Stansted. Instead, with volume growth unlikely as a
       result of the 25 mppa condition, carriers would focus on other ways to
       develop profitability. Thus volume, in the form of higher load factors,
       could be forsaken in a desire to boost profits through either extracting a
       higher revenue per passenger (yield), and / or by driving operating costs
       down further. In the 35 mppa case volume growth would emerge as a
       potential factor in the drive for profits, and, as a result, there would be
       far greater scope for price competition between carriers. Higher load
       factors would result through this process.

10.12 In addition to the fleet mix forecasts for the 25 mppa and 35 mppa cases
       BAA has provided a fleet mix sensitivity, where the 264,000 ATMs
       proposed under revised condition ATM1 are assumed to reflect a
       heavier (more long haul) fleet mix in 2014/15.

Movement Profiles
10.13 Hourly aircraft movement profiles for the 25 mppa and 35 mppa cases
       are presented and explained in Volume 16 of BAA‟s Environmental
       Statement, see paras 9.1.1 – 9.1.9.

11   Air Cargo Forecasts

     11.1   BAA‟s air cargo forecasts for the 25 and 35 mppa cases are presented
            in Volume 16 of BAA‟s Environmental Statement, see section 4.

     11.2   The air cargo tonnage forecasts have been used as an input to the
            forecasts of on – airport employment (see chapter 15 of this Proof of

     11.3   In essence the forecasts were driven by an analysis of demand growth
            for the South East which suggested increasing constraints on cargo-
            carrying capacity at Heathrow and Gatwick, through excess demand for
            runway slots at both airports. This could be expected to reduce the
            scope for growth in both bellyhold capacity (i.e. cargo space on
            passenger ATMs) and freighter aircraft capacity.

     11.4   The addition of increasing amounts of „spillover‟ cargo demand to
            Stansted‟s own organic growth produces the forecasts.        The overall
            demand is believed to be similar in both 25 mppa and 35 mppa cases,
            but the distribution of it between whole plane cargo movements and
            bellyhold capacity is expected to vary, with greater use of the latter in
            the 35 mppa case because of the expected introduction of more long
            haul passenger services.

12   Summary of 25 and 35 mppa cases

     12.1    The key annual forecasts which were the basis of the assessments, and
             which are set out in Volume 16 of the ES, are summarised below:-

Table 12.1

Measure                       25 mppa        35 mppa      Difference from 25 mppa
                                case           case                 Case
                                                             No.            %
Passengers (m)                   25             35          +10m           +40

Passenger ATMs (000s)           180           242.7         +62.7          +35
Cargo ATMs (000s)               22.5           20.5          -2.0           -9
Total ATMs (000s)              202.5          263.2         +60.7          +30
Other Movements (000s)          13.5           11.0          -2.5          -19
Total Movements (000s)         216.0          274.2         +58.2          +27

Cargo Tonnes (000s)             600            600           Nil           Nil

NB: The slight disparity between some of the detailed figures given above and those
contained in Table 4 at para 6.7.1 of the ES Vol 1 is due to the rounding of the
figures given in Table 4.

13   Forecast Inputs to assessment of Terminal & Apron infrastructure

     13.1   Forecasts supporting BAA‟s assessment of the terminal and apron
            infrastructure required for 25 and 35 mppa are presented in Volume 16
            of BAA‟s Environmental Statement, see section 5. These forecasts have
            been derived from our assessment of the likely market mix, fleet mix,
            and movement profiles described previously.

     13.2   In its determination of the need for terminal infrastructure BAA uses a
            measure of busy period activity known as the 5% Busy Hour (BHR).
            This 95% percentile rate of passenger flow is meant to represent
            conditions of crowding or queuing which would be experienced by no
            more than 5% of annual passengers.

      13.3 In the ES Vol 16 Appendix A1, Table A1.2 it can be seen that the
            projected growth in these BHRs is less than the growth in annual
            passengers. This is the commonly observed experience as airports
            grow in scale and traffic patterns tend, or are forced, to spread more
            evenly both seasonally and diurnally.

      13.4 As far as apron demand forecasts are concerned the peak at Stansted
            in 2004 was for 57 passenger aircraft just prior to the morning departure
            peak.    Having forecast the annual number and mix of aircraft types
            consistent with the need to carry the passengers in the 25 mppa and 35
            mppa scenarios the next step was to project the expected peak build up
            of these aircraft requiring operational parking positions.

