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Soapbox - The Power of the Hub

Investment in a single hub airport can boost economic growth - by Colin Matthews, Chief Executive
Heathrow Airport

Colin Matthews - CEO Heathrow Airport

The United Kingdom has been home to the world’s busiest international airport since the dawn of the jet age. With people from all over the world traveling through the United Kingdom to reach their final destination, the country has become a global center for service industries such as insurance, law, and finance.

And the United Kingdom has prospered as a result. Heathrow is its only hub airport and has been supporting the country’s trading position for decades. As a hub airport, Heathrow pools demand from around the United Kingdom with that of nearby countries. By combining local passengers with transfer passengers, Heathrow can support many more long-haul destinations than any other UK airport. Regional airports—such as Manchester or Birmingham—serve important, but different, needs.

These airports are not equipped to use transfer passengers as a way of supplementing the ups and downs of local demand and so they cannot support frequent, direct links to far-flung economies. These long-haul connections are vital for economic development, facilitating economic growth through trade, foreign investment, and tourism.

Yet the country’s competitive advantage will end sometime in the next decade if Heathrow is overtaken by Paris, Amsterdam, Frankfurt, or Dubai as the busiest airport for international passengers. Each of these cities competes directly with the United Kingdom for inward investment and jobs. And being at full capacity, Heathrow can’t keep up with them.
Unless action is taken, Heathrow’s relative decline, and its resulting inability to offer the range of destinations businesses need, will make the whole of the United Kingdom a less attractive place to do business.

In setting up its Airports Commission, the UK Government has recognized that maintaining the country’s aviation status is critical to economic success.

Some argue that if having one hub is good, then having two, say Stansted and Heathrow, must be better. In reality this will not work. Splitting the pool of transfer passengers available to fill flights undermines the viability of long-haul routes. Tokyo’s attempt to operate hubs at both Haneda and Narita airports saw it slip from first to seventh in Asian city connectivity rankings. Montreal’s attempts to operate two hubs saw one become an expensive white elephant. And New York, with eight million inhabitants and two international airports, is less well connected to long-haul destinations than Frankfurt, with a population of 600,000. 

London Mayor Boris Johnson and Heathrow are often cited as being on opposing sides of the aviation capacity debate. In fact, there is agreement on the importance of a single hub. In October 2012, Johnson said: “There is absolutely no point in simply scattering new runways randomly around. What this country urgently requires is a hub airport with several runways that will solve the pressing need to increase hub aviation capacity.”

The United Kingdom needs a single hub. The government has three options: add capacity at Heathrow; close Heathrow and build a new hub airport elsewhere; or do nothing and see the economic prosperity of the entire United Kingdom suffer.

This challenge of capacity that the United Kingdom faces should serve as a salutary reminder of the importance of air transport for governments worldwide.

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