Wednesday, July 16, 2008

Environmental perversity...

Because the Government has imposed a "use it or loose it" rule for those precious Heathrow take-off and landing slots, some airlines such as BMI plan to have planes ‘fly empty’ to keep slots at Heathrow.

This shows the difficulty of governing in a free market economy (if there's such a thing?): any regulation potentially affects market forces and can be perverse.

In this case, the perversity is that if prevents short term downwards capacity adjustment.

However, it brings the LHR third runway question again: at a time where the Government seems to already have made its mind (read Hutton signals go-ahead for Heathrow expansion before consultation), another proof of its collusion with BA and BAA, it seems that with oil prices at a record level and not going down any time soon the need for additional capacity may not be there anyway.

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