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The future of UK flying

2017 Update for UK Aviation Growth

In 2015 we reported on the final report for the UK’s plans to support aviation growth in the country. This article can be found below. On the 30th October, Chris Grayling spoke about the progression of the expansion and we’ve highlighted the key points for you below.

  • The overall talk spanned the main focus point of sustainable growth within UK aviation and how this affects environmental factors and also the economy.
  • Rolling out a huge infrastructure program by making the investments, taking the difficult decisions with the goal of building capacity and resilience for the future.
  • In 2016, 268 million passengers passed through terminals across the country which is a 7% increase on 2015.
  • New routes have been added from the UK to emerging markets and investment has been in new passenger and freight facilities.
  • Aviation has played a role in creating thousands of new jobs, attracting new foreign businesses to the country and helping forge trade links with growing cities across the world.
  • The objective of sustainability is to meet rising passenger and freight demands to increase profitability and support growth ambitions.
  • The planned expansion of Heathrow is still ongoing and Chris added the extra runway would deliver benefits of up to £74 billion of passengers and the economy over 60 years. Of the 3 options shortlisted by the Airports Commision, the Heathrow North-West runway offers the greatest economic benefits.
  • The new aviation growth strategy will reflect the need for growth across the whole UK, not just London.
  • Modernisation of the industry is key to tackling delays and cutting emissions.

In a summarised sentence the speech tells that the focus in the new aviation strategy for the UK is to help economic growth and help passengers experience fewer delays, better service, more options and in turn more choice and competition which leads to lower prices.

At Be Wiser Business Insurance we are always on the cusp of the news which can affect businesses across the UK. We specialise in finding business insurance at the best price for our customers.

The Airports Commission

On the 1st July 2015 the Airports Commission released their final report on the UK aviation expansion plan. The report explores the opportunities to expand either Heathrow or Gatwick airport and whilst no formal decision has been made, it is thought the report forms a crucial part of the Governments decision process.

The 300+ page report outlines the strengths and weaknesses of each runway site and how it will impact the local community, businesses and passengers. The commission recommended an expansion to Heathrow Airport but has since come under scrutiny by people supporting a Gatwick expansion. Some senior Conservative MP’s have also voiced their concerns regarding the plans which would directly affect their constituents.

Breakdown of key points

Cost –

Heathrow represents by far the biggest investment with an expected cost of £18.6bn. A further Gatwick runway would cost significantly less at £9.3bn. The issue with the proposed Heathrow site is its disruption of both the M25 and M4 as well as the populated density of the area. Gatwick is much further out of London and in a less densely populated area which results in lower costs.

Passengers –

The main priority of expanding a UK airport is to increase the UK’s standing as an aviation hub and a key aspect of measure is passenger numbers. Currently Heathrow serves 34.7 million more passengers annually than Gatwick and the commission believes Heathrow is best suited for increasing this number.

The reason for Heathrow’s higher passenger numbers rests in the type of aircraft landing at the airport. Heathrow services a much higher percentage of long hall flights which also make it an ideal airport for transfers, over 30% of all passengers are transferring to another flight. Gatwick is better suited to short and medium hall flights, primarily targeting European destinations which results in fewer transfer flights.

Local community –

The impact on the local community if far lower for the Gatwick plan. Land acquisition, noise pollution, devaluing housing prices and air pollution are all reported to be higher under the proposed Heathrow extension however it also produces more jobs. The commission recognised the downside to the community from Heathrow’s proposal and has made a number of recommendations to rectify them:

  • For houses on the proposed site, offer homeowners a quantum based on market value plus 25% as early as possible.
  • Establish a community engagement board to give local people a platform to voice opionions.
  • Training and apprenticeships for local people.
  • A noise levy on airport users to compensate locals.

What Heathrow upgrade means for business

Heathrow is by far the biggest commercial hub of the two airports. As the below graphic highlights, the majority of southern logistic companies are based closer to Heathrow resulting in a large amount of freight travelling through the airport.

Choosing Heathrow as a site to build a new runway brings with it vast financial benefits for the UK. Predominantly it allows increased long hall connectivity and would connect the UK to a further 40 destinations including those in emerging markets in Asia, Africa and South America. It is estimated that the Heathrow extension would produce £150bn GDP within 60 years.

Recent movements in the world economy have lead to aggressive airport expansion in developed countries and emerging markets. China is set to expand and build 100 airports in the next 15 years and Turkey has begun construction on the world’s largest airport, 100% larger than Heathrow. Dubai has recently overtaken Heathrow as the world’s leading aviation hub as it links America and Asia. It will assist in helping Dubai create 37.5% of its GDP from the aviation sector alone by 2020. The need for the UK to expand its aviation infrastructure is paramount to its economic growth.

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