Heathrow announces new measures to connect UK nations and regions to global growth

Heathrow

By Heathrow

Published 23rd March 2015

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Heathrow has announced a new package of commitments deliverable with expansion, designed to connect the UK’s nations and regions to growth markets around the world. Taken together they have the potential to deliver billions of pounds worth of trade and investment opportunities, reversing a lost decade of connectivity which has seen regional connections to long-haul markets squeezed out of the UK’s hub airport.

Highlights from the new commitments include:

  • New package of commitments conditional on expansion enabling up to nine new air links to Heathrow and increased frequency on seven existing routes

  • New £10 million Heathrow Route Development Fund

  • A review of airport charges to help play our part in keeping existing domestic routes commercially attractive to airlines

The move comes at a time when Amsterdam Schiphol has more links to the UK’s nations and regions than Heathrow and Gatwick combined. As a result, Schiphol has gained traffic that would otherwise support new long haul routes, jobs and economic activity in the UK.

The measures would boost the seven existing routes, offering the potential for better timed and more frequent flights. In addition, our analysis indicates that passengers would be able to fly from nine domestic airports not currently served by Heathrow, meaning that a total of at least 16 regional airports will have the opportunity of direct links to the UK’s hub.

Heathrow’s commitments to help boost regional links

The commitments include:

  • A review of airport charges to help play our part in keeping existing domestic routes commercially attractive to airlines from January 2016;

  • Establishing a new Heathrow Route Development Fund. £10 million in start-up capital for airlines to support five new routes for three years;

  • Partnering with UK airports, LEPs, Chambers of Commerce, national and regional governments to work with airlines to establish new domestic routes through Heathrow;

  • Working with government to re-designate public service obligation (PSO) routes to Heathrow, the only airport that can connect them to and through London to growth markets across the globe;

  • Working with any organisation that wants to operate Northolt as a satellite runway for UK routes until Heathrow is expanded.

The commitments announced today have been informed by the recommendations of the National Connectivity Task Force, set up in May 2014 with a remit to recommend how connectivity between the UK’s nations and regions and the major airports in the South East can be enhanced.

They build on a previous announcement by easyJet that it plans to operate from an expanded Heathrow, competing on several existing domestic routes and providing new links to four airports across the UK.

Airports Commission analysis has already revealed that an expanded Heathrow will deliver up to £114bn in economic benefit outside London and the South East, double the amount that would be delivered by an expanded Gatwick.

Flybe welcomes Heathrow commitments

Commenting on the commitments, John Holland-Kaye, Heathrow CEO, said: “Expanding Heathrow could deliver close to 80,000 jobs and up to £114 billion of GDP outside London and the South East.”

“We have been listening to businesses, politicians and now to the National Connectivity Task Force, and today’s announcement shows that we have a plan to deliver what Britain needs. Only Heathrow can connect all of Britain to global growth.

“That’s why we are best for Britain and backed by Britain. Let’s get on with it.”

Saad Hammad, Chief Executive of Flybe said, “Flybe welcomes the commitment of Heathrow to enhance regional connectivity both within current runway capacity constraints and in the event of new runway development.”

“As the UK’s largest regional airline, operating Flybe services from 37 UK airports, we are in a prime position to connect the country via Heathrow.

“Our national hub in the South East must address the needs of all the nations and regions of the UK not just those living within the boundary of the M25. Key to this is an airport pricing regime that encourages regional connectivity alongside guaranteed slot availability for regional connecting services.

We are delighted that Heathrow has listened to the issues faced by the UK regions and is taking practical steps to be more inclusive.”

Find out more:

Notes:

  • Today, domestic destinations already served by Heathrow include: Aberdeen; Belfast City; Edinburgh; Glasgow; Leeds Bradford; Manchester; and, Newcastle. In addition, EasyJet has backed Heathrow expansion and indicated its plans to increase competition on several existing routes and establish four new air links to Inverness, Belfast International, the Isle of Man and Jersey.

  • The Heathrow Route Development Fund will support five further links for airports around the country which need access to global markets but where the market doesn’t initially support those routes following expansion. Airports which could benefit from this support include Liverpool, Newquay and Humberside.

  • Public Service Obligations (PSOs) are routes from regions that are dependent on air connections for their economic and social development but airlines would not operate them if they were considering their commercial interests alone. Government pays a subsidy to airlines to enable those routes to ensure those regions are connected. There are two PSOs currently in operation, one from Newquay to Gatwick, the other from Dundee to Stansted.

  • The recent Transport Select Committee’s Smaller Airport Inquiry found that:

    • Constrained capacity at Heathrow has damaged domestic air connectivity from smaller airports.

    • Smaller airports have replaced withdrawn flights to Heathrow with flights to other European hub airports. But, while airport hubs in northern Europe – Amsterdam-Schiphol, Frankfurt and Paris Charles de Gaulle – are attracting more transfer traffic from the UK, Heathrow remains a key access point to international and long-haul travel for many passengers from smaller airports.

  • The value of regional links to Heathrow is demonstrated by the fall in passenger numbers at smaller airports where these links are withdrawn. For example, Durham Tees Valley airport experienced a 75% reduction in overall passenger numbers following the withdrawal of its Heathrow service in 2009.

  • PWC analysis for the Airports Commission has shown that Heathrow expansion will deliver greater economic benefits beyond London and the South East than any other option – £114bn of economic benefits to Scotland, Wales, Northern Ireland and the English regions. The rest of the UK would receive more than twice as much economic benefit by expanding Heathrow as by expanding Gatwick.

  • Independent report by QUOD, commissioned by Heathrow, confirms over half the gains from forecasted economic benefits and job creation will be made outside of London and the South East (see table below). Their assessment is based on the Airport Commission’s baseline scenario for future growth and remains a conservative estimate of the potential economic and employment benefits that could be delivered by a new runway at Heathrow.

  • Further scenarios developed by the Commission estimate the total economic benefit of Heathrow expansion at £211 billion across the UK – almost £65 billion more than the baseline adopted for QUOD’s analysis – and up to 179,600 new jobs across the UK demonstrating that significant additional value could potentially be secured.

  • The Commission says the additional value to the economy of choosing Heathrow over Gatwick could be as much as £97bn

Heathrow

By Heathrow

Published 23rd March 2015