Heathrow’s third runway: the business outlook

The report claims that a third runway would add regular daily services to around 40 new destinations, including 10-12 long haul routes, and 250,000 more flights per year.

The expansion would come at a cost of £17.6 billion, plus up to £5 billion in upgrades to the rail and road infrastructure around the airport. The Commission came out in favour of a Heathrow expansion over Gatwick, though did say that a Gatwick expansion would be viable.

“Heathrow is best-placed to provide the type of capacity which is most urgently required: long haul destinations to new markets. It provides the greatest benefits for business passengers, freight operators and the broader economy,” said Sir Howard Davies, the Commission chair.

He said that Heathrow offers the long haul routes which are “particularly important from an economic point of view, and will be increasingly important as the UK’s trading links with emerging markets develop further, and that’s where the growth is going to be. Expansion at Heathrow gives you the best opportunity to develop that wide network further, to create the kind of connectivity that Britain’s economy in the middle of the 21st century is desperately going to need.”

Business leaders have welcomed the report, with many echoing Sir Howard’s comments about the need to connect to emerging markets. John Cridland, CBI director-general, said: “Growing airport capacity in the South East is absolutely critical to the whole of the UK’s economic future – it simply isn’t an optional ‘nice to do’. Each day the Government delays taking the decision, the UK loses out as our competitors reap the rewards and strengthen their trade links.

“Creating new routes to emerging markets will open doors to trade, boosting growth, creating jobs and driving investment right across the country. Our research shows that eight new daily routes alone could boost exports by up to £1 billion a year.”

Air freight accounts for 40 per cent of UK imports and exports, and Heathrow handles more of that by value than every other UK airport combined (68 per cent), with £101 billion worth of goods passing through the airport last year. Heathrow says that the proposed expansion will double the freight capacity of the airport.

“Britain’s only international hub airport is also better placed to boost the UK’s connectivity with key growth markets such as Brazil and China,” said Gavin Hayes, director of business lobbying group Let Britain Fly.

There have been calls for swift political action on the Commission’s findings, and warnings about the potential consequences of failing to act quickly. “Further delay will be increasingly costly and will be seen, nationally and internationally, as a sign that the UK is unwilling or unable to take the steps needed to maintain its position as a well-connected, open trading economy in the twenty-first century,” said Sir Howard.

Cridland was similarly keen for action to be taken, saying: “Now that Sir Howard’s Commission has made its recommendation, the Government must commit to the decision now, and get diggers in the ground at Heathrow swiftly by 2020.”

“The UK’s economic future cannot be kept waiting on the tarmac any longer. By taking the decision now, the Government can send the message, loud and clear, that Britain is open for business,” Cridland added.

Mr Hayes echoed the sentiment: “With Heathrow, our only international hub airport, already full for a decade and all of London’s other airports forecast to be full within the next ten years, there is no alternative but to now get on with it. As this report shows there’s no runway left for the can to be kicked along.

“First and foremost it’s now time UK political leaders put the long-term national interest over short-term political needs.”

He said that the government should “immediately” back the Commission’s view that a runway is required. Getting deeper into possible timetables, he added, “This should then be followed within six months by a statement that sets out a clear timetable for building the new runway. The Government should also commit to an early Parliamentary decision to take place by summer 2016 at the latest.”

John Longworth, director general of the British Chambers of Commerce, added that work should be under way by 2020. “The ball is now firmly in the government’s court. If ministers duck this decision, and delay airport expansion for yet another generation, British businesses and our overall competitiveness will pay the price,” he said

“Business long ago ran out of patience. The government cannot afford to delay airport expansion any further if it is serious about Britain punching above its weight on the global stage. That means delivering a new runway at Heathrow now, and leaving the door open to subsequent expansion at Gatwick, Stansted and key regional airports as well.”

Baroness Jo Valentine, Chief Executive of London First, also called for interim action. She said that, “…with any new runway a decade away and our major airports already at bursting point, there are lots of things the government could be doing right now to bridge the gap.

“This means reducing the number of planes stuck in holding patterns, cutting border queues, and speeding up rail journeys – particularly to Stansted – so people use a wider range of airports.”

She also commented on London Mayor Boris Johnson’s assertion that “It’s not going to happen.”

“We also need the Government to reverse the Mayor’s absurd decision to block expansion at City Airport,” said Baroness Valentine.

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