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Inaction on Heathrow expansion could jeopardize growth of Northern UK Powerhouse

Jun 15, 2016

Heathrow’s capacity constraints mean the Northern Powerhouse is losing out on £710m a year in trade as passengers are forced to travel via other international hub airports instead.

In a keynote speech at the International Festival of Business, Mr Holland-Kaye trailed new research by Frontier Economics. It reveals that the cost of inaction on airport capacity to the economy of the North equates to £710m in lost import/export trade every year, based on the first analysis to show that flying via a hub airport abroad, rather than via Heathrow, generates less trade for the British economy.

If Heathrow wasn’t constrained, then more passengers flying to and from the UK regions could fly via Heathrow instead of having to fly via another international hub. And this could help facilitate an additional £1.7bn in trade each year.

Heathrow's role is to connect the northern powerhouse to countries and cities where there is not enough demand from other airports to put on the route. That's why Heathrow welcomes the continued growth of direct services from airports in the North of England including Manchester, Newcastle, Liverpool and Leeds including new flights from Manchester to Beijing and Newcastle to New York. Heathrow helps to ‘fill in the gaps.' But with the UK’s hub airport at capacity, many people in the UK have to rely on booking connections via hubs in Europe, Istanbul and Dubai to reach long-haul destinations with only one stop.
Today’s figures therefore represent the ‘tip of the iceberg’ in terms of the total cost to the UK of a lack of connectivity to Heathrow from the regions, as they don’t factor in the trade that would be enabled as a result of the new domestic connections that an expanded Heathrow could provide – for example, to Liverpool John Lennon Airport, Robin Hood Airport Doncaster Sheffield and Humberside Airport in the Northern Powerhouse, or the 40 new long-haul routes expansion would provide.
Separately, in addition to facilitating extra trade, the research concludes that domestic hub airports – of which Heathrow is the only example in the UK – provide around 70% greater frequency of flights to other domestic airports than is offered by international hubs. Heathrow is therefore better placed than foreign hubs such as Paris, Amsterdam and Frankfurt to connect Britain’s regional economies to growth markets.
The findings further ratify the Airports Commission’s unanimous and unequivocal recommendation: that expanding Heathrow is the best choice for Britain.
John Holland-Kaye, Chief Executive Officer at Heathrow Airport, said:
“Heathrow is the right choice for a long-term plan to back every corner of the UK. The Government is going to struggle with the foundations of the Northern Powerhouse if a third runway isn’t built to support the region’s existing connectivity. To rebalance and strengthen the British economy, the UK needs a domestic hub airport that can compete with our unconstrained hub rivals abroad, and that’s something only Heathrow can deliver.”

Heathrow has committed £10m to a Route Development Fund, which will provide start-up support for new domestic destinations. It will enable up to five new routes to be established following Heathrow expansion, with routes from airports like Liverpool, Humberside and Doncaster/Sheffield potentially eligible.

James Ramsbotham, North East Chamber of Commerce Chief Executive, said:
“We completely agree the lack of decision on Heathrow’s expansion is extremely detrimental to the ambitions of the Northern Powerhouse. As a region in which exports and inward investment are essential to our economy, we need global links and these can only be provided with access to the UK’s hub airport. This will enable us to build on existing connections and exploit new markets across the globe.”

Inaction on Heathrow expansion could jeopardize growth of Northern UK Powerhouse

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