     13.5   In the 25 mppa case it was assumed that the airlines would wish and be
            able to continue to operate with broadly the same degree of peaking
            patterns as observed in 2004.       In the 35 mppa case the degree of
            enforced peak spreading was assumed to be greater, and there was
            seen to be greater scope to develop new services with different peaking
            patterns. This case would entail a more efficient use of required apron

14   Inputs to noise, air quality and third party risk assessments

     14.1   Air traffic forecast data forms an important input to the assessments
            undertaken for air noise, ground noise, third party risk and air quality.
            The base data on aircraft fleets used to derive the specific data for each
            assessment was set out in Volume 16 of BAA‟s Environmental
            Statement, see Appendix A3 for air noise, Appendix A4 for gr ound noise
            and Appendix A5 for third party risk. The air quality assessment also
            used data drawn from these appendices, taken together with inputs from
            the surface access assessment.

15   Forecasts of On-Airport Employment

     Definition of Scope

     15.1   The employment forecasts covered by my evidence relate to what is
            known as direct on-airport employment. These are people employed by
            firms engaged in activities directly related to the functioning of the
            airport and whose place of employment is located inside the boundaries
            of Stansted Airport.

     Data Sources

     15.2   There are two sources of on-airport employment data at Stansted. The
            first is an annual census of all airport employers conducted by BAA that
            produces a list of staff numbers by type of employer (e.g. airline, retail
            concessionaire etc).        The second is via a more detailed survey
            conducted at roughly 5 year intervals which, among other issues, obtain
            information about employee characteristics such as place of residence,
            household size, mode of travel to work and entry/exit time.

     15.3   As a preliminary to gathering information directly from employees BAA
            also attempts to conduct surveys among on-airport employers, mainly to
            provide a guide as to their total workforce classified by job type so as to
            ensure that subsequent returns from individual employees can be
            scaled to make them representative of the total workforce.

     15.4   The classification process aims to categorise employees in terms of the
            airport function with which they are most closely linked, as follows: -

            - Passenger related staff eg cabin crew

            - Air traffic movement related staff eg pilots, refuellers

            - Air cargo related staff

        - Traffic related support staff eg firefighters, aircraft loaders

        - Non-traffic related support staff eg administrative staff.

Forecast Process

15.5    There are four        stages     in BAA‟s    methodology for        forecasting
        employment, as follows: -

        i)   Categorise the employment in the base year according to the airport
             function they support and whose growth will influence the rate at
             which their numbers will change.

        ii) Application of the relevant traffic forecasts to the three groups of
             traffic related staff (passenger, aircraft movement and cargo

        iii) Linking this growth to the base levels of general traffic related
             support staff and non-traffic related support staff.

        iv) Adjusting the resulting projected staff levels to reflect BAA‟s
             assumptions concerning the expected level of productivity gain.

15.6    The breakdown of employees established in the 2003 Stansted
        Employment Survey was as follows: -

Table 15.1
Stansted On – Airport Employment 2003

Category                               Staff                   %

Pax Related                          2,450                     23
ATM Related                          3,300                     31
Cargo Related                          480                     5
Traffic Support                      1,140                     11
Non-Traffic Support                  3,230                     30
Total                               10,600                    100

15.7   The assessment of on-airport employment totals uses the forecast annual
       passenger, movement, and cargo tonnage volumes summarised in the
       table below: -

Table 15.2

Category                           2003           25 mppa case        35 mppa case
Passengers (m)                      18.7                25.0                35.0
ATMs (000s)                        171.3               202.5                263.2
Cargo Tonnes (000s)                200.1               600.0                600.0

15.8   The pace of growth at Stansted in recent years, allied to the absolute
       levels of traffic now attained, has been a major contributor to rapid
       increases in labour productivity. This has been further boosted by the
       nature of the traffic growth that has originated from low cost airlines with
       high rates of labour productivity.

15.9   As a result labour productivity grew by over 14% between 1997 (when the
       previous on-airport employment survey was conducted) and 2003. Such a
       rate of productivity growth, which is significantly faster than that achieved
       at Heathrow and Gatwick, cannot be expected to be sustained in the long
       term. Factors that are likely to combine to reduce the rate of productivity
       growth include slowing in the rate of traffic growth and changes in the mix
       of airlines using the airport (including the introduction of long haul
       services). As a result productivity is assumed to increase at a rate of
       1.5% per annum in the 35 mppa case. The 25 mppa case assumes no
       increase in labour productivity over 2003 levels. This reflects the
       particularly strong commercial need that would prevail to develop non-
       traffic related activities (which still require staff) at the airport.

