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One hub or none

15 November, 2012

Categories:
Airport (general)
Capacity/Economy

New research from Frontier Economics shows the lack of capacity at Heathrow airport is already costing the UK up to £14bn a year in lost trade and this figure could rise to £26bn a year by 2030.

The figures form part of a new report “One hub or none” published by Heathrow today which marks the airport’s first contribution to the aviation capacity debate since the establishment of the Government’s Airports Commission. The report explains why a hub airport is different and uniquely valuable to the UK. It also sets out why two hubs or ideas for a split hub like ‘Heathwick’ won’t work. And it concludes that the UK’s connectivity needs can only be met by a single UK hub airport, which means either expanding Heathrow or replacing Heathrow with a new hub airport. It shows beyond doubt that it is impossible for other non-hub airports such as Gatwick, Stansted or Birmingham to close the £14bn trade gap.

Heathrow operates at 99% capacity. There is no room to fit in new trade routes to the emerging economies which are important for future economic growth. That lack of capacity is affecting the UK’s competitive position. There are 1,532 more flights to the three largest cities in mainland China from Paris and Frankfurt than there are from Heathrow. The UK’s connectivity gap with China has also widened in terms of destinations. UK businesses cannot fly directly to seven destinations in mainland China - Chengdu, Hangzhou, Wuhan, Xiamen, Nanjing, Shenyang or Qingdao – that are now served by other European hubs.

Daily, direct flights bring in twenty times as much trade as routes which are not direct or as frequent. Only a hub airport can provide these links. Hub airports use transfer passengers to pool demand from different countries to support direct and daily long haul routes that would not be viable using local demand alone. Point to point airports, which rely on local demand, cannot support these routes.

Heathrow welcomes the growth of point-to-point and regional airports. But the expansion of point-to-point airports is not going to solve the UK’s connectivity problem. As the UK’s only hub airport, Heathrow serves 75 destinations that are not supported by any other UK airport. Only a hub airport can provide the range and frequency of long-haul direct services that UK air passengers want.

Some people have put forward the idea of dual hubs (for example Stansted and Heathrow both operating as hubs independently of each other) or split hubs (for example Heathrow and Gatwick being joined via a high-speed rail line, dubbed ‘Heathwick’). Today’s report explains why neither of these options is viable.

Hubs rely on the ‘home carrier’ to support them. The UK only has one major network carrier, British Airways. A dual hub using Heathrow and Gatwick was tried by BA in the 90s. It didn’t work. BA has since taken every opportunity to consolidate its operations at Heathrow, where it can reap the synergies of single-hub operation and use the transfer traffic to support routes. Without a major network carrier at a new, second hub other airlines won’t locate there since they won’t have the home carrier’s short-haul network and transfer passengers to support their long haul operations.

A split hub will not work either. Hubs must have an efficient - and quick - way for passengers to transfer between flights. The best European hubs can transfer passengers between planes in 45 minutes. A link between Heathrow and Gatwick would mean passengers spending 100 minutes moving between planes. That is simply too long for a ‘Heathwick’ type solution to be competitive. And that is before looking at the additional complexities of how to transfer bags reliably or the cost of the link.

Colin Matthews, Heathrow’s Chief Executive, said:

“If anyone was still in doubt about the importance of aviation to the UK economy, today’s report should lay those doubts to rest. We’re already losing out on up to £14bn of trade a year – and that could almost double by 2030. The new work we are publishing today shows that only a single hub airport can meet the UK’s connectivity needs and the choice is therefore between adding capacity at Heathrow or closing Heathrow and replacing it with a new UK hub airport.”

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Heathrow Airport media centre
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Richard Scott
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