Edinburgh airport and the economy

The American politician, Charles Erwin Wilson, is popularly credited with saying that what is good for General Motors is good for the USA.

That supposed umbilical link between the fortunes of a private commercial company and those of a state or city remains seductive today. Until recently it was commonplace to state that the apparent unending growth of RBS was naturally good for Scotland.

The ongoing troubles of RBS should be a warning. But it seems that, in other cases, critical faculties remain sluggish. Take for example, Edinburgh Airport, whose energetic and articulate chief executive, Gordon Dewar, spoke at the City Council’s Economy Committee this week.

Edinburgh Airport is a thriving commercial business – volumes are up on every count, new routes are being developed, more investment in facilities is planned. Mr Dewar had the good grace to acknowledge the challenges that airports pose to carbon emissions but, sadly, I am not sure his shareholders will be worrying too much about that.

And so each new press release about new routes and higher numbers is greeted as unambiguously good by press and politicians. What is good for Edinburgh Airport is good for the city and the city region, it seems. As I argued this week, however, such a one-dimensional narrative does a disservice to a more discerning debate. What is the actual net economic impact of the airport? Who gains? What kind of business airport business generates what kind of economic impact and what policies does the city pursue to maximise benefits? Indeed, what is the optimal size of the airport?

There’s a world of economic difference between domestic flights (and 45% of Edinburgh Airport business is domestic, much of which could be handled by train) which result in boozy weekends causing mayhem in “party flats” and long term inward investment which enhances skills and jobs.

Now, I’ll not pretend that we got into all of those questions at the committee. But I hope that we started to look at both sides of the equation. For example, we know, from official air passenger data, that Scotland as a whole runs a passenger value deficit of almost £1 billion each year – in other words the total spending by people leaving Scotland on flights exceeds that of in-bound passengers by £900 million. That is an economic cost, not a benefit, yet how often do you see that statistic cited? We don’t have those data for Edinburgh alone but I hope that an economic impact study being commissioned this year will examine that local dimension more fully.

Edinburgh airport’s footfall (or “wingfall”?) is 60% tourist and 40% business, and the same net effect might be imagined for business decisions. Academic studies have suggested that flight connectivity is by no means the most important factor in locating a business (quality and skills of employees typically comes top) but, of course, it must play a part. But for every business which decides it can invest “in”, it is equally possible that businesses can use connectivity to exit and run a business more remotely. After all, it must be more tempting to shift production to a country which does not bother so much about pesky stuff like a minimum wage or working conditions, if there is a flight door to door. Equally, how about the capital exits from those wealthy enough to run second homes in France or Spain and lubricated by cheap flights?

Let’s keep perspective. Edinburgh thrives on being an international city. We benefit from being a city which is open to the skills and insights of people from around the globe. Equally, our citizens are enriched by being able to experience at first hand other cultures (and climates). I’ve not been at the airport, personally, for quite a while but I’d include myself in that latter category (at least by the time my kids nag me about being able to go abroad for a holiday at last – apparently, over the sea to Arran does not count).

But, as Mr Dewar recognised, there is no hiding place from the cold arithmetic of carbon reduction. Technology may improve but volume needs to be managed as well. And, maybe just maybe, the depth of the experience offered by international travel would be enhanced by being it being a bit less frequent and a bit more special.

So, given that environmental imperative, it is important that we also get to an economic debate which sees air travel in a rounded way and acknowledges that the sky will not fall in on the city economy in a lower-carbon future.

I’m looking forward to that evolving discussion.