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Sunday, August 12, 2007

No Business case for Staverton Airport - copy of letter to the Gloucester Echo

Dear Editor,

Following Darren Lewington’s letter regarding the airports support during the flooding crisis, I would also like to congratulate his organisation for supporting the crisis. However, such support does not constitute a business case for the airport’s expansion which Darren Lewington's letter goes onto make (Citizen letters 9/08/07).

As I have pointed out in previous letters we face a critical danger from global warming and the recent flooding should be taken as a wake up call. The Nature magazine recently published research concluding that the flooding which has been experienced world wide is unequivocally linked to global warming.

We now face a period where food production across the world is falling due to the combined effects from global warming of droughts and floods and the desire to shift production to bio-fuels. This is coinciding with worldwide falls in oil production causing further prices rises. The total effect of these two major issues is that inflation is rising worldwide, causing corresponding increases in interest rates. All the indications are that the economic long term fundamentals are now in decline, and what we are seeing is not a simple market correction. As a result, this weekend the banks are standing on the precipice of a global liquidity crisis, and interest rates will stay painfully high for the long term.

This has a profound impact on the business case for Staverton Airport . Taking an optimistic estimate that the cost of borrowing will be 7%, and tax will be paid at 20%, then based on the airport’s business plan, it will take over 25 years to pay back the initial investment. If the cost of borrowing rises to only 8%, it will take approximately 45 years to pay back the investment, so bad is the business case. Thus the airport expansion is an extremely bad deal for the council tax payers of Gloucester and Cheltenham .

There can only two outcomes for the council tax payers of Gloucester and Cheltenham . They will either have to bail out the investment if the business fails, or they will suffer far more noise and pollution from the airport than it has claimed as it tries to ramp up the number of aircraft far beyond the current public predictions of service growth to obtain a reasonable return on investment.

As well as upholding the obligation on climate change and protecting the local environment, it is also vital that the elected councillors ensure that their constituents are not faced with unnecessary financial risk and that their taxes are effectively spent. If an important aspect of the business case for the airport's expansion will be the provision of support in the case of future flooding caused by global warming, then the council should first of all ask if the money it plans to spend on the expansion of the airport could not be better spent on investment in the appropriate emergency equipment instead; or on flood protection in the Bath Road area.
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