U.K.’s Airport Deficiency Costs $1.5 Billion in Trade, CBI Says

The U.K. needs to improve airport connections and expand hub capacity to encourage direct flights to emerging trade partners like Brazil, Russia and China, according to the Confederation of British Industry.

A new daily flight to each of the world’s eight fastest- growing markets would boost U.K. trade by as much as 1 billion pounds ($1.5 billion) a year, the London-based business lobby said in a report today.

British airports, including Europe’s largest hub at London Heathrow, are not keeping pace with rival European facilities in developing new direct connections, the CBI said. Operating at full capacity on its two runways, Heathrow has only grown 53 percent in the last two decades, compared with growth rates exceeding 80 percent at Frankfurt Airport, Paris’s Charles de Gaulle and Amsterdam Schiphol.

“Every day we delay expanding our connections, we risk falling further behind our competitors,” CBI Chief Policy Director Katja Hall said in the report. “Firms need frequent direct flights to the widest range of markets.”

Enough demand exists to support hub airports, which pool passengers to fill long-haul flights, and point-to-point facilities drawing from the local catchment areas, the CBI said. The two types of airports have both seen an increase in demand since 1993, they said.

While the “unique nature of a hub airport means it is particularly well-positioned to act as the initial driver for new long-haul routes,” the CBI said, the “substantial population agglomerations” of people around London and other British cities means point-to-point links also play a valuable role.

A government-appointed task force led by Howard Davies, a former Financial Services Authority chief, is considering various options to expand the U.K.’s airport capacity. The task force is scheduled to publish an interim report next year, recommending short-term options, and a final report by mid-2015, after the next parliamentary election.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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