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Lack of capacity at Heathrow costs £14 billion

Heathrow AirportAccording to a report commissioned by Heathrow Airport, its lack of capacity is costing the nation’s economy some £14 billion a year.  The report also noted that this figure could increase to £26 billion a year by 2030.  This comes amid controversy about airport capacity in the south-east, and the government has ruled out building a third runway at Heathrow for now.

To help it figure out how to deal with the UK’s airport capacity needs, the government has commissioned Sir Howard Davies to lead a team that will advise it on the matter.  The commission is due to present an interim report by the end of next year, and a full report will be published in the summer of 2015, following the next general election.  In response to this commission, Heathrow delegated consultants Frontier Economics to prepare the ’One hub or none’ report, but it’s not a formal submission.

Hub airports bring in passengers from other airports so the travellers can connect on flights to their final destinations.  At Heathrow, about one-third of passengers do this, and the airport’s report says that the decision for the UK isn’t between two hubs or one.  Rather, it’s between one hub or none (hence the report’s name).  It explains that one airport can operate as a hub and says the government can: (1) do nothing and allow the country to fall behind its rivals; (2) add more capacity at Heathrow; or (3) close the airport and replace it with a new, bigger hub.

The report reviewed the number of connections and passengers there would be with more capacity at Heathrow Airport and compared it with the number of passengers there would be without new runway capacity.  After this, it calculated the level of trade being missed out on due to the gap in connectivity.

Colin Matthews, the chief executive of Heathrow Airport, says that this report should lay to rest doubts about the importance of aviation to the nation’s economy.  The new work they are publishing demonstrates that just one hub airport can meet the country’s connectivity needs.  Therefore, the decision is between adding capacity at Heathrow or shutting the hub down and replacing it with a new one.  He added that connecting traffic is the mechanism that makes routes economically feasible.  A lot of routes would be impossible if the feed can’t be offered.

However, campaign group Hacan chairperson John Stewart say there’s no evidence that the economy in London will lose if Heathrow Airport doesn’t expand.  This is because of the capital’s importance as a business destination.  The hub has the most terminating passengers of any worldwide airport, so it doesn’t need the extra passengers brought in by an expanded hub to make it commercially feasible to operate many flights to major business destinations.

Gatwick Airport also doesn’t agree with the report in that it believes a new runway for itself would be more practical and affordable than other options.  Its bosses also say a Gatwick runway would give passengers more route choices to major destinations.  Such development would have a substantially lower impact on the environment compared to a Heathrow expansion as well.  The Airports Commission needs to forget Heathrow’s monopoly past and look to the future.  It will have to decide if a competitive network in London – delivering lower prices and more convenience, connections and choice – is preferred over supporting an unnecessary and outdated expanded Heathrow.

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