The airport made its statement as part of its work with the Davies Review of aviation capacity. Heathrow argues that they support the Government’s vision for “dynamic, sustainable transport that drives economic growth and competitiveness”, and say they welcome the opportunity to contribute to the Airports Commission work to identify how to maintain the UK’s position as Europe’s most important aviation hub.
The UK has been home to the world’s largest port, then international airport, for the last 350 years. Heathrow is the UK’s only international hub airport, a national asset, providing the connectivity that has supported the UK’s leading position in the world economy. Heathrow handles more international passengers than any other global hub. The Heathrow hub provides the UK with the vast majority of its intercontinental connectivity, with direct connections to 77 destinations not available from any other UK airport. Over 90% of the South East’s long-haul passengers travelling for business fly from Heathrow.
With Heathrow already operating at its permitted capacity, the Department for Transport (DfT) forecasts say that by 2020 there will be 11m of un-served passenger demand at Heathrow and 28m by 2030. Its clear that more hub capacity is needed now.
Heathrow say while the immediate demand case for a three runway hub is very clear, the longer term forecasts also show that any potential demand case for a fourth runway is highly uncertain and may not materialise.
While Heathrow believes that the DfT forecasts provide a good high level estimate of future passenger demand, they take issue with the approach to allocating traffic between UK airports – in particular that it does not properly consider network or hub economics or account for transfer passengers.
The DfT forecasts assume that with Heathrow constrained, long haul demand, and to an extent transfer demand, will get picked up at other UK airports. In practice, say Heathrow, network economics and the related airline business model, make this highly unlikely. Instead overseas hubs and economies are the beneficiaries.
Heathrow say the issue is leading the UK Government to underestimate the very pressing nature of the hub capacity constraint and its damaging impact on UK intercontinental connectivity.
With weaker connectivity comes lost trade opportunities. Frontier Economics estimates that the UK may already be forgoing trade worth £14bn p.a., 0.9% of UK Gross Domestic Product (GDP). Once lost, these opportunities are much harder to recover as relationships, systems and investments become more entrenched elsewhere.
Similar to the DfT, Heathrow forecasts constrained traffic growth of ~0.5-1% p.a. at the UK’s hub, with growth slowing as the hub capacity constraint tightens. This low level of growth reflects the reality that Heathrow is already operating at over 98% of its 480k Air Traffic Movement (ATM) cap.
Heathrow’s own unconstrained central case forecast for hub demand growth to 2030 is 2.4% p.a. This is close to the DfT forecast for Heathrow for the same period.
Whilst the UK is already suffering from hub capacity constraint, the current political and planning landscape means that it will likely be 2024 before significant additional hub capacity could be operational in the UK, with Heathrow being the location where this can be delivered the quickest.
By 2024 the UK’s hub will have been capacity constrained for two decades and a significant proportion of the un-served hub demand will have been lost, probably forever, to other european (or middle eastern) airports.
Given the constraints on the building of any UK runways, Heathrow believes that hub demand will be somewhat lower than forecasts might suggest – since we can only build at the pace of the planning system, Dubai, Istanbul and elsewhere will grab some of the demand for connectivity and transfer passengers that UK Plc might have acquired. THis would lead to the long term demand for UK hub capacity being lower than forecasts suggest, and there not being a need for a fourth runway – R3 could be enough.
What is beyond doubt is that the UK needs more capacity now, and that government prevarication on the issue is risking the countries economic future.