Expand Heathrow, lower prices

A report suggests that capacity constraints at UK airports are adding £95 to an average return flight.

The report by Frontier Economics suggests that political inertia on the need for more capacity is increasing ticket prices for air travellers.

Heathrow has been unable to add more flights for a decade but demand has continued to increase, pushing up prices. The research by Frontier Economics estimates that passengers travelling through Heathrow are already paying an average of £95 more for a return ticket than they would do if Heathrow had a third runway. In future un-met demand will be even greater, and Frontier Economics estimates that by 2030 the average return ticket price could be £300 less with Heathrow expansion than with a two-runway Heathrow.

The figures take into account the costs of building a third runway and suggest that the savings delivered to consumers by additional capacity are far greater than the costs of construction. The Airports Commission estimates that the costs of building a new runway are around £20 per return passenger.

Colin Matthews, Heathrow’s Chief Executive, said: “This research shows that not building a third runway at Heathrow will add hundreds of pounds to the cost of a family holiday, be a disincentive to doing business in the UK, and increase the cost of the goods and services that are imported and exported through Britain’s most important trade gateway.

“This additional burden on both the cost of living for families and on businesses is entirely avoidable. The private sector stands ready to invest in the infrastructure Britain needs. Government has it within its power to lower prices for consumers by taking a clear decision to support expansion and end the years of prevarication that are now causing fares to rise and routes to be constrained.”

Frontier Economics’ detailed study also concludes that expanding Heathrow could add 40 new direct connections to London as a whole, with many of those routes going to destinations in rapidly growing economies such as Calcutta, Lima and Mombasa.

Heathrow has already made a commitment that it would work with government and airlines to ensure that expansion delivers improved air links between Heathrow and other parts of the UK – destinations such as Inverness, Liverpool, Newquay and Humberside could be connected to the UK’s hub. In contrast, say Heathrow, adding a second runway at Gatwick would only add between five and seven new routes, mainly to package holiday destinations.

The report argues that there would be even greater benefits to passengers if both Heathrow and Gatwick were allowed to expand, since having spare capacity at both airports would allow the greatest scope for competition. Heathrow has steadfastly said it is not opposed to expansion at Gatwick, as long as it is not “at the expense of the urgent and pressing need for more hub capacity to connect the country to emerging markets”.

Place West London are holding a half day conference focussed on the future of Heathrow, looking at the three options currently being considered by the Davies Commission – extra runways, extended runways, and closure – and their potential effect on the West London economy. See full details.

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