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Economic benefits?

The main argument used by people who want expansion at Heathrow is that it is needed for the good of the economy. They say that the economy of London and the UK will suffer if the airport is not expanded.

These papers assess whether that is really true –

· Economic benefits of Heathrow Expansion - an assessment [290.54KB]

· Aviation and the Economy [134.95KB]

· CE Delft Summary Report [102.93KB]

The Economics

Current airport

• Fewer than 26% of users of Heathrow are travelling on Business(1).

• 35% of people travelling to Heathrow are interchange passengers – they never leave the airport. Therefore they contribute little to the UK economy outside of the aviation industry.

• 100,000 flights a year, nearly a fifth of all flights, are to destinations in the UK or near-Europe where there is already a viable rail alternative. There are 60 flights per day to Paris – more than any other destination. 36 flights a day go to Manchester, more than to Hong Kong or Chicago.

• London’s airports handle 128 million passengers a year – that is more than use the airports serving Paris and Frankfurt combined.

• Ferrovial, the Spanish owners of Heathrow, make a substantial profit from passengers using the airport. In the year since Ferrovial bought BAA (the operators of Heathrow) – capital investment fell by 15% but revenue grew from £1.077 billion to £1.232 billion.

Heathrow Expansion

• Only 1% of members of the Institute of Directors think airport expansion is a priority(2).

• 78% of London firms are against expansion at Heathrow(3).

• Fewer than a sixth of London firms would even consider leaving London if the airport did not expand(4).

Aviation generally

• £9 billion a year in tax subsidies is given to the aviation industry (It is zero-rated for VAT. It does not pay on fuel).

• Aviation fuel costs 26p a litre whereas petrol for cars is about £1 a litre.

• £9 billion would pay for 22 new hospitals(5) – it cost £400 million to build London’s University College Hospital – or 450,000 nurses (current nursing positions advertised at £20,000(6).

• 89% of the general public think that businesses that create pollution should be more heavily taxed(7).

• 63% of the general public would be prepared to sacrifice one foreign holiday a year to save the planet(8).

• Only 17% of the general public are opposed to constraining growth in air-travel(9).

• Tourists visiting the UK spend at least £15 billion pounds less per year than UK tourists going on holiday overseas. Expanding aviation simply means increasing the trade deficit for UK tourism.

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1 The Times Business Section 07/08/07
2 Transport Matters Survey by the IOD – January 2007
3 London Chamber of Commerce Survey 2006
4 As above
5 Cost of Assets listed in UCH London Hospital NHS Foundation Trust 12 month accounts 05 – 06, p.17
6 Derived from NHS website advertised nursing position salaries August 2007
7 Communicate Research for the Sun Newspaper – 6-7 Sept 2006
8 Communicate Research for the Sun Newspaper – 6-7 Sept 2006
9 Ipsos Mori Survey – July 2006

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