Should there be a third runway at Heathrow

The question of building third runway in Heathrow is a controversial issue. It may bring a lot of benefits and externalities. Here I will try to show that the former outweigh the latter. By examining the how the vital this airport is in attracting foreign investment, its importance as Hub airport, possible local benefits of the expansion, how many jobs it is going to create and how vulnerable it is to foreign competition I will to prove that the development will bring more benefits than losses to British economy.

London is currently rated as place number on to do business. This position is due to the access to markets and international transport links. In the global economy transport links are one of the most important feature that make UK attractive to foreign direct investment. In 2007 FDI contributed more than Ł 52 billions to London’s economy, and it brought more than 0.5 million jobs to the capital. As 52% of top 500 companies consider connectivity as the most crucial facto when considering an investment, it worth to take into account how significant Heathrow is for London Economy.

2/3 of flights from and to Heathrow is transfer traffic. In the air traffic business the economies of scale play crucial role. The more international flights the more attractive airport is as a place in which transfers are made. This is not only important for the air industry. The more there are direct flight to London, the more attractive the place is for tourism and business.

Heathrow is an important factor in reducing unemployment. It employs 102.000 people directly. Further 100.000 jobs are created indirectly. Heathrow is an place were the training of labour takes place. If the third runway is going to be constructed there is going to be need for huge amount of workers, hence the aggregate demand will be boosted. The expansion of the airport would proportionally increase the indirect an direct jobs created by the airport.

Other local benefits, would the increased connectivity between London and further regions of UK. “Scots business – large and small – need affordable, competitive links to a strong Heathrow”. The airport provides is significant connection between UK’s regions and long haul destinations. 70% of flights from Manchester, and 60% from Leeds are transfer connections.

To preserve the vital role of Heathrow in the UK economy, and its leading position as a Hub airport, we have to allow its expansion. It is operating at 99% of its capacity, while Pairs or Frankfurt airports have more than 25% of spare capacity. If the third runway is not going to be build, Heathrow is not won’t be able to compete with other international airports, like those mentioned above. Benefits outlined above, increased FDI, the advantage of economies of scale to increase the transfer flights, creation directly and indirectly jobs and benefits for UK transport to be preserved and increased need third runway.