New research shows claims London can split its hub airport over multiple sites are without foundation. There is no evidence that any cities across the world have successfully done this, or that low cost carriers, new aircraft or relocating alliances will change that, according to the report researched and written by independent aviation consultants JLS Consulting.
Whilst Heathrow and others such as the London Mayor argue the only way to solve the UK’s lack of direct connections to long-haul emerging markets is via a larger hub airport, others such as Gatwick claim this is unnecessary, and that splitting demand across multiple airports would also work.
The JLS Consulting report looked at cities around the world to see if there was any evidence that the split solution could work. It concluded emphatically that there are no successful versions of this model. The report shows that whilst short-haul, point to point services have seen rapid growth in the UK since the late 1990s, the same has not happened with long-haul services despite there being space at non-hub airports.
Despite this already compelling evidence against the split-hub model, Heathrow commissioned today’s report to see if there was any evidence it could work in the future. It concludes that there are numerous cities around the world with multiple airports but that, like London, they use those airports for different functions – and have, at most, one hub.
New York has three network carriers but still only supports one hub airport, Newark. JFK operates as a point-to-point airport supported by New York’s huge urban population (circa 19 million). Tokyo attempted to split its hub airport into two and its connectivity and economy has suffered as a result. Paris has one hub (Charles de Gaulle) with Orly operating as a point-to-point airport. Moscow has no hub and consequently poor international connectivity.
The report argues that the complexity and financial difficulties of integrating carrier schedules to make use of transfer traffic explains why there are so few hub airports in the world, ‘let alone two competing hubs in the same city’.
“This research shows that no world cities have successfully split demand across multiple hub airports. However convenient it would be to believe that London could be the first, we cannot bet the UK’s economic prosperity on wishful thinking. The UK can only benefit from improved long haul connections by building a bigger hub airport,” said Colin Matthews, chief executive officer, Heathrow Airport.
The study shows that low cost carriers (LCC) will not enable a second hub airport. Network airlines typically lose money when operating their short-haul feeder routes, so LCCs are unlikely to be willing to change their business models. Even when a network operator owns a LCC (eg IAG owns Vueling) it operates it as a stand-alone business, not a feeder network.
The report adds that moving an alliance to another airport would not be enough to create a second hub without a network carrier based there to make it work. After the EU/US ‘Open Skies’ agreement, Air France tried a Heathrow-Los Angeles service. But it could not make the route work as it was isolated from its own short-haul feed at its Paris hub base.
New aircraft like 787s, dubbed ‘The hub buster’ in some early Boeing literature, will not suddenly invalidate the hub model, with IAG’s CEO, Willie Walsh, pointing out the vast majority of airlines ordering these aircraft are traditional hub operators. Norwegian’s new low-cost, long-haul services from Gatwick use 787s but currently have ‘first-mover advantage’, which will soon disappear as network airlines take delivery of 787s.
Finally the report points out that the new emergent powers in aviation are all basing their strategies around hub airports. Dubai’s new airport will become the single home for Emirates, Doha’s new airport will replace the old one just as Hong Kong did with its new Chep Lap Kok airport, and Istanbul is planning the same approach with its new super-hub.
The IMF forecasts that over the next ten years, the eight largest emerging markets will account for more than half of global GDP growth. “We know that countries trade twenty times as much with countries they have a frequent, direct flight to so links to those emerging economies will be vital to the UK’s prosperity,” said Matthews.
“The only way to support those links is through a hub airport. Hub airports use transfer passengers to support long-haul routes that would not be viable with local demand alone. The size of the UK, and the fact that it only has one home carrier, British Airways, to supply these transfer passengers from its short haul network means we can only have one hub airport,” he added.
Meanwhile, a separate report released this week revealed the impact of Heathrow’s brand new Terminal 2 on local economies throughout the UK, where it has benefited more than 140 businesses and helped to support tens of thousands of jobs. Set to open in June, the development is one of the largest privately funded construction projects in the UK.
John Holland-Kaye, Heathrow Development Director, concluded: “Investment in Heathrow is making a significant contribution to Britain’s economic recovery, creating jobs across the UK, allowing our suppliers to invest in training and innovation, and giving them a fantastic showcase for their work,” said John Holland-Kaye, development director, Heathrow Airport. “It demonstrates how expansion at Heathrow will not only create jobs when it has been built, by connecting British exporters directly with emerging growth markets, but also create jobs across the UK while it is being built.”
In the coming weeks, the development will move into a new phase as Heathrow, its airlines and other operators begin to get the terminal ready for passengers. This will include six months of intensive preparations, with more than 180 trials and tests involving more than 14,000 people. The terminal will open on June 4, 2014, with the first aircraft, a United Airlines flight from Chicago, scheduled to land at 05:55.
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