Summary
London's Mayor opposes the expansion of Heathrow airport and instead proposes a new airport in the Thames estuary. It is claimed the airport could be open in 10 yrs and cost £40bn.
However, the initial proposal is for a one or two runway airport that would eventually be extended as demand increases. However, what London needs is a large 3-4 runway hub airport now - two airport hubs don't work and London already has 5 airports.
Analysis
London has five airports each fulfilling different roles. Heathrow is the largest international airport in the world. The majority of its passengers are travelling long haul and around a third are interchanging (many from UK domestic flights). It is operating at 99% capacity and unlike its major continental rivals has only two runways. Heathrow is the world's busiest two runway airport and Gatwick the world's busiest one runway airport highlighting the need for additional airport capacity in the London area.
The biggest demand for growth is at Heathrow, shortage of slots mean they change hands on the grey market for $10m plus, depending on time of day. Major carriers that want to operate out of Heathrow are unable to do so. Air India set up its European hub at Frankfurt mainly because it could not obtain its desired slots at Heathrow.
Long Haul Airlines tend to want to operate out of hub airports as the interlining passengers help to sustain new or thin routes that the local market alone is unable to do so. What London needs is an expansion of its existing hub airport (Heathrow) or a new hub airport which would need 3-4 runways.
It does not need a new 1-2 runway airport in the Thames esturay that provides only new capacity for point to point services. This type of demand can be more readily and cheaply met by expansion of Stansted or Gatwork.
For a new airport in the Thames to work it needs to be a 4 runway airport with a 100m passenger capacity from day one enabling a full hub airport service to be provided. The present idea is ill-conceived with little understanding the aviation sector's needs and finacially is not viable.
John Siraut consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
