Geneva airport after the financial tsunami
The need for Geneva airport to handle 25 million passengers by 2030 is now doubtful after the floating of the Swiss Franc.
In the late 1950s the British Prime Minister Harold Macmillan, was asked what he considered was most likely to blow his government off course. In an answer that has gone down in history, Macmillan replied, “Events, dear boy, events.”. Here in Switzerland, the sudden decision of the Swiss National Bank no longer to support the base exchange rate of CHF 1.20 for one Euro can be described as one such event. However, we British remember Black Wednesday, 16 September 1992 when the British Conservative government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism (ERM) after it was unable to keep the pound above its agreed lower limit in the ERM. George Soros, the most high profile of the currency market investors, made over £1 billion profit by short selling sterling. Many feel that the same would eventually have happened here if the Swiss National Bank had tried indefinitely to keep supporting the Euro.
Just a few days before the decision, and as part of a process to create a framework for the future planning of Geneva airport (PSIA: Plan Sectoriel de l’Infrastructure Aéronautique) the Swiss Civil Aviation authority (OFAC) put on its Web site an air traffic forecast for the period up until 2030. This report, produced by a German independent consultancy agency, forecast that by the year 2030 the airport would need to handle 25 million passengers per year, as compared with the 15 million passengers of last year. This passenger traffic would require an annual increase of 2% per annum for scheduled and charter flights, i.e. an increase from the current 142’000 to about 192’000 in 2030.
As was explained in the report, the predictions were based upon the correlation between economic growth and airport passenger traffic. To quote from the report:-
The by far most important driver of the air traffic development is the economy resp. the dynamics of economic growth.
The report uses the OECD Economic Outlook 2014, adjusted to local values, which anticipated real GDP growth this year (2015) to be around 2.6% for Geneva, 2.7% for Vaud. These would slow to be only (!) 2.3% from 2020 onwards. For the local Rhone-Alpes region of France the GDP would be 1.7% this year, but rising to 2.2% from next year onwards.
One can suppose that the Airport Management would welcome these forecasts, since they would allow the airport to claim that it MUST expand to cater for this increase in traffic. Since the forecast clearly states that it does not take into account any constraints, such as runway or terminal capacity, the Airport would then need to make (or are already making) the very large investments needed to overcome the constraints.
So, after the Bank’s tsunami, what will now be the growth in the Geneva region? A study by UBS suggests that for Switzerland as a whole, the economic growth for 2015 is likely to have been reduced from 1.8% to 0.5%,whilst for 2016 the reduction will be from 1.7% to 1.1%, though Geneva may be slightly higher. After that, who knows?
My personal opinion, which many people living around the airport may share, is that planning for any airport expansion has to take into account various non-economic variables? At what level does the increase in the various nuisances caused by local air traffic (noise, air pollution, devaluation of property near the airport) become sufficiently important to nullify purely commercial benefits?
One might hope that these nuisances would be openly discussed in the context of the PSIA, which in any case must surely insist on a re-evaluation of the figures in this independent report. After all, this report, meant to be valid for the next 15 years, has been invalidated just a few days after being published! The folly of long-term predictions!
Harold Wilson was right!