A WORLD-CLASS city deserves world-class aviation links. Without them, businesses and jobs will drift away. With its crowded airports, limited long-haul options and unreliable air services, London faces exactly this threat. Something needs to be done.
For some, the answer is “Britain needs a bigger hub airport”. This ideology seeks to conflate concern about Britain’s economic growth with arguments for a third runway. Earlier this week, Heathrow posted advertisements targeting MPs at Westminster Underground with a thinly-veiled threat. “UK economic growth. This is your final call.” Strong stuff.
But a hub airport cannot answer London’s needs, let alone Britain’s needs.
Heathrow already handles 70m passengers a year, 31 per cent of the country’s annual total. Business travellers in and out of London undoubtedly prefer its convenience, although the unreliability of such an over-worked asset creates customer complaints.
The Department for Transport estimates Britain will need space for 125m more passengers a year by 2030. There is no way that Heathrow, even with a third runway, can possibly answer this demand.
A third runway could, at best, handle an extra 20m passengers a year, even after 10-15 year’s delay. But where would the other 100m passengers go? And what happens while it is built?
The simple maths of the situation demands that we look beyond Heathrow for the answer, and consider how our regional airports can help.
Today, our aviation system encourages travellers from all over the country to make their way to Heathrow for even the simplest journeys. The landing charge regime caps Heathrow’s prices, despite well-documented over-demand. And the national carrier has withdrawn foreign destinations from regional airports.
This leads to a bizarre situation where 3.3m passengers from outside the southeast travel to a crowded London airport based in one of Europe’s worst traffic bottlenecks mostly for the simplest journeys to well-served, short-haul holiday destinations such as Mediterranean resorts.
Holidaymakers from Birmingham flying to Malta or Lisbon are taking the slots needed by corporate passengers in London trying to reach valuable new markets. This makes no sense. No sense for British families or for British businesses. No wonder London’s business leaders are tearing their hair out. And this situation doesn’t help businesspeople in the regions hoping to attract investment to their own local economies.
A more balanced and integrated approach would recognise that there are nine major runways outside of London that could better cater for regional passengers.
For instance, Birmingham Airport currently handles 9m passengers and it has the spare capacity to double this figure to 18m passengers today. Construction has started on a runway extension that will increase capacity to 36m passengers by 2030. If Birmingham could have its travellers back, it would free up slots at Heathrow for flights to emerging markets. Airports like Manchester, Liverpool and Edinburgh can make a similar contribution.
The government’s aviation review is an opportunity to think boldly about how to use existing resources. As a starting point, the government should look hard at the revenue regime imposed on London’s airports. Unlike other airports, income to Heathrow, Gatwick and Stansted is capped by the Civil Aviation Authority. For instance, Heathrow can earn no more than £16.99 per passenger. The more it makes from shopping, the less it can charge airlines for landing fees. This regime was meant to protect consumers from over-charging at a time when BAA owned all three of London’s airports. With Gatwick sold and Stansted on the auction block, this regime seems out of date and it works against consumers’ interests. Clearly a businessman travelling to the Far East is more valuable than a teenager seeking cut-price thrills in Ibiza. Heathrow should be allowed to charge more.
I happen to think that if market forces were freed from the dead hand of regulation, we could see Heathrow fulfil its natural role as the premier airport for a global city. Reliability would increase, there would be more slots for long-haul travel and the airport’s owners would, quite reasonably, see income increase.
Some would go further and impose a congestion charge on Heathrow. This would certainly speed up the repatriation of passengers to regional airports. I am not sure, but this is something the government should certainly consider.
My vision of British transport in the twenty-first century is one where a manufacturer in Manchester can fly straight from a regional terminal to a factory in Guangzhou on Monday, return on Tuesday and be selling goods in London on Wednesday having taken the morning high-speed train.
A modern economy demands more than one crowded airport. It needs a fully integrated transport network.
Paul Kehoe is the chief executive of Birmingham Airport.