15.10 The resulting on-airport employment totals are given below: -

Table 15.3

 On-Airport Employment
 2003                           10,600
 25 mppa case                   14,350
 35 mppa case                   16,800

15.11 The employment survey recorded the staff distribution by location in 2003.
        For the future this distribution has been adjusted to reflect: -

        -    Growth in the various related components

        -    Changes in volume of staff by category e.g. passenger related staff
             are largely employed in the passenger terminal and Enterprise House

        -    Planned additions by zone to the stock of staff accommodation

        -    Development of new zones of activity

15.12 The resulting distribution is given in Volume 16 of BAA‟s Environmental
        Statement, section 6.

16    Forecast input to surface access studies

     16.1   In the consideration of surface access issues, the key air traffic forecast
            inputs concern passenger volume, passenger type (for example UK
            resident or foreign resident), journey purpose (for example Business), and
            ground origin. This is because different types of non – transfer passenger
            segments typically exhibit different modal choices (for example London –
            originating Foreign Leisure groups are much more likely to use public
            transport options than other groups).

     16.2   The air traffic forecasts used as input to BAA‟s surface access studies are
            described in Volume 16 of BAA‟s Environmental Statement, see section 7.

     Passenger Volume

     16.3   In the 35 mppa case non – transfer passengers account for a 83% share
            of all passengers, against 90% in the 25 mppa case. The difference
            between the two cases is a reflection of the additional airport capacity
            available in the 35 mppa case. This will provide air passengers with a
            greater range of routes and frequency than that offered in the 25 mppa
            case, thereby facilitating a relatively higher transfer passenger share.

     Passenger Type & Journey Purpose

     16.4   There is a similar proportion of UK resident passengers (70 – 71%) in both

     16.5   Although the absolute numbers of business passengers increases in the
            35 mppa case, there is forecast to be a higher proportion of business
            passengers in the 25 mppa case (23%) than in the 35 mppa case (19%).
            The difference between the two cases reflects the circumstances outlined
            in para 16.3; additional airport capacity in the 35 mppa case will provide
            greater opportunities for travel to a wider range of passengers. In the 25
            mppa case the relative scarcity of capacity is likely to lead to an increase
            in airfares (relative to the 35 mppa case), with the opportunity to fly from
            Stansted being purchased by those who can most easily afford it (ie
            especially price inelastic segments such as business travellers).

 Ground Origins

 16.6        The constraints of 25 mppa will produce a more locally – biased set of
             passenger origins than that likely in the 35 mppa case. In the 25 mppa
             case 13% of passengers are assumed to originate from outside the South
             East and East Anglia. This figure rises to 16% in the 35 mppa case,
             illustrating the drawing power of an expanded Stansted.

 16.7        In their report to Uttlesford DC, „Review of BAA Traffic Forecasts for
             Stansted Airport‟ (Feb 2006) SH & E commented that they held a different
             view to BAA on passenger ground origins in the 35 mppa case. SH & E
             suggested that Stansted‟s passengers would be drawn from a more local
             area than that assumed by BAA, with no more than 13% of passengers
             originating outside the South East and East Anglia. This alternative
             viewpoint is examined in the „SH & E‟ sensitivity test. The ground origin
             forecasts for this sensitivity, which have been agreed with SH & E are
             given in Table 16.1 below and have been modelled in the Addendum to
             the Transport Assessment.

 Table 16.1
 SH & E Sensitivity

This sensitivity, which examines an alternative set of passenger ground origins for
the 35 mppa case, is based on the following forecasts: -

                             UK            UK       Foreign      Foreign
  Zone                    Business       Leisure    Business     Leisure      TOTAL

  Inner London
                            0.51          0.93        0.45         1.71        3.59
  London Outer NE
                            0.36          2.28        0.08         0.99        3.71
  London Outer SE
                            0.10          0.72        0.03         0.30        1.16
  London Outer SW
                            0.18          0.87        0.13         0.57        1.74
  London Outer NW
                            0.10          0.92        0.03         0.62        1.67
  Outer South East NE
                            0.85          3.18        0.24         0.71        4.99
  Outer South East NW
                            0.25          0.91        0.06         0.29        1.51
  Outer South East SW
                            0.11          0.54        0.03         0.27        0.95
  Outer South East SE
                            0.18          0.75        0.02         0.29        1.24
  South West & Wales
                            0.12          0.59        0.04         0.24        0.99
  W Midlands
                            0.11          0.42        0.01         0.10        0.64
  E Midlands
                            0.23          0.95        0.06         0.13        1.36
  E Anglia
                            0.85          2.83        0.23         0.76        4.67
  Rest of UK
                            0.07          0.69        0.03         0.16        0.94

  TOTAL                     4.02         16.58        1.45         7.12       29.17

Busy Day Passenger Demand

16.8   Forecasts of the volume and hourly profile of non – transfer passengers
       on a busy day are given Volume 16 of BAA‟s Environmental Statement,
       paragraphs 7.4.1 – 7.5.2.

