In Parliament this week we made an important decision to increase the UK’s airport capacity by adding a third runway at Heathrow. The need to take action is clear as Heathrow has already reached 99% operational capacity, and is the busiest airport in Europe and 7th busiest in the world.
The UK has for many years been a leader in the aviation sector in Europe but the competition is heating up. In the 1990s Heathrow flew to more destinations than any other airport in Europe and now it has slipped to 7th place behind Frankfurt, Paris and Amsterdam. Today, all of Heathrow’s main European competitors have three or more runways, and Schiphol airport in Amsterdam has 6.
Despite falling behind, Heathrow is still responsible for around 1% of UK's GDP, and unsurprisingly, the country's centre of economic gravity is to the west of Central London with 120 of the UK's top 300 company HQs located within a 15 mile radius of Heathrow. The airport is also the biggest UK freight port by value, and supports over 100,000 jobs. Good air-links are very important for UK companies especially in areas such as financial and business services where face-to-face relationships are crucial. I have first-hand experience of this having worked internationally for most of my career, taking around 150 flights a year. Developing Heathrow into a competitive international hub is crucial for business and will mean more flights to more destinations for everyone.
The UK has a much-discussed productivity challenge and it is well recognised that improved transport infrastructure is part of the solution. The British Chamber of Commerce suggests that over a 60-year period, a new runway at Heathrow will lead to productivity increases that will benefit the economy by £8.6bn to £12.8bn.
Of course, it’s not only airport capacity which will help improve productivity. Across the country many people spend unproductive hours sat in traffic jams and we have personal experience of this with the A27. In my view the length of time taken to reach decisions on major infrastructure investment is a key factor in why our productivity is 25% less than Germany.
Infrastructure investment always has an impact on the local environment and local communities and it is important that steps are taken to mitigate these. Measures are being put in place at Heathrow with a compensation package of up to £2.6bn which includes investment of £700million to insulate homes against noise. Furthermore, pressure is already being placed on airlines to reduce aircraft noise and air pollution with binding targets that are part of the deal and an objective to get 50% of passengers to travel the airport by public transport by 2030.