While Britain dithers on aviation expansion, other European countries are forging ahead

13th February 2012

As an island nation, and one with such a magnificent history of trading with international markets, the UK's air links with its economic partners are essential.

These vital arteries provide the lifeblood for the UK economy, allowing UK businesses to export their goods and services to the world and overseas companies to bring inward investment. This translates into jobs and prosperity for the whole country. All of this, however, is currently under threat. While Paris, Amsterdam, Frankfurt and Madrid build more capacity at their hub airports, Britain dithers. New data reveals the true extent of the problem. More than two-thirds of business leaders in Brazil, India, China, Mexico and South Korea report that better air connections with other European cities would make them more likely to do business there. In 2009, the British Chambers of Commerce (BCC) estimated that for every year expansion of hub capacity was resisted, the country's economy loses around £1bn. This must be compared with direct economic benefits of between £8.6bn and £12.8bn and wider economic benefits of £20bn for allowing extra runway capacity at Heathrow. Our survey data supports this, with 62 per cent of respondents saying they would only consider trading with the UK in the future if flight connections to their home markets are strengthened. The current movement, however, is in the opposite direction, with the number of destinations served by Heathrow declining by around 25 per cent over the past two decades. This trend will cause the UK to miss out on economic growth, as its inability to accommodate new routes to emerging markets is hampered. This is the view of 64 per cent of those who responded to our survey. While our members welcome the ambition displayed by the recent announcement on a possible 4-runway airport in the Thames Estuary, this so far unfunded project will take 20 years to deliver. What is to be done in the meantime to solve the UK's capacity crunch? The BCC is a strong supporter of measures such as high speed rail and better use of excess capacity at our regional airports. Indeed the former will bring Birmingham Airport to within a 38 minute journey of Heathrow providing some much-needed alleviation there. Further phases to the North of England and Scotland will also bring our airports closer together, which could reduce the need for internal flights. At most, however, this will only release around nine per cent of slots at Heathrow capacity that will be instantly consumed given current levels of demand, which see airlines selling landing rights for more than £30m per pair. In less than a third of the time and for one tenth of the cost of an estuary airport, a new runway at Heathrow would show that the UK is serious about staying connected to the world through the extra capacity it would provide. Only then will the government's boasts about Britain being open for business ring truer.

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