The economic case for Heathrow expansion requires fresh analysis, according to leading economists in the aviation sector.
Heathrow confirmed last week that it will present proposals for a third runway to the government this summer. But former Iata chief economist Brian Pearce, now executive director of the Air Transportation Systems Laboratory at University College London, said the case for a third runway made by the Airports Commission in 2015 is now out of date.
Pearce told the Transport Select committee of MPs last week that “the world was a much more tranquil place” when the Airports Commission presented its findings.
Asked whether the UK aviation market today remained similar to in 2015, Pearce said: “No. When the Airports Commission looked at this a decade ago, its central scenario was an extrapolation of benign trends.
“We’ve had major changes in the world since then. It has become much more fragmented geopolitically. There is a lot more protectionism. We’ve had major shocks, the most notable being Covid-19 and the war in Ukraine.
“We’ve just about seen the global aviation industry recover to 2019 levels. [But] we’ve lost about five years’ growth. We see higher costs and a downward revision in long-term growth projections. We’re looking at growth on a slower trajectory than a decade ago.”
Pearce told the committee: “We need to take the forecasts with a great big pinch of salt.”
Dr Alex Chapman, senior economist at the New Economics Foundation, told MPs: “There is something not right about the modelling. There are 300 million passengers coming into and out of the UK every year [and] we’re widely regarded as one of the best-connected countries in the world.”
He noted data for 2024 showed “leisure routes being added to Turkey, Greece and the Canary Islands – not business destinations” and argued: “There is a welfare benefit to individuals, but a high cost to the climate and to wider society. Is that really worth it?”
The Airports Commission, headed by Sir Howard Davies, was commissioned in 2012 to examine the case for airport expansion and in 2015 recommended construction of a third runway at Heathrow rather than a second runway at Gatwick on economic grounds.
But it suggested restrictions to reduce the environmental impacts, with a ban on night flights, a pledge not to build a fourth runway, a legal commitment on air quality and an aviation levy to fund insulation for homes and schools.