ROUTES: Heathrow debate has regional implications

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News that Patrick McLoughlin, the UK's new transport secretary, has postponed his decision over Heathrow's third runway until after the next General Election in 2015, has prompted a collective groan across the aviation industry and the wider business community.

"How many more reviews do we actually need," asked Laurie Price, former aviation adviser to the select transport committee between 1997 and 2005, in his opening remarks at a conference in London last week.

Previous attempts to reach a consensus on airport expansion have included the 1971 Roskill Commission and the 2003 Future of Air Transport White Paper. These, however, have often appeared to kick decision-making into the long-grass, sparing successive governments the headache of long-term infrastructure projects that risk angering the electorate, while delivering scant benefit to their political backers.

"All [the inquiries] have - and no doubt will continue to - conclude that we've got to do something," Price notes. "What we actually need is action today, not another study I really cannot believe that the UK economy should be held to ransom all because of six [anti-expansion] constituencies in west London."

The UK Department for Transport (DfT) has at times sought to downplay the economic fallout from over-stretched airport capacity, insisting that London is still the best-connected city in Europe and has spare capacity at secondary airports serving the capital. But Price is dismissive of these well-versed arguments.

"Saying London has more flights to more destinations than any other city in Europe is not the same as having those from a single hub," he says, referring to the principles of hub economics, whereby extensive feeder services boost the viability of long-haul flights.

"To say that Gatwick - operating its single runway at 50-plus air transport movements an hour - will be full early in the next decade is disingenuous. I think Gatwick is more full than the government would care to admit."

With market forces driving up the cost of access to London, slot pairs at Heathrow are now trading for upwards of $50 million. Dave Duthie, director of the Highlands and Islands Transport Partnership (HITRANS), notes the devastating impact this has on the appetite for regional connectivity.

"We have to recognise that Heathrow is terribly important for the UK economy as a whole," he argues. "Think about the major contribution the northeast of Scotland makes to the UK economy. The oil and gas sector produces £15 billion [$24 billion] a year for the UK economy."

While much of that revenue springs directly from oil reserves in the North Sea, Duthie says about half comes from international work that northeastern companies conduct elsewhere in the world - work which, without hub connectivity, will become harder to sustain. "You can only do that work and bring that benefit to the UK economy if it has connectivity," he insists.

The recent takeover of BMI by British Airways parent International Airlines Group (IAG) underscores why Scottish firms are so concerned. The UK CAA may have ring-fenced seven of the 14 Heathrow remedy slots being sold by IAG for Edinburgh and Aberdeen, but beyond that, there is no long-term guarantee of Scotland's connectivity.

Indeed, BA plans to retain just two of the six daily Heathrow flights operated by BMI from each of the Scottish cities in its upcoming winter schedule. It is no secret that the flag carrier sees more value in redeploying the slots for high-yielding long-haul routes - a trade-off that Duthie blames on constrained capacity, and which he uses to justify public service obligation protection.

"Not all passengers are worth the same," he says in reference to leisure routes served by the capital. "A passenger going on a Spanish holiday is not worth the same as a passenger going to do business abroad. One is taking money out of the UK economy; one is bringing money back into the UK economy."

To this end, Duthie believes that market intervention to protect Scottish and regional links is necessary unless the government commits to expanding Heathrow. In a damning assessment of the harm caused by constrained capacity, he warns: "Free market [trading of Heathrow slots] only works if you have unencumbered access. If you had the capacity through increased infrastructure, then I'm sure the market would work but the access is restricted. We need that access to Heathrow."

While the debate rages on over what type of increased capacity offers the best long-term solution - be it a third Heathrow runway, or a new hub to the east of London - it is clear that patience is running thin in all corners of the UK.

It is clear, too, that technological advances in engine efficiency plus the EU's Emissions Trading System must be factored into increasingly dated environmental objections. With rival hubs in Europe and the Gulf rapidly growing their share of transit traffic, the UK finds itself at a crossroads. Few believe that yet another long-winded inquiry is the right way forward.