Why Heathrow really matters

Nov 30 2009 by Kevin Rowan, The Journal

WHILE there are strong industrial relations criticisms relating to the chief executive of British Airways, the CBI are to be congratulated for bringing Willie Walsh to Newcastle to debate the importance of international air links to the North East economy.

The debate about a third runway at Heathrow has focused almost exclusively on the balance between economic development and environmental impact in the South East of England, but this issue has a disproportionate impact on this region.

A third runway would add as much as £30bn to the UK economy. It is difficult to think of another infrastructure investment that could have such an impact. The fact that this is a wholly private sector funded project is another key factor to support this expansion. It is, however, the regional impact that is critical to workers and businesses here. A combination of factors has led to domestic links into Heathrow, as the UK’s premium international hub airport, reducing dramatically over the last 10 years or so.

In 1995 Heathrow supported 21 domestic airport links – today that has fallen to just six, one of which is Newcastle Airport. Those factors include the impact of the recession, demand has fallen; additional costs on air service operators, from fuel costs to increase in costs through additional taxes such as the Air Passenger Duty, set to increase next year. These factors have caused operators to concentrate on more profitable, long-haul flights, for the limited slots that they have at Heathrow.

One major factor also is the extremely limited availability of slots. Heathrow Airport is operating at 99% capacity, there is very little flexibility at all for operators to run domestic flights into Heathrow. This is one of the reasons why there are currently 21 UK domestic flights into Schipol in Amsterdam, three and a half times as many as flying into Heathrow.

BA’s six flights a day from Newcastle into Heathrow currently runs at over 80% capacity, of which over 50% are international transfer flights. A very high proportion of this is business travel. The backdrop to this is the international nature of the regional economy. The North East is the only region in the UK which consistently returns a positive balance of trade.

Over 500 North East firms, almost all the largest private sector employers, are foreign owned. Future prosperity and growth will come from significant inward investment. International connectivity is critical to our economic success.

The Conservative Party opposes the third runway at Heathrow on environmental grounds. It is difficult to understand this argument given the aviation industry is committed to 50% reduction in carbon emissions and party to the forthcoming European emissions trading scheme. It may be a potential vote-winner in the South East, but not developing Heathrow expansion could be an economic disaster in the North East.

Kevin Rowan is regional secretary of Northern TUC