A report has been published which says direct flights are critical to trade with emerging markets, that the UK could be missing on £1.2bn a year because of a lack of connections, and that Heathrow could lose its place at the top of the league of international airports within ten years.
The new economic research claims that Britain “risks being cut off from global growth” and becoming “a less competitive place to do business” because it is losing out to European competitors in the battle for flights to emerging markets.
‘Connecting for Growth’, a new report by Frontier Economics, says that a lack of direct flights to emerging markets may already be costing the UK £1.2bn a year as trade goes to better-connected competitors. This figure could rise to £1.6bn by 2021, it says – equivalent to one-third of the UK’s current balance of trade deficit. The net present value of this missed opportunity to the UK economy over the next 10 years could total around £14bn.
The report claims a direct relationship between frequent direct air connections and improved volumes of trade and investment. It finds that UK businesses trade 20 times as much with emerging market countries that have a direct daily flight to the UK as they do with those countries that do not.
However, the report warns that only a major transfer hub is able to serve such destinations, and because the UK’s hub airport at Heathrow is full, Britain is missing out on opportunities for trade and falling behind European competitors. The report finds that Paris and Frankfurt already boast 1,000 more annual flights to the three largest cities in China than Heathrow. It also finds that there are 21 emerging market destinations with daily flights from other European hubs that are not served from Heathrow; including destinations such as Manila, Guangzhou, and Jakarta.
Other emerging market airports served by daily flights from other European hubs, but not well-served by Heathrow include Caracas, Belo Horizonte, Gdansk, Kiev, Saint Petersburg, Mexico City, Ho Chi Minh City, and Shenyang.
The report warns that if Heathrow’s capacity remains constrained, Heathrow is likely to lose its position as Europe’s busiest airport by 2021, falling to third behind Frankfurt and Paris Charles de Gaule, with Amsterdam Schiphol close behind.
Heathrow is vitally important to the economic health of West London. 76,000 people work at the airport, and an estimated 75,000 other jobs in the sub-region are sustained by the presence of a world-leading airport.
Colin Matthews, BAA Chief Executive, said: “The Government has asked the question: is a hub airport important to the UK? This research answers that question with an emphatic ‘yes’.
“The opportunity for the UK to establish itself as the leader in Europe in its connections to India, China and other important markets still exists. But if Britain is not to lose out to international competitors, we need an aviation policy from Government that recognises the role of a hub airport in supporting growth – and we need it quickly.”
Stephen Phillips, Chief Executive, China-Britain Business Council, said: “The China-Britain Business Council has identified a wide array of exciting business opportunities in fast-growing regional cities across the length and breadth of China, not just in Beijing and Shanghai where there are currently direct flights. At CBBC we feel it is essential that UK companies take advantage of this potential. If British firms don’t, others will. More flights to China, and opening up direct flights from the UK to China’s regional cities, would assist British companies in seizing the huge opportunities available.”
Neil Chesters, one of the authors of the Frontier Economics report, said:“This report shows not only the importance of protecting and promoting a hub airport, but that doing so will directly support the Government’s ambitions to nurture an export-led recovery and put the UK back on the path to sustained economic growth.”