Employee Reporting Profiles

16.9   Forecasts of employee reporting profiles have been used in the modelling
       of surface access flows. These are presented in Volume 16 of BAA‟s
       Environmental Statement, paragraph 6.1.13.

17   Car Parking Forecasts

     17.1    BAA‟s assumptions about the requirement for public and staff car parking
             spaces in the 25 and 35 mppa cases are presented in Volume 16 of BAA‟s
             Environmental Statement, see section 8.

     17.2    The forecast requirement for car parking spaces is as follows: -

     Table 17.1

      Car Park Type                   25 mppa      35 mppa         Difference from 25
                                        case         case             mppa Case
                                                                    No.          %
      Long Stay*                       23,200       28,900        +5,700        +25
      Mid Stay                         5,750         6,950        +1,200        +21
      Short Stay                       2,400         2,950         +550         +23
      TOTAL PUBLIC CPs                 31,350       38,800        +7,450        +24
      BAA Managed Staff CPs            2,650         3,000         +350         +13

     * Includes parking at off airport sites

18     Latest BAA Forecasts

     18.1    As was referred to in paragraph 2.3 above, the forecasts prepared by BAA
             contained in Volume 16 of the Environment Statement were the product of
             work undertaken during 2004 and 2005. As part of the normal process of
             running its business, BAA routinely reviews projections for all its airports,
             including Stansted.

     18. 2   The most recent forecast review, undertaken in early 2007, has taken into
             consideration a variety of issues, but the most significant have been,

             a)   The continued rise in the price of oil and more pessimistic views
                  about its future trend; and

             b)   The growing pressure to reduce the rate of growth in demand for air
                  travel by means of taxes and / or emissions trading schemes

     Oil Prices

     18.3    The oil price assumptions made by BAA at the time it was preparing the
             Environment Statement forecasts were based on its view that , in real
             terms, prices would stabilise at around $55 per barrel (from a figure of $69
             in September 2005) and gradually fall to $50 by 2015 as new sources of
             supply were tapped and the rate of demand growth moderated. Since then
             the evidence of sustained higher prices, demand growth and persistent
             political instability in key producing areas has caused BAA to revise
             upwards the oil price assumptions. In late 2006 the prevailing price was in
             the range of $60 – 65 per barrel. BAA‟s latest forecasts now assume a
             decline to $60 (in real terms) by 2010 and $55 by 2015.

     Environmental Charges

     18.4    During the autumn of 2006, following publication of the Stern Review, the
             Chancellor‟s announced intention to double the rate of Air Passenger Duty
             and the publication of a draft EU Emissions Trading Scheme, it became
             clear that BAA‟s previous assumptions relating to environmental charges
             needed to be revised to assume a more rigorous charging regime.

18.5     This entailed reflecting a continuation of the new higher rate of APD and
         making the assumption that the aviation sector would join the EU
         Emissions Trading Scheme (ETS) from 2011.

18.6     The combined effect of higher oil prices, a doubling of APD, and the
         application of assumptions about EU ETS has the effect of slowing BAA‟s
         demand forecasts for the South East. In the short term most of the
         difference is attributable to higher oil prices and the APD increase, while
         over the longer term the impact of an EU ETS becomes more significant in
         reducing the demand forecast.

18.7     BAA now expects that passenger throughput at Stansted in 2014/15 will
         be some 2 mppa below that forecast at the time it made its application.
         This is the result of the slightly slower growth in throughput outlined above
         and represents about 12 – 18 months slippage; in other words BAA now
         expects 35 mppa will be reached in 2015/16.

       At the time that the forecasts in the Environmental Statement w ere conceived BAA had taken a cautious
       view of the likely downward trend in oil prices as a proxy for the addition of envir onmental taxes, on the
       basis that they would be more likely to be imposed (and / or be higher) if the oil price was to collapse
       again as in the 1980s.

19   Conclusion

     19.1   Although, for the reasons given in Chapter 18, BAA has recently reviewed
            and slightly revised down its forecasts for Stansted it is confident that
            figures presented in Volume 16 of the Environmental Statement remain its
            best view of the traffic characteristics associated with a 35 mppa and 25
            mppa at around 2015.

     19.2   It is re – assured in this by the comments of Uttlesford‟s traffic forecasting
            consultants who, as reported in Chapter 2, concluded “that the passenger
            forecasts produced by BAA for Stansted are reasonable” and that its
            aircraft fleet mix forecasts “represent a reasonable view of aircraft
            movements by type when Stansted operates at 35 mppa”.

     19.3   In the two areas where the consultants differed from the BAA viewpoint,
            namely the proportion of Long Haul passengers and the zonal distribution
            of passenger ground origins (both in the 35 mppa case), sensitivity tests
            have been conducted to test the materiality of any additional noise or
            surface access impacts.


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