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Special Report - Restricting Growth

Special Report - Infrastructure

The UK Government’s decision to rule out London Heathrow’s third runway for the foreseeable future will hit the UK economy hard.

Heathrow currently serves about 180 destinations, which seems impressive enough until the 1990 total of 227 destinations is presented. With no third runway, the figure is predicted to drop to 147.

The cycle of a declining network could have a dramatic effect, especially considering that rival European hubs are all expanding their connectivity. Frankfurt will serve an astonishing 360 destinations by 2030 thanks to a new runway that will become operational later this year. Madrid Barajas has benefited from a $3 billion‑plus investment that has provided two new runways along with an additional terminal. And Flybe CEO Jim French says his decision to codeshare with Air France was driven by restrictions in the UK southeast and the opportunity to use Charles de Gaulle Airport in Paris as a hub.

British MP and member of the Transport Select Committee Paul Maynard says that in a dynamic environment such as aviation there are only two options: shrinking or growing. “There can be no treading water,” he says. “Heathrow’s crisis is now. Heathrow may remain the UK international gateway but there is no guarantee that it will remain a global hub.”

In a pamphlet entitled UK Aviation on the Precipice, Maynard says operating at 98% capacity means Heathrow is not only less resilient but will also lose out on connections with emerging economies. Increasingly, routes with countries such as China are better served from other hubs in Europe or from secondary gateways via the Middle East.

If constraints forced UK passenger numbers to remain at today’s levels it is estimated that by 2020 the Exchequer would lose $16.3 billion (GBP10 billion) in additional tax revenues, according to the Airport Operators Association in its report, Airports Providing Lift to an Economy in Recovery. Also at risk are the exports between the UK and non-EU destinations handled by Heathrow. This is worth nearly $49 billion (GBP30 billion).

Looked at from another angle, about three-quarters of overseas visitors to the UK arrive by air. The UK’s 37% growth in tourism between 2000 and 2010 was less than half of that of Germany’s. And in 2010, France attracted eight times more visitors from China than the UK, although this could be more to do with the UK Air Passenger Duty, which, together with a visa, means a Chinese visitor would pay nearly $200 more to use Heathrow rather than Paris’ Charles de Gaulle gateway.

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