Heathrow expansion: Failure to act will kill the government’s Chinese trade ambitions dead

 
Mark Reynolds
Chinese investment in infrastructure. So far so good. (Source: Getty)
During Chinese President Xi Jinping’s visit to the UK last week, our government made a flurry of announcements about Chinese investment in infrastructure. From HS2 to nuclear power stations, the Chinese would help modernise the backbone of our economy.

So far so good. Notably absent, however, was any mention of aviation. Airport expansion is essential if the government’s ambitious plans to boost trade with China, much talked about last week, are to be met. The chancellor, after all, wants Britain to be China’s second-largest trading partner by 2025, something that requires increased air capacity and preferably direct air links to more Chinese cities. But Heathrow, our only international hub airport, has been full for a decade, Gatwick will be full by 2020, and most of London’s other airports are filling up fast. The only way to reach our aspirations is to build a new runway.

China gets it. That is why it has plans to build no fewer than 17 new runways by 2036, while our government is yet to decide on one new runway in the South East. Our competitors also get it. Paris Charles De Gaulle, for example, has four runways, while Heathrow is left to cope with merely the two. As a consequence, Paris enjoys 50 per cent more flights to China than us. Coupled with a more efficient visa system, this results in high-spending Chinese tourists spending eight times more in Paris than here in London.

Given London’s position as the world’s most popular international visitor destination, we should be attracting far more Chinese visitors than we are. We are limited, in part, by a lack of flights to a number of major Chinese cities with populations the same size, if not bigger, than London. There are currently no direct flights from London to Tianjin, Shenzhen and Wuhan, which all have populations of around 10m.

Critically, it’s not just our connectivity with China that’s lagging. London now has fewer weekly flights than its European rivals to seven of the eight growth economies identified by the IMF. Capacity shortages in our biggest airports mean routes that would be profitable are squeezed out. The only growth economy where we currently have more flights is India, yet it seems even this is under threat. Direct flights from London to Ahmedabad were recently axed, and this will inevitably impact on new business opportunities in the sub-continent.

Recent CBI analysis suggests Britain could lose a staggering £31bn in trade by 2030 because of the failure to increase flights to Brazil, Russia, India and China alone. Increasing our international connectivity and boosting trade and investment go hand in hand. More flights equals more trade. In fact, we trade up to 20 times more with those countries with which we have a direct air link and, by value, 40 per cent of all UK exports go via air. Indeed, using the same measure, 26 per cent of our exports go via Heathrow.

This is why, in the coming weeks, the business community will be again calling for the green light to build a new runway at Heathrow based on the Airports Commission recommendation.

Such a decision would send a strong message to the world that Britain truly is open for business.

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