The UK is proud of London Heathrow's position as the world's busiest international airport but for the coalition government currently in power, it is turning into a poisoned chalice.
The decision to rule out a third runway at the airport, which has been operating at full capacity for many years, was one of the defining policies of the Coalition agreement between the Conservatives and the Liberal Democrats. The coalition also ruled out new capacity at other airports around London, including Stansted and Gatwick.
However, with a review of aviation policy under way, the third runway is back on the agenda, along with an alternative idea for a new airport in the Thames estuary.
The view that the UK is losing ground to its European competitors, while the economy will be harmed if it does not invest in more capacity, is becoming increasingly prevalent. In his 2012 budget speech, Chancellor George Osborne said the UK has to confront the lack of capacity after increased lobbying from BAA, owner of Heathrow, business groups such as the Confederation of British Industry and airlines such as British Airways.
"While we have sat on our hands for decades, other countries like China and Middle East states have made strident efforts to build up their aviation industry, benefiting not only the industry but their economic standing in the world," says Willie Walsh, chief executive of BA parent IAG.
"For example, China is building 70 airports between 2011 and 2015, with another 97 airports to be built by 2020. As we stagnate, our counterparts in Europe and around the world rub their hands with glee. We have no strategy. We are disconnected when it comes to linking the value of aviation to wider UK benefits and we are suffering as a result."
Katja Hall, the Confederation of British Industry's chief policy director, adds: "As the global economy moves east and south, constraints at a hub airport running at 99% capacity are preventing airlines from meeting demand for flights to growth markets in emerging economies.
"Every day, we're ceding ground to competitors. There are now seven major cities in China served by the airports in Frankfurt, Paris or Amsterdam that aren't served by direct flights from the UK. Germany now has 60 direct air links a week with China, twice as many as the UK," she continues.
With capacity constrained, Heathrow landing slots have become a valuable commodity, meaning airlines focus only on the most profitable routes, says Colin Smith, head of airports at consultancy PwC. "This has reduced Heathrow's effectiveness as a hub because the rise of the low-cost carriers has reduced margins on short-haul flights, leaving airlines such as BA to focus more on long-haul traffic. If Heathrow had more capacity, and slots were cheaper or free, the budget airlines could step in to take over the short-haul routes that BA has dropped."
But is the capacity issue unique to the UK or are other European markets constrained as well? In the UK, many think rival airports are taking traffic away from Heathrow. "Schipol, Frankfurt and Charles de Gaulle are displacing Heathrow as the airports most business passengers choose to transfer through," says Smith.
Yet Eurocontrol, the European Organisation for the Safety of Air Navigation, predicts that in Europe "between 0.7 million and five million flights will be unaccommodated in 2030, representing from 5% to 19% of the demand". Recession in Europe cut traffic in 2008 and 2009, easing the pressure on airport capacity, but in the longer term, demand will return and airports will not always be able to fully respond.
"While European airports have committed a total of €120 billion ($150 million) to new facilities between 2000 and 2015, and plan an overall 41% capacity increase by 2030, this will be far from enough," says ACI Europe, which represents the interests of more than 400 airports in 46 European countries, accounting for over 90% of commercial air traffic in Europe. "Projections from Eurocontrol show that by that time, 11% to 25% of demand for air services will not be accommodated."
Airports in countries throughout Europe are facing an airport capacity crunch, as EU Commissioner for Transport Siim Kallas acknowledged in a communication on airport capacity last year. The issue is of keen interest to the EU institutions, given the reforms they have mandated under the ambitious programme, the Single European Sky.
"The success of the Single European Sky relies on the connection between the air and the ground," Kallas said. "If you triple airspace capacity without an aligned increase in airport capacity, then you're just building an enormous bottleneck at airports. Projects such as Airport Collaborative Decision-Making and SESAR help maximise existing capacity, but with the traffic predicted over the next 20 years, there's no escaping the fact that Europe needs more airport capacity."
The European Commission says demand currently exceeds capacity throughout most or all of the day at six European airports - London Heathrow, London Gatwick, Paris Orly, Milan Linate, Düsseldorf and Frankfurt. Demand also exceeds capacity during peak hours at a number of other airports.
Meanwhile, airports outside Europe are expanding without growth constraint, says ACI, and many of them are competing with European hubs for transfer traffic between the Americas and Asia as well as between Africa and Asia.
"For example, while Dubai airport is being enlarged to accommodate 75 million passengers, a second airport - Al Maktoum International - opened recently and is still expanding. This new facility will ultimately have five runways with a total capacity of 120 million passengers, nearly twice the number of passengers presently handled by Heathrow," ACI asserts.
The changing balance of power in global aviation is clear from ACI's figures. In 1995, 10 of the top 20 airports in terms of international airports were in Europe, with four in the USA and six in Asia. In 2010, while Heathrow managed to hold on to its top spot and nine of the top 20 were European, seven were from Asia, two from the Middle East and only two from North America.
"In all probability, by 2030, none of the world's 10 biggest airports, in terms of passenger traffic, will be located in Europe," ACI says. "The emerging picture for the future of our air transport system is one of chaos, with passengers and airlines exposed to cascading delays and flight cancellations on an unprecedented scale."
Declan Collier, ACI Europe president and chief executive of London City Airport, at the organisation's recent annual congress in Madrid, said Europe is becoming increasingly "aviation disabled" through governments and regulators actively ignoring the connection between airports, international trade and economic performance.
"The increasing dependence of the European economies on external trade must serve to reinforce the strategic role of airports for economic development. You do not take a train to go and look for business in Sao Paulo, Shanghai or Bangalore."
Yet it is increasingly difficult for airports to expand capacity. First, they face increasing difficulties in securing permission to build in the face of voter opposition and local and national environmental restrictions, which add a lot of time and expense to the process. Second, given the current economic crisis, finance is hard to come by.
For example, the planning process for Munich airport took 22 years at a cost of €800 million, ACI says. "In addition, expansion plans are often at the mercy of the worst kind of politics, adding great uncertainty and potentially resulting in the interest of the few prevailing over those of the majority. In these conditions, European airports are simply not in a position to respond to market demand."
Simon McNamara, deputy director general of the European Regions Airline Association, says: "Airports matter - they are our gateways to the world. For geographical and historical reasons Europe is a "world hub" connecting flights across all five continents. We need to remove the bottlenecks at airports. We need to boost capacity and improve quality."
Source: Flight International