The selection by the UK Government's Economic and Industrial Strategy (Airports) sub-committee of Heathrow Airport as its preferred growth option for the London airport system, marks the first stage of another process of consultation that will likely lead to a formal Government vote on the planned expansion in late 2017 or early 2018. However, with anticipated appeals, environmental issues and a long planning process, it does not answer the question of when a new Runway will be built.
Gatwick is now expected to press ahead with its plans to build a second runway regardless of the Government's recommendation, while Stansted Airport, discounted by the Airports Commission in its ruling is suggesting that it too will need to begin the design and development work for a second runway in the next two to three years to meet demand.
"We still have more growing to do on our single runway, which has a capacity of at least 40m passengers – and we will invest in the terminal space to allow us to serve more passengers as required," said Charlie Cornish, chief executive of Manchester Airports Group (MAG), owner of the London airport. "But, our strong growth means we are already eight years ahead of where the Airports Commission predicted we would be and we estimate that Stansted will be full in the next 10 to 15 years."
In the interim period, Stansted will continue to be a crucial economic catalyst for both the South East and Cornish, like many other airport CEOs across the UK is hopeing that following the runway decision, government will shift its focus onto issues which are preventing airports like Stansted from absorbing current demand as effectively as they could be.
With the UK Government decision to back expansion at Heathrow, more than a year after the Airports Commission recommended the building of a third runway at the west London airport, we now take a look at data over the past ten years and how its existing capacity constraints have blunted its growth and seen Dubai International Airport overtake it as the world’s largest international airport.
Over the last ten years passenger traffic at London Heathrow has grown 11.0 percent from 67 million annual passengers in 2006 to almost 75 million last year. It has witnessed year-on-year growth in every year of the current decade, albeit at an average annual rate of 2.6 percent. Over the same ten year period Dubai International Airport has grown 171.0 percent from 28 million annual passengers in 2006 to over 78 million last year. It is growing at an average annual rate of 13.0 percent this decade.
Heathrow’s unique capacity constraints – it is operating at 98 percent capacity – coupled with the high demand from airlines due to strong passenger yields at the airport, mean slots are hard to obtain. The airport currently claims it has a queue of thirty airlines waiting for slots and earlier this year Oman Air paid a reported $75 million for morning inbound and outbound slots to launch a second daily rotation in and out of the hub from and to its Muscat base and Croatia Airlines is reportedly currently negotiating to sell its slots to support its restructuring efforts.
It’s estimated that due to demand from airlines and passengers to use the airport far outstripping supply, passengers are already paying on average £95 more per a return ticket then if Heathrow had extra capacity (Frontier Economics, 2014: Impact of airport expansion options on competition and choice).
Heathrow has been seeking smart ways to overcome its current restrictions. Air navigation provider NATS is using its Airport Capacity Management (ACM) tool to optimise operations at the London airport. Launched in April 2014, it “revolutionised the process for agreeing seasonal airlines schedules at the airport”, according to Nick Stevens, senior solution architect at NATS and in 2015 it was key to opening up the first new early morning slot at Heathrow Airport in over 20 years.
Meanwhile, weather is increasingly being factored in to modelling and the airport works with NATS to take into account weather patterns, airspace restrictions and other data sources to predict aircraft arrivals and departures, enabling more proactive decision-making and management of resources.
Maximising the use of each slot has also seen the average size of aircraft operating from Heathrow rise from 190.4 seats per departure in 2006 to 203.8 seats in 2015, according to data from OAG Schedules Analyser. This growth has been supported by the growing number of Airbus A380 flights now scheduled (up to 9,151 departures in 2016; 25 a day), making the facility the second largest market for Superjumbo operations. The average aircraft size is forecasted to rise further to 206.6 seats per departure for 2016, based on published schedules.
Despite the strong demand the OAG data shows that the number of flights from Heathrow has actually declined over the past couple of years after reaching a high of 239,002 annual departures in 2011. This record year for movements pipped the 2007 performance by just two outbound flights. Last year there were 236,289 departures and this year's schedule forecasts 237,185 for the full year. This may appear seem surprising. However, as the airport is operating at such a high capacity slot availability remains limited to times of the day not suitable to many operators for sustainable schedules and the airport is effectively full during peak demand periods.
British Airways (BA), the largest operator at Heathrow with a 47.5 percent capacity share in 2015, has grown its inventory at the hub airport by 24.9 percent over the past ten years, a period that has seen around 25 new airline brands start flying from the airport. Over the same period fellow UK carrier Virgin Atlantic Airways has grown 25.5 percent, although a network restructuring has meant capacity will decline by a fifth this year to levels last seen in 2010.
The biggest capacity changes over the last ten years has been the arrival of Delta Air Lines, now the tenth largest operator from Heathrow by seats and the Germanwings brand as part of Lufthansa’s restructuring of its non-hub flying. The largest capacity growth among the top twenty carriers at the airport has unsurprisingly come from the world’s new hub carriers. Etihad Airways (194.2 percent) and Qatar Airways (174.4 percent) have almost trebled their activities, while Turkish Airlines (116.0 percent) has doubled its own presence.
Over the past year it is actually American Airlines that has boosted its activities at Heathrow by the largest margin with capacity up 26.4 percent in 2016, versus last year, according to published schedules. Among the top twenty operators Turkish Airlines is showing growth of 25.7 percent, while Swiss International Air Lines (16.2 percent), Emirates Airline (14.5 percent) and Qatar Airways (12.3 percent) will record double-digit growth.
Alongside the previously highlighted Virgin Atlantic capacity reductions, Germanwings (-29.5 percent), KLM (-7.3 percent), SAS (-6.3 percent), Delta Air Lines (-5.7 percent), Air France (-2.5 percent) and Cathay Pacific (-0.4 percent) will report declines in Heathrow departure capacity in 2016, based on current published schedules.