Politics 19 September 2013 Start with the passengers Sign up for our weekly email * Print HTML Why competing gateway airports better serve communities The crux of the debate on airport capacity is whether the south-east should have one mega-hub airport offering the maximum number of connections, or whether the UK will be better served with two or three competing airports. It is my view that competition will provide residents and visitors with better service, greater economic impact and, critically, affordable access. We can learn from many major cities around the world, such as New York, Tokyo and Shanghai. A mega-hub is not a requirement for greatness. Affordable connectivity for residents and visitors is. Connectivity vs connections The term connectivity is often heard in this debate, but its meaning is ambiguous. It is important to distinguish between connectivity, the UK’s accesss to the rest of the world, and connections, how an airline group optimises traffic flows across its network. Connectivity is what drives economic impact and societal interactions. The goal should not merely be about connections to the greatest number of points. Instead it should be about affordable connections and adequate capacity to the right destinations across the world. Affordable connectivity matters Affordable connectivity to destinations that people want to go to is of much greater importance than having the world’s highest number of destinations. What is the point of an exhaustive list of destinations, if the price for desired destinations is so high and the capacity so limited that only a fraction of potential travellers can actually use the service? Competition Competition is the single strongest driver of price. The UK has used competition as its main policy tool for aviation. As an aviation economist, I recognise that the UK has led the world in instilling competition in international air transport. While the US was the first to deregulate domestic markets, the UK led the privatisation of airlines, negotiating the first open skies agreements, privatising airports, and ensuring competition between airports. In a bold policy move, the U.K. in 2009 required the breakup of BAA to ensure that not only would airlines compete with each other but that the airports would as well. Enabling a mega-hub would undermine this pro-competition policy. Connecting passengers, economic impact and risk What about passengers that merely connect between flights in London but do not visit the UK? Some emphasise the need to maximise such connections and claim that only a mega-hub can do this. Connecting passengers can add the critical mass needed for viability of a number of routes. However, the economic impact of these connecting passengers is much lower than passengers who want to come to the UK. The business risk is higher too. Some airports with high connecting passenger ratios discovered that such traffic was risky and could move overnight to another hub. St Louis and Pittsburgh were high connecting traffic US airports, but their home carriers either failed or changed strategy. These airports saw their traffic plummet when carriers realigned networks and moved connecting traffic to another hub. Today, as carriers form large carrier groups, management may decide that from a network perspective, certain types of traffic are best connected from a different hub in the group’s network. Where is the growth? The contemplated airport capacity increase will not be in place until well into the 2020s. By that time, the carriers currently operating at Gatwick and Stansted will have evolved their business models. When we look elsewhere in the world, we see low cost carriers (LCCs) whose business models include not only connections between a single airline’s flights, but also an increasing number of connections with other carriers. LCCs in the US, Canada, Australia and Brazil are good examples. Today many of the most profitable airlines are not the traditional full service network carriers (FSNCs), but the LCCs. This is the case in the U.K. In a recent study I showed that FSNC traffic in London has fallen from 77 per cent in 1990 to 40 per cent today. Growth is highest at the LCCs. A policy that would only add capacity at the airport used by FSNCs will not support growth for the fastest growing carriers. London: the world’s largest air market London is the largest aviation market in the world. Like other major cities, it can support multiple airports. Capacity growth should support competition between airports and carriers. Competing airports will better serve the region through affordable connectivity to where people want to go. Dr Michael Tretheway is an aviation economist. He is currently engaged as an advisor by Gatwick Airport Stansted airport. Photograph: Getty › Issue by issue Subscribe from just £1 per issue More Related articles Jeremy Corbyn has found a vulnerable spot on Theresa May and trade Politicians are worried that their pensions are destroying the planet. Is yours? Nap Store: Where did all these new mattress start-ups come from?