What would Heathrow expansion mean for small businesses?


The authors of the Davies report were unanimously in favour of a building a new runway at the UK’s largest airport, rather than extending one of its existing ones or expanding Gatwick, The Guardian reports.

Sir Howard Davies, who led the report, said: “Heathrow is best-placed to provide the type of capacity which is most urgently required: long-haul destinations to new markets. It provides the greatest benefits for business passengers, freight operators and the broader economy.”

There is little mention of small businesses in the report, apart from the fact they were part of the “70,000 responses” who wrote to the commission during its deliberations. However, many entrepreneurs, with their eyes on foreign markets, want more flights to more destinations. Exporting businesses need more air freight capacity, as well as flights to visit customers and transport them here.

Among them is Graham Ewart, managing director of Direct Healthcare Services, a south Wales-based manufacturer of specialist mattresses and cushions which exports to Europe, the Asia-Pacific region and Latin America. “As our global distribution network grows, getting products back and forth and bringing customers to the UK as well as flights out of the UK is a daily occurrence for us,” says Ewart. “Heathrow is ideally located on the M4 for companies outside of the south-east, so it’s accessible and it offers the kind of long-haul flights to emerging markets which are crucial to the future of our business.”

But the Davies report comes with no guarantees and the prime minister, who previously opposed Heathrow expansion, said yesterday in parliament only that he would make a decision by the end of the year.

Business leaders and entrepreneurs are likely to be less than impressed with more delays. “We now have a recommendation that has already taken a parliament to make and the government now needs to get on with the job of implementing it,” says Terry Scuoler, chief executive of the EEF manufacturers’ organisation. “The aim must be for planning permission to be granted before the end of this parliament.”

Manufacturers are not the only ones hoping for an increase in air capacity. Some entrepreneurs are concerned that London could be eclipsed by other major cities as a place to do business. “London is leading a race to become a global digital city and we need to show we’re open for international business and talent,” says Russ Shaw, founder of business group Tech London Advocates. “An additional runway at Heathrow in 2025 will be too little, too late for a city that is already reaching capacity.”

The estimated economic impact of Heathrow expansion will be substantial, according to the report. Adding £147bn to GDP over 60 years and creating 70,000 new jobs by 2050. It is also predicted it will enable Heathrow to service 40 new destinations, including a dozen long-haul routes. But the Davies report is also concerned with protecting London’s status as a global city and says the capital’s aviation system is “crucial to the country as a whole”. It says that the global aviation market has become dependent on the dominance of a few large “hub” airports, such as Heathrow, which are aided by surrounding smaller “spokes”. The suggestion is that unless Heathrow meets demand it could be bypassed by other hubs and become a “spoke”.

For many businesses in the aviation sector this is the winning argument. “Its [Heathrow’s] future success and our future competitiveness as a nation depends on the number of departures from and arrivals to that hub,” says Ian Baxter, founder of logistics company Baxter Freight. “Frequent departures mean better service levels, more transit options and lower costs. So picking Gatwick as the airport to expand over Heathrow means backing a secondary airport over the main hub which to me as a logistician makes no sense whatsoever.”

But not all businesses are happy that it is Heathrow which gets the nod. The Davies report’s backing of Heathrow comes with a list of conditions regarding pollution and noise. For some, this makes it less convincing, particularly as the report still describes Gatwick expansion as viable. “The Davies report recommends Heathrow but then imposes so many impossible conditions that it simply could not be delivered,” says Soozie Campbell, chair of the Brighton & Hove Tourism Alliance. “It also says Gatwick is still a viable option. This is effectively a green light for Gatwick.”

Other business owners argue that Heathrow is simply in the wrong place to be the UK’s major airport. “An airport needs to be in a place where it can expand as required for decades to come, not in a limited urban environment causing noise and pollution levels and with very real constraints on physical space,” argues Claire Moran, founder of Forge Public Relations. “Otherwise by the time the third runway is built, the arguments will be rising that we need more capacity.”

In the face of such arguments government policy has been to play for time. Furthermore, clashes among politicians over the decision are only more likely. The report was bad news for Boris Johnson, the Mayor of London, whose own plan, the creation of a new airport in the Thames Estuary, was not shortlisted. Nevertheless, the report still took the time to categorically reject it describing Johnson’s plan as “appealing in theory” but “unfeasibly expensive”, “highly problematic in environmental terms” and “hugely disruptive” to businesses.

Elsewhere in the country there was a mixed reaction from businesses. In the midlands and the north there have been calls for the UK to follow a “distributed model” to air transport; rather than a single hub, several airports, connected by high speed rail could act as a combined hub. This idea, heavily backed by Birmingham Airport, also did not make the Davies report shortlist. According to Paul Faulkner, chief executive of the Greater Birmingham Chambers of Commerce, this was a mistake. “Concentrating everything at Heathrow now embeds an unwelcome monopoly for Heathrow and the airlines. The cost to fly will now only increase,” he said. “It will not help job creation outside of the south-east and this is one of the major flaws in the report.”

But in the short term a more distributed model might, in fact, be the de facto model, especially if HS2 goes ahead. Both Birmingham and Manchester airports are undergoing substantial expansions and unlike Heathrow have capacity. “A large central hub at Heathrow would not be a threat to Manchester Airport,” says Professor Michael Luger of Manchester Business School. “In any case, we would not see a third runway at Heathrow or Gatwick for another decade, giving Manchester 10 years to continue its development that will allow it to approach 50 million passengers per year.”

Although there is division among businesses on how exactly the UK should expand its air transport capacity, most feel that this needs to be done. This is because companies rely on airports for much of their trade and business. In truth, as long as their needs are met, many would be happy to see either Heathrow or Gatwick expand. However, the Airports Commission’s finding does not guarantee a decision or compel any politician to do anything nor provide the one thing businesses crave most – certainty.