Hamish McRae: The unstoppable growth of aviation

Going through any British airport is hardly fun. But we are dealing with a problem of success

So Heathrow, Gatwick and Stansted seem likely to be split up. That must be the odds-on bet for BAA's three London airports, following the decision yesterday by the Office of Fair Trading to refer it to the Competition Commission. The OFT said it found evidence of poor quality and high charges, and that there was a need for more competition.

Most people who have to go through the London airports would probably agree. Monopoly is almost always bad news for customers. Going through any British airport these days (with the possible exception of Prestwick, where you are greeted like a long lost friend) is hardly a bundle of fun. But Heathrow does seem to have gone downhill since BAA was taken over by firm of Spanish builders, Ferrovial, last spring. And while it might seem a bit rough to break up the monopoly so soon after the business had been sold, the possibility of an OFT reference was made clear at the time. No one forced Ferrovial to buy BAA in the first place.

So at one level this is a story about an unloved monopoly being scrutinised by the regulators, with, I expect, the predictable ending. But it is also a story at two broader levels: what is to be done about air transport for London; and more broadly still, how can the booming South-east of England best cope with the pressures of growth?

The first thing to be said about the air transport network for London and the South-east is that it works remarkably well under the circumstances. The five London airports (BAA's three plus Luton and City) handled 130 million people last year, far more than any other place on the planet. That is 2 per cent of the world's population. Most large conurbations manage with two airports, maybe three. The fact that London has five spreads the load, particularly the travelling time to and from the airport for travellers and workers alike.

Heathrow is the most efficient airport in the world in terms of land use; Gatwick in terms of runway use. The UK pioneered railway access to airports, reducing congestion in the vicinity. No one pretends that the situation is ideal and there are showpiece airports elsewhere that make ours look scruffy. But the most admired ones are pretty dinky: Singapore and Munich handle fewer people than Gatwick. But we are dealing with a problem of success.

We then should have a thoughtful discussion about the best way to manage the growth of air transport. I personally don't feel too much sympathy with people who live near Heathrow. They chose to live there. Presumably they were aware there was an airport there when they moved in and that it might grow - though actually it has grown no more quickly that most airports. Much the same argument applies to Gatwick.

The case of Stansted is different because there was a sudden expansion, from which long-standing residents will have suffered. But the plain fact is that most home-owners in London and the South-east have benefited from economic growth, not least because of the value of their homes, and rising air transport is a key part of that growth. It creates jobs. And while having housing near such jobs may not be a recipe for peace and calm I did see an estimate that Heathrow workers had on average a shorter commute than workers at any other major airport.

None of this is to down-play the truth that we should seek to manage the environmental and other costs of air transport. I think there is huge scope for both carbon offsets and carbon trading to help us enjoy the benefits of growth without increasing the weight of our footprint.

But we do have to make travel nicer. That means a thoughtful, measured customer-centric response to demand rather than a shrill politicised one. We have to make it nicer for people going through airports and nicer for workers in them. We have to make the growth as kind to the environment as is practicable.

That leads to the wider issue of managing the conflicting pressures on the environment of London and the South-east. This is a huge issue: one that involves land use, patterns of home-building, what should happen to the Green Belt and so on. The starting point is to try to understand why there should be such pressure on one particular spot, and that is not easy. The population weight of the UK seems to be moving inexorably southwards by a mile or two a year, leading to ever-greater pressure on housing and the infrastructure. So what is to be done?

One response would be to try to push the growth back. That was certainly tried from the 1940s to the 1970s. Manufacturers were encouraged to set up distant plants, plants that subsequently closed. Government jobs were moved out of the South-east - still are being moved - with the effect of crowding out private-sector jobs in the areas they go to. But these policies have in general been unsuccessful. London and the South-east have tended to continue to outpace the rest of the UK both in terms of growth of output and population.

At the other extreme would be a hands-off policy, one that has been applied with success to some specific areas, such as London Docklands. Nothing is perfect but the development of Canary Wharf must already be one of the most successful examples of urban regeneration in the world. As more residential accommodation is built on its fringes, it will become a more balanced community too. It also has the effect of re-balancing the central London area, creating another central business district to rival the City and the West End. In another 50 years London will have become a true three-centre agglomeration.

Hands-off is not appropriate everywhere, so were the expression not so devalued there should be a search for a middle way. There are two possible models for this. One, which the Government seems to be heading towards after a wobbly start, is a loosening of existing planning within a specified framework. In other words there will be certain regions, such as the Thames Gateway, where expansion will take place. But the central government will decide broadly what forms that should take.

The alternative is competing local authorities. So you would for example encourage Croydon to use its proximity to Gatwick to try to become a focus for more up-market development. If one authority became overly restrictive, as the City did prior to Canary Wharf, then it would lose out. This model would fit in well with a break-up of BAA: it would be in each airport's interest to help the economy of its hinterland and vice versa.

The big point here is that growth invariably creates strain. But anyone who worries about this, as I think we all do, needs to recall what lack of growth does. Stagnation is not much fun either.