UK could lose “global hub” status

heathrow control tower sunsetHeathrow CEO Colin Matthews has warned the Airports Commission that the UK could lose its global hub status, and be relegated from the “premier league” of international connectivity.

Mr Matthews told an oral hearing of the Commission that the current situation with five European hubs – Heathrow, Paris, Frankfurt, Amsterdam and Madrid – is unlikely to last, as airlines continue to consolidate and rival airports in Europe and the Middle-East expand to compete for transfer passengers.

Mr Matthews explained that Heathrow is one of only six airports in the world with regular, direct connections to more than fifty long haul destinations. But he said that airlines are consolidating into fewer and larger carriers, which are then concentrating their operations at fewer and larger intercontinental hubs. Mr Matthews believes that in Europe it is highly questionable whether all current hubs will survive.

As the network airlines become more concentrated at hub airports, so does the transfer traffic. Without transfer traffic, regular and direct long haul routes to all but a few tourist destinations become unviable, said Mr Matthews, and the home country loses out on the jobs and economic growth that come with links to other economies.

Hub airports in continental Europe and beyond are expanding rapidly, as they attempt to suck transfer passengers from rivals such as Heathrow and support their own network carriers. Heathrow’s four European rivals have either committed to, or are developing, plans for enough runway capacity to serve an average of around 700,000 flights a year, nearly 50% more than Heathrow’s current limit of 480,000.

Recent analysis by the OECD noted that the capacity constraints at Heathrow mean London is already “under-performing in long-haul connectivity relative to its local market”, indicating that Heathrow could be operating to at least 20 more long-haul destinations, given the size of London’s metropolitan population.

Colin Matthews told the Commission that the UK still has one last chance to keep its status as a leading international hub. He told the hearing that despite Paris and Frankfurt being set to push Heathrow into third place in Europe within a decade, London is still in a prime position for global aviation, has strong local demand from a large and global city and is home to one of the world’s most important network airlines and alliances in the shape of BA and oneworld. Indeed, with additional capacity, Heathrow could be providing regular direct connections to 40 more long-haul destinations by 2030, particularly to long-haul emerging market destinations that are important for economic growth.

Mr Matthews added that any move away from the current hub airport model was extremely unlikely, dismissing suggestions that point-to-point and hub models could be integrated, or that low cost carriers could move into long haul markets.

Heathrow CEO Colin Matthews said: “These straightened economic times have triggered a global economic race, with both companies and countries competing fiercely. If the UK does not want to be left behind by its foreign rivals, it must have the connectivity to compete and trade on the world stage. That connectivity can only come from a single hub airport in the right place for taxpayers, passengers and business. Only Heathrow can meet all these demands.”

Mayor of London Boris Johnson would agree with nearly all of Mr Matthews’ comments, except that relating to Heathrow’s suitability for expansion. He recently presented a report suggesting that a hub airport was vital to the UK’s economic future, but said that Heathrow was not the place for it.

Heathrow supports between 114,000 and 250,000 jobs in West London, according to various estimates. It is likely all these would be lost if the UK’s hub airport were sited elsewhere. Some people suggest that the Heathrow site could be redeveloped to more than replace those jobs, providing enough office and industrial space for occupiers to make up the gap. Others suggest that companies would choose to locate near an airport, and Heathrow redeveloped as commercial space and new homes would be a white elephant.

 

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