Approving a third runway at Heathrow risks “curtailing future market developments,” claims the former chairman of the Competition Commission inquiry that ordered the break up of airports monopoly BAA.
Christopher Clarke says it would be “counterintuitive to reinforce the already dominant and high cost position of Heathrow against lower cost and more flexible operators such as Gatwick”.
In an article published by Gatwick today, just over five years since the BAA ruling, he says the decision was brought about because of “adverse effects on competition” by “Heathrow’s position as the only significant hub airport in the south-east or indeed the UK”.
The investigation by the forerunner of the Competition and Markets Authority led to Gatwick, Stansted and Edinburgh being sold.
Clarke points out that since it was sold, Gatwick’s airport charges have been among the lowest in Europe at around £8.60, compared to equivalent charges at Heathrow which are over £26 – among the highest in the world.
On Heathrow expansion, he says: “Heathrow is already the most expensive provider of capacity in Europe.
“A new runway would increase its costs further, scarcely the best platform to compete with Frankfurt, Amsterdam or indeed Dubai.”
The government has said it will make a decision before the end of the year on whether it wants an additional runway at either Gatwick or Heathrow after the west London hub was favoured by the Airports Commission.
Clarke writes: “If this was a decision being taken by the board of a commercial company, it seems unlikely that Heathrow would be chosen, as similar economic returns can be delivered at Gatwick for a lower capital cost, more quickly, and – on a range of parameters – at lower risk.
“Reinforcing the sector’s liberalisation by balancing capacity between an expanded Gatwick and Heathrow will further nurture the benefits already realised from the introduction of competition into the airports market.
“This is not a decision affecting London and the south-east; it will influence the ability of all UK airports seeking to compete for new international traffic.
“Expansion at Heathrow will curtail the growth of direct international connections at all other airports in the UK.
“Reinforcing the sector’s liberalisation by balancing capacity between an expanded Gatwick and Heathrow will further nurture the benefits already realised from the introduction of competition into the airports market.
“Building a wide range of capacity, able to meet the needs of different airline models at different price points is a sensible way to reinforce competition in the sector and to introduce better structural and economic resilience into the system than opting for the world’s highest cost producer, a strategy that has never worked in any industry.”