Third LHR runway ‘could reduce fares by £300’

Passengers travelling through London Heathrow are already paying an average of £95 more for a return ticket than they would do if the airport had a third runway, according to a report.

Research firm Frontier Economics also estimates that the average ticket price could be £300 lower by 2030 if Heathrow was allowed to expand.

And the report, commissioned by LHR, claims a third runway could add 40 new routes from the airport.

The figures take into account the costs of building a third runway and, Frontier Economics said, show that “the savings delivered to consumers by additional capacity are far greater than the costs of construction”.

Heathrow third runway proposal

Colin Matthews, LHR’s chief executive, said: “This research shows that not building a third runway at Heathrow will add hundreds of pounds to the cost of a family holiday, be a disincentive to doing business in the UK, and increase the cost of the goods and services that are imported and exported through Britain’s most important trade gateway.

“This additional burden on both the cost of living for families and on businesses is entirely avoidable. The private sector stands ready to invest in the infrastructure Britain needs.

“Government has it within its power to lower prices for consumers by taking a clear decision to support expansion and end the years of prevarication that are now causing fares to rise and routes to be constrained.”

The Airports Commission estimates that the costs of building a new runway are around £20 per return passenger, whereas Frontier estimates the total reduction in the average return fare by allowing airlines the freedom to compete would be £320.

The commission, headed by former CBI boss Sir Howard Davies, is currently looking at two possible expansion options at Heathrow, as well as a possible second runway at Gatwick (see news, December 2013).

The proposal for a new airport in the Thames estuary, dubbed Boris Island after London mayor Boris Johnson, is also still being considered and could be added to the shortlist if it is shown to be economically viable.

The commission will make its final recommendation in summer 2015 after the next general election.

Frontier argued that passengers would benefit more if both Heathrow and Gatwick were allowed to expand.

The research firm added that Heathrow could add long-haul routes to key cities in emerging markets such as Kolkata in India, Mombasa in Kenya and the Peruvian capital Lima.

Expansion would also improve connections between Heathrow and UK regional airports such as Inverness, Liverpool, Newquay and Humberside.

Frontier said that adding a second runway at Gatwick would add between five and seven new routes, which would be mainly to package holiday destinations.

Graham Smith

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  • As you stated, this report was commissioned by Heathrow Airport Limited; I’d take any conclusions with a pinch of salt, particularly those relating to its arch-enemy Gatwick.

    As the core conclusion that prices would reduce, it assumes demand would remain constant.

    Which it won’t.

    Nor are airlines (or indeed Heathrow Airport) likely to give up potential profits by reducing prices in this way. It just doesn’t work like that.

    So Frontier’s headline is fundamentally flawed.

  • Having now read the report, I note that in fact what Frontier is suggesting is that *unless* the Third Runway is built, fares will go up by £300 on average.

    So it’s not actually suggesting fares will “reduce” just that they will increase less than might otherwise be the case.

    This Report by Frontier Economics is bunkum, sponsored by the Heathrow propaganda machine, and it would have been useful for BT to have cast a more sceptical eye over it before regurgitating the press release.

  • Several Airlines including BA are warning of LHR charging by far in excess, and question the long term future of retaining flights or hubs there.
    The way they are going, simply puts Schiphol, CDG in a far greater position to take LHR’s business, which is already happening, and reach destinations that we do not have the capacity to fulfill.
    I avoid LHR for long haul and save a good £300 on each flight, as it is also the most expensive airport in The World for passengers, and the overall charges incl government taxes) the highest. The services have historically not matched what you pay, to exit the UK overall.

  • For the UK economy to grown and attract overseas investment, it needs a proper hub airport that can serve as a single point connection for flights. It’s idiotic to think Heathrow can serve this role long term, so why invest good money after bad by expanding it now? Eventually it’s going to need a fourth runway (infact it needs that now), then a 5th or a 6th runway at some point.

    I’ve just got back from Dubai and when you see the growth of the likes of Emirates, thanks in no small part to a government that has continually invested in its airport facilities. It makes you realise how pathetic the UK really is in dealing with this issue.

    The Dubai airports current site is hemmed in, and it’s two runway setup is reaching capacity. Yet they already started developing a new site in 2008, which when finished will have 6 runways and be able to handle 200 million passengers a year!!

    Yet the UK can’t even make a decision on developing one more runway. It’s time to think boldly and take the bull by the horns. Heathrow is in the wrong location. It’s time to build a brand new hub airport out in the Thames Estuary, which will be able to expand and develop without any constraints, or affecting the lives of millions of Londoners.

  • We have been hearing about this new promised third runway for decades and nothing ever materializes.
    It is called procrastination a action.
    Let passengers suffer now and keep paying the highest fees.
    Who cares, do not they keep flocking in in millions each year!!
    Frankly. I do not ever think anything will occur except some dozens of news hungry protesters sobbing to try to show themselves and their friends on TV.

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