A recent Lib Dem voice poll asked ‘Do you support or oppose building a third runway at Heathrow airport?’ and it was not surprising to me, knowing the history of Liberal Democrat aviation policy, that 79% opposed this proposition. But this jumps the gun. Firstly, what is a hub airport and why is it valuable to the UK? Secondly, we need to understand if there is a problem to solve, and to define that problem. And then finally, what are the realistic options on the table that should be explored that will solve the problem.
A hub airport is an airport where local passengers combine with transfer passengers to allow airlines to operate flights to destinations that could not be supported by local demand alone. Put simply, it is the most efficient way of connecting many different destinations. Typically, passengers from short-haul flights combine with passengers from the airport’s local catchment area to fill long-haul aircraft. It is this network of flights, transfer passengers and direct passengers that makes a hub airport special. They allow the UK to connect to countries where it wouldn’t sustain a direct daily flight itself. To put the importance of transfer passengers into context, on routes such as Heathrow to Hyderabad and Heathrow to Chennai, over 70% of passengers are transfer traffic. Without those transfer passengers, these direct routes which allow UK firms to export to fast growing markets, will be lost.
So with no spare hub capacity in the UK – what does this mean for the economy? New research from Frontier Economics shows the lack of capacity at Heathrow airport is already costing the UK up to £14bn a year in lost trade and this figure could rise to £26bn a year by 2030. In the medium term, the emerging markets will start creating large numbers of multi-nationals and these firms will look for EU bases. Where will Chinese firms choose? Seven destinations in mainland China – Chengdu, Hangzhou, Wuhan, Xiamen, Nanjing, Shenyang or Qingdao – now have direct flights into other European hubs and not into the UK. Why would the firm from Wuhan set up an office in the UK when it can fly its executives directly into Paris?
The connectivity gap is costing the UK economy dear, and is growing. So what are the options?
The new report out from Heathrow today is clear – the Government have three options: do nothing and let the UK fall behind; add capacity at Heathrow; or close Heathrow and build a new hub airport elsewhere.
What about split hubs? Hubs must have an efficient – and quick – way for passengers to transfer between flights. Research in the report shows why a ‘Heathwick’ type solution would be uncompetitive.
And the dual hub theory – perhaps Stansted operating to the East and Heathrow to the West? A dual hub using Heathrow and Gatwick was tried by BA in the ‘90s. It didn’t work. Our report contains examples from New York to Japan illustrating why dual hubs do not provide the connectivity required.
The task facing the Airports Commission, under the chairmanship of Sir Howard Davies, is not an easy one. That is why Heathrow is proposing 12 criteria against which the different options for future hub capacity could be assessed: a competitive hub, commercial deliverability, sufficient capacity, safe operation and airspace design, economic benefits, timing of delivery, environmental impact, noise, location for passengers, surface access, land use & urban development, and transition.. We hope that our document is useful to the Commission as they start their work. The UK deserves an aviation policy based on evidence that supports growth. Cross-party support is key to developing a long-lasting solution that provides the connectivity, jobs and growth that the UK needs.
* Nigel Milton is Director of Policy and Political Relations at London Heathrow