British Airways calls for Heathrow expansion

Britain could benefit by more than £50 billion or £1,000 per British citizen by developing a third runway at Heathrow, the Confederation of British Industry annual conference heard Monday.

Developing an alternative airport hub at Cliffe in Kent or Stansted in Essex, would cost the country billions in lost economic benefits and net less than half of that which could be captured at London Heathrow, leading economist Dr Andrew Sentance warned.

Dr Sentance, British Airways’ Chief Economist, was speaking just days before the end of the government’s consultation on airport infrastructure.

“The government’s own figures show that a new Heathrow runway, plus one other runway in the south east of England, can meet almost 95 per cent of the extra business travel demand over the next 30 years. 

“The total economic benefits are more than £50 billion, nearly £1,000 per British citizen,” he said.

Developing a hub airport at Stansted or Cliffe would not deliver economic benefits on this scale.

“The only realistic option for maintaining an internationally competitive aviation hub in Britain is to develop Heathrow further. This cannot be done without environmental conditions and local assurances which make expansion of the airport acceptable to affected communities,” he said. 

“To be a competitive aviation hub in the 21st century, an airport needs to have three independent runways and good road and public transport access to local markets. 

“These conditions can only realistically be met at Heathrow by moving ahead with the government’s short third runway proposal. 

“Aviation is a British success story. For every one job in aviation, four more are supported indirectly across the economy.

“We have the third largest airline industry in the world after the United States and Japan. In how many industries can Britain now make that claim?” he concluded.

Airport expansion could provide over £50bn economic boost

Speech given by Dr Andrew Sentance, Chief Economist, British Airways, to CBI National Conference, Monday 25th November 2002

I am delighted to be able to contribute to this aviation debate, which reflects the importance to UK business of good aviation links. Air transport provides vital arteries for international trade and investment. Because of the international nature of UK business and because we are an island, this is particularly important to the success of the British industry and commerce.

We have a very efficient and successful air transport industry. British Airways is proud to be a key element of a national success story, particularly over the last two decades. Yes, there are some short-term problems. But taking a long-term view, British aviation has an extraordinary track record of success. We have the third largest airline industry in the world - after the US and Japan. In how many industries can the UK now make that claim? UK airlines carry the second largest number of international passengers. British Airways is the largest airline outside the US.

This success has provided the platform for the industry to make an economic contribution which goes much wider than the jobs and economic activity it directly creates. For every one job in aviation, four more are supported indirectly across the economy.

More important still, according to a report by former Treasury economists working for Oxford Economic Forecasting, aviation makes a significant contribution to national productivity growth. Good aviation links are vital for innovative high-technology and other high value-added industries, such as financial services. They provide a magnet for inward investment and encourage major international companies to locate activities in the UK. It is no surprise that the economic centre of gravity in London and the South-East of England lies to the West of London, supported by the UK’s major aviation hub - at Heathrow.

However, the industry cannot deliver these economic benefits unless it has access to the infrastructure needed to support its expansion. The question is not whether we need new runways in the South-East of England, but how many and where. We need a strategy for airport development which allows us to capture valuable economic benefits for our nation, while dealing with the legitimate local and environmental issues which are raised by airport expansion.

A key element of that strategy must be ensuring that the UK maintains an internationally competitive aviation hub. Competing hubs in Europe - Paris, Frankfurt and Amsterdam- are drawing away many of the connecting passengers who have traditionally supported the strong network of international longhaul services we have taken for granted at Heathrow. 

While the government has put other options on the table, including a new airport at Cliffe in Kent, the only realistic option for maintaining an internationally competitive aviation hub is to develop Heathrow further. To be a competitive aviation hub in the 21st Century, an airport needs to have three independent runways and good road and public transport access to local markets. These conditions can only realistically be met at Heathrow, by moving ahead with the government’s short third runway proposal. This would allow shorthaul services to use the new short runway, providing more feeder traffic for the hub - particularly from the UK regions. It would also free up space on the two main runways for larger longhaul aircraft.

This cannot be done without a set of environmental conditions and local assurances which make the expansion of the airport acceptable to affected communities. We believe a set of reasonable conditions can be set which strike the right balance between capturing economic benefits and dealing with environmental and local concerns. We have already made a number of commitments on noise and night flights to support this approach.

The government’s own figures show that a Heathrow runway - plus one other runway in the South-East of England - can meet nearly 95% of the extra business travel demand over the next 30 years. The total economic benefits attached to this expansion in business travel are over £50bn at current prices, nearly £1,000 per UK citizen. This value will through higher productivity and investment in businesses throughout the land - generating higher living standards. The benefits will not just be felt in the London area, but through improved links from the regions to longhaul services via Heathrow. And expansion can be realised within reasonable environmental limits - consistent with the government’s policy of promoting sustainable development.

The government’s consultation on airport expansion does not close until next weekend. Please make sure the voice of British business is heard on this important issue, through the CBI, other business organisations and directly. In the airline industry, we want to continue to deliver the major benefits which the UK economy derives from our activities. But we can only do that if we have access to the right airport infrastructure, and if we London Heathrow to become an internationally competitive aviation hub for the 21st Century.