How expanding air travel has led to a cabinet dogfight

Pressure is growing to develop Stansted or Heathrow but economic and political concerns have split Labour's high command higcommanndit comes down to politics and economics. Either way, the economic benefit will carry a political price

It comes down to politics versus economics - Blair versus Brown.

While the Chancellor argues that the strength of the economic case for expansion at Heathrow airport is irrefutable, the Prime Minister asserts that the Government has far more to lose electorally by opting for the West London airport and should go for Stansted instead.

In some senses Heathrow is the most obvious candidate for an extra runway. It is the busiest international airport in the world, handling about 60 million passengers a year.

Supporters of further expansion there argue that without a third runway London will rapidly lose out to rival airports such as Paris, Amsterdam and Frankfurt, with huge knock-on effects for the south-east economy and ultimately the whole of the UK. Charles de Gaulle airport in Paris will soon have more runways than London's three big airports put together.

British Airways, the biggest airline at Heathrow with nearly 40 per cent of all take-off and landing slots, calculates that an extra, short runway at the airport would produce an economic benefit of £37bn over a 50-year period.

In comparison, it estimates the benefit of one new runway at Stansted at £21bn and three new runways at £52bn. British Airports Authority, or BAA, the operator of the two airports, calculates that Heathrow would generate £200m a year for every one million extra passengers a new runway would bring in, compared with £90m for Stansted.

The Government calculates the construction costs of building a new runway at Heathrow at £4.2bn, against £3.9bn for Stansted. At Heathrow there would be an extra bill of £1.2bn to compensate local residents, against compensation costs of £250m at Stansted.

However, BA argues that the total costs of expanding Stansted would be much greater because of the additional transport links and terminals which would have to be built. At Heathrow a fifth terminal has already been given the go-ahead, although BAA, the owner of the airport, would need to construct a sixth terminal to handle passengers using a third runway.

With the benefit of a third runway, Heathrow would also be in a much stronger position to attract transfer passengers from elsewhere in the UK and Europe, whereas Stansted is likely to remain a point-to-point airport, even with the addition of one or more runways.

Business chiefs are already thought to have voiced their concerns to BAA that industrial development in regions such as the north-east, Yorkshire and the east Midlands will be held back if executives are unable to get easy access to transatlantic services through Heathrow. A third of the airport's 60 million passengers are transit passengers.

The two biggest airline alliances in the world - the Oneworld alliance led by BA and American Airlines and the Star Alliance headed by Germany's Lufthansa and United Airlines of the US - have a major presence at the west London airport.

By contrast, there are no international carriers based at Stansted. Where the Essex airport does have an advantage, however, is as a base for low-cost carriers such as Ryanair and easyJet, which have been the biggest growing sector of the airline industry in the last three years. Michael O'Leary, chief executive of Ryanair, has argued strongly against a third runway at Heathrow.

The electoral argument in favour of Stansted put forward by Downing Street is infinitely more cynical: more voters will be affected by the expansion of Heathrow than Stansted and therefore the Government should choose the latter.

After the choice is announced in December, the relevant airport operator - BAA in the case of both Heathrow and Stansted - would then have to seek planning permission.

Under existing arrangements such a process can take an unconscionable length of time. In the case of Terminal Five at Heathrow, 12 years elapsed between the request for planning permission and BAA being given the go-ahead.

However, a bill currently going through Parliament seeks to curtail the procedure for large projects by allowing for the appointment of more than one inspector to take evidence. The Act is expected to receive Royal Assent next Spring which means, in theory, that any planning inquiry into the construction of a runway should not take more than a year or two.

By the time of the next election, in 2005 or 2006, it is possible that the bulldozers will be poised to begin their work.

Whichever is chosen there will be protests, many of them spectacular and telegenic.

It is argued that the electoral damage would be far worse in the populous Heathrow area, where protesters are threatening "direct action" to prevent the construction of a third runway. Disruption there would have far more political resonance, it is thought.

However, Steven Grigg of the University of Birmingham, who has researchedairport protest, says the Government should not underestimate the anti-Stansted group which is "well-organised and well-led".

Downing Street points out that apart from Braintree and Harlow, most of the constituencies around Stansted are no-go areas for Labour. Most of them are impenetrably Conservative and therefore electorally inconsequential.

There is more to lose in the Heathrow area even though many of the seats in the immediate vicinity are held by Conservatives and Liberal Democrats. Among the Labour-held seats in west London are Hayes & Harlington, Feltham & Heston and Brentford & Isleworth.

Ministers are aware that whichever decision they make, airport expansion is a vote-loser. Those who live near the extra runway are likely to vote against the Government and those who use the extra capacity will fail to notice the difference.