ANALYSIS: Whether Heathrow needs a third runway is the wrong question

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Whether a third runway should be built at London's Heathrow airport is not the correct question to be asking, says Ascend's chief economist Peter Morris

It is commonly accepted that a country seeking to compete in the global economy must be in need of an efficient and viable airport infrastructure. Universally maybe, but not in Britain.

Extraordinarily, that insular attitude has also meant that it has created - or rather perhaps allowed the creation of - one of the most efficient and successful aviation countries in the world over the period 1980-2000. In the UK, this led to a globally competitive growth of passengers, cargo, profitable airlines, privatised airports, new and expanded air routes. Many linked aviation businesses, such as my own which specialises in information and consultancy also developed.

It was almost magic, since the public sector, in reality, contributed very little in terms of finances, and indeed collected billions for the public purse from sales of aviation assets. You had the feeling that when or if various government players noticed this vibrant sector, there was actually disbelief that through simply letting go and encouraging a liberalisation of airlines and airports there was a successful market result. In this way, even the white elephant investment in Stansted was soon forgotten, as people congratulated themselves that, yet again, Britain had apparently got something for nothing by simply moving the furniture.

The industry efficiency gains were real, prices fell in real terms, routes expanded, customer choice soared, and aviation profited as well as the UK economy. Apart from the USA, from whose mistakes we learned, I believe we pretty much got there first across the whole field of aviation.

There were however two problems with this revolution.

The first was that the basic airport runway infrastructure in London had not really changed, so more and more traffic was squeezed into finite assets. Scarce assets, such as early morning slots at Heathrow spiralled in value, if they were available at all. Any spare capacity, even moving out to Southend, started to be used up and the vexed question of 'what next' started to arise. Such a question needed a strategy and investment. In perhaps true UK style, the fundamental question of future airport infrastructure has been on the cards, and unanswered, since the 1970s. Symbolised perhaps by the fact that over the last decades the average tenure of UK ministers of transport has been less than a year.

The next problem echoes the cycle of UK success in the industrial revolution. Other countries learned from the UK model and refined it in a more focused way. Liberalisation of both air transport and tourism has spread. At the same time that the UK started to look at this air traffic growth as a problem, and to tax and restrict aviation, other countries woke up to the economic benefits of a range of strategies from attracting airlines and traffic to offering multi-country Schengen visas to tourists. You might say that they learned from us, just as we started to stumble and watch other European hubs become much more competitive.

Rather than a third runway for Heathrow, to me the question is to define a strategy to accommodate growth in air traffic (aircraft and people) in London and the South East to 2030 and beyond. It needs to be realistic and efficient in terms of all the stakeholders: investors, air passengers, market trends, airlines, employees, local residents and the airport operator to name but a few.

It is imperative to learn from others. In such a global business there are plenty of examples, good and bad. One particular benchmark I recall is Montreal Mirabel where the international aircraft were spirited 60km away from the city in 1979. At the time it had the biggest airport land area in the world. After 20 years, an airport liked neither by passengers or airlines closed.

Aviation is largely commercial public transport whose ownership in the UK has been privatised. There is no 'public money' so the plan must work for the stakeholders: investors, operators and users.

Nobody would now start to build an airport on the southwest side of London, with prevailing southwest winds. But as a result of Heathrow, there is a lot of linked human and physical capital tied up in southwest London, from pilots to petrol pump attendants, shop workers or teachers, to the businesses that rely on access.

There is a real problem here. There is already an estimated level of damage to the UK's economy of around £1 billion a year through the inefficiency of the London airport infrastructure. The country has had decades in which inefficiency has been repeatedly ­layered into schedules for passengers and airlines, and still further delays occur.

To read more about the third runway at Heathrow airport and the proposed alternatives. visit: flightglobal.com/Heathrow

Peter Morris is chief economist at Flightglobal's advisory arm, Ascend