FFE Magazine

London’s Heathrow Builds Third Runway

LONDON (Dow Jones) – London’s Heathrow airport made its case to remain the UK’s main hub by building a new runway, arguing that the only alternative that wouldn’t undermine the country’s competitiveness would be to build a brand-new airport near the British capital.

The world’s busiest airport by international passengers operates at 99% capacity but calls from airlines and business lobby groups for the construction of a third runway have been rejected on environmental grounds by the UK government, which has set up an Airports Commission to review all options.

Heathrow Airport Holdings Ltd., formerly BAA, said lack of capacity has already resulted in the loss of trade to European rivals such as Paris and Frankfurt which, for example, offer many more routes and flights to mainland China than the UK.

”We’re already losing out on up to GBP14 billion of trade a year because of poor connections – and that could almost double by 2030,” said Colin Matthews, Heathrow’s Chief Executive.

The airport’s report, ”One Hub or None,” argues that two hubs or a split hub is not the answer because daily, direct flights bring in twenty times as much trade as routes which are not direct or as frequent; hubs rely on their ”home carrier” to support them, in this case, International Consolidated Airlines Group’s (ICAGY, IAG.LN) British Airways, which has already tried and failed to operate from a dual hub; and point-to-point airports just can’t offer the feeder facilities long haul carriers need.

Heathrow said that if it had a spare runway capacity it could immediately add up to 43 additional regular flights to emerging market and other long haul destinations.

Heathrow doesn’t identify where a replacement hub could be located – the most expensive alternative proposed so far is a new airport in the Thames Estuary outside London, championed by Mayor of London Boris Johnson.

Virgin Atlantic, which has only recently launched a UK short haul business to pickup more traffic on its long haul routes out of Heathrow, welcomed the airport’s report.

”This report makes a compelling case for a single hub airport to address the UK’s hub capacity crisis. We are sure the Davies Commission will find it a useful contribution to its thinking,” a Virgin Atlantic representative said.

”The UK needs one hub airport, with sufficient capacity to allow the UK to be competitive and reap the benefits of the connectivity air transport provides,” the representative added.

Heathrow, which is part owned by Spain’s Ferrovial SA, is currently in the process of selling Stansted Airport, to satisfy competition concerns after a four-year battle with regulators.

Manila Bulletin || 15 Nov. 2012

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