The UK is at serious risk of missing out on trade with emerging markets worth £14bn during the next decade because of inadequate aviation links, according to a report.
The inability of London’s overstretched Heathrow airport to support more flights to developing countries may already be costing the UK £1.2bn each year as trade goes to better connected European competitors such as France and Germany, according to the report by consultants Frontier Economics.
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The UK is at serious risk of missing out on trade with emerging markets worth £14bn during the next decade because of inadequate aviation links, according to a report.
The inability of London’s overstretched Heathrow airport to support more flights to developing countries may already be costing the UK £1.2bn each year as trade goes to better connected European competitors such as France and Germany, according to the report by consultants Frontier Economics.
BAA, the airports operator that owns Heathrow and which commissioned Frontier’s report, urged the government to quickly finalise a “credible aviation policy” that would back efforts by the UK to increase trade with fast-growing emerging markets such as China.
BAA reluctantly accepted ministers would not reverse their decision to scrap plans for a third runway at Heathrow, which is already operating at full capacity but the company insisted there were short-term measures that could boost the airport’s ability to provide more flights to developing countries.
One controversial idea BAA is interested in is “mixed-mode” operations at Heathrow, whereby the two existing runways could be used simultaneously for take-offs and landings, to increase the number of flights. Such arrangements could be unpopular with local residents and the government is against mixed-mode operations.
Frontier’s report concludes UK businesses trade 20 times as much with developing countries that have a direct daily flight to Britain compared with those nations that have less frequent service or none at all.
However, the report says Heathrow’s infrastructure is unable to support more flights to emerging markets that are expected to enjoy higher levels of economic growth during the next decade compared with developed nations.
“We estimate that the existing constraints at Heathrow may prejudice UK trade with the emerging markets to the order of £1.2bn a year,” Frontier says.
“Considering the forecast economic growth of these markets, this loss could increase to the order of £1.6bn a year by 2021.” Frontier estimates the net present value of the trade that the UK could miss during the next decade to be £14bn.
Heathrow already serves fewer emerging markets with daily flights than airports in Frankfurt and Paris. For example, Heathrow does not have flights to Guangzhou in the Pearl River Delta, China’s main manufacturing centre.
Heathrow is Europe’s busiest airport by passenger numbers but Frontier predicts it could fall behind Frankfurt and Paris by 2021.
Emma Gilthorpe, BAA’s director of regulation, said the company accepted a third runway at Heathrow was off the government’s agenda. “What we are asking for is a credible aviation policy, and quickly.”
The government has promised to produce a new aviation framework by 2013.
Theresa Villiers, aviation minister, said a successful Heathrow would be a “key part of any aviation strategy”. She added the government was “determined to deliver a new approach to aviation policy: one that ensures the aviation sector both supports economic growth and addresses the environmental impact of flying”
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