|Mention is often made of Heathrow competing with Amsterdam, Frankfurt and Paris as if the only way it can attract further passengers is by an increase in transfer passengers. With London’s huge multi-cultural catchment area and tourism appeal we believe there will also be a huge increase in point-to-point passengers as and when new routes are started.|
Last week’s announcement by the UK government that it was in favour of the building of a third parallel runway at Heathrow has generated much heated debate about the benefits (or otherwise) of the proposal with the focus on the environmental damage such a plan would generate, both on the ground and in the air. A Sunday Times editorial stated: “The economic case for expanding Heathrow, as we have frequently pointed out, is wafer thin. The benefits to Britain of large numbers of transit (sic) passengers may accrue to BAA but have scant impact on the rest of the economy.”
Let’s look at some facts…
Here at anna.aero we believe in presenting factual information that may be of interest or use to both sides of the argument. Mention is often made regarding Heathrow competing with other European hubs, notably Amsterdam (AMS), Frankfurt (FRA) and Paris Charles de Gaulle (CDG) as if the only way Heathrow is likely to attract further passengers if additional capacity is provided is by an increase in transfer passengers. Let us start by summarising the current situation at the four airports.
|LHR||4,331||845,750||157 / 79||195||27.6|
|CDG||4,382||701,853||224 / 103||160||19.6|
|FRA||3,770||612,837||235 / 97||163||16.0|
|AMS||3,363||478,613||195 / 76||142||17.2|
|Source: OAG Max Online for w/c 16 February 2009|
Heathrow has the greatest weekly seat capacity which explains why, with just two runways, it is operating at or close to capacity for the majority of the time. Paris CDG already operates slightly more flights each week while all of its European rivals operate to more destinations. Heathrow has the biggest average aircraft size and the highest average frequency per destination. Each destination from LHR is served on average around four times each day while at each of the other airports the average frequency is less than three.
|Heathrow has far less destinations than its competitors, just 157 direct non-stop services versus 235 from Frankfurt (50% more!!). The new runway will enable more niche destinations to be served both at home and abroad. Some UK regions have found their services to Heathrow ‘squeezed’ out in recent years and the UK’s rail network does not yet provide a viable alternative.|
Frankfurt offers 50% more destinations than Heathrow
Heathrow currently offers ‘just’ 157 non-stop destinations. This sounds a lot but is embarrassingly low when compared with Amsterdam (195), Paris CDG (224) and Frankfurt (235). Yes, Frankfurt offers 50% more non-stop destinations than Heathrow and flies to 18 more countries (97 v 79).
- Countries served from FRA but not from LHR (27): Afghanistan, Albania, Antigua, Argentina, Barbados, Belarus, Bosnia & Herzegovina, Cuba, Dominican Republic, Equatorial Guinea, Estonia, Georgia, Grenada, Iraq, Jamaica, Latvia, Lithuania, Luxembourg, Moldova, Montenegro, Namibia, Slovenia, Sudan, Taiwan, Trinidad & Tobago, Venezuela and Vietnam.
- Countries served from LHR but not from FRA (9): Armenia, Bahamas, Bangladesh, Ghana, Pakistan, Sierra Leone, Uganda, Yemen, Zambia.
Some of the countries not served from Heathrow are served from other London airports but these can all be considered secondary airports (yes, even Gatwick) when compared with Heathrow.
Sufficient demand may already exist for services from Heathrow to some of these countries to prosper but the difficulty (and expense) of acquiring these landing and take-off slots makes it difficult (though not impossible) for new entrants to ‘break-in’ to “fortress Heathrow”. Several US carriers did it last year by working with their alliance partners while Blue1, Kingfisher, Arik Air and most recently Oman Air have all started Heathrow services for the first time.
Share of transfer traffic at LHR has been stable for a decade
According to data derived from regular passenger surveys undertaken by the UK Civil Aviation Authority since the 1970s the share of passengers transferring between flights at Heathrow has been stable for over a decade. Between 1972 and 1987 it averaged around 23%, increasing to 26% in 1991 and 33% in 1996, 1997 and 1998. The latest figure for 2007 estimates the proportion at 34%. In 2001 the share of transfer passengers at Amsterdam was 41%, at Paris CDG 33% and at Frankfurt, with its much smaller natural catchment area, 51%.
|Two old ladies apparently on their way to Edinburgh. Heathrow’s domestic traffic is a bit of a myth – along with arguments about shifting domestic flights on to trains – since 1991 domestic traffic’s share has almost halved from 16.7% to 8.5%.|
It is a relatively simple matter of airline network planning that many routes could not be served profitably if they relied purely on point-to-point traffic. Feeding passengers from many nearby destinations through a central hub will often help generate sufficient demand to allow a route to prosper. If Heathrow gets a third runway London’s large and culturally diverse catchment area will ensure that the majority of passengers will either start or end their journey in the UK.
Apart from helping to make new routes and destinations viable (for UK passengers) transfer passengers benefit the UK by frequently travelling on UK airlines such as British Airways, bmi and Virgin Atlantic on at least one of the flight segments. Plus they go shopping and thus benefit the shops as well as BAA.
Domestic traffic declining; 50% of it connecting to/from abroad
CAA survey data also estimates that out of the 23 million connecting transfer passengers at Heathrow 20 million are connecting on international flights and three million on domestic flights. Given that only 8.5% (or 5.7 million) of Heathrow’s passengers are travelling on domestic flights this means that over half of all domestic passengers are connecting to/from international destinations.
|Source: UK CAA Survey 2007|
One possibly surprising statistic is the on-going decline in domestic passenger numbers at Heathrow. Since 1991 the share of domestic traffic at LHR has almost halved from 16.7% to 8.5%.
This has caused much consternation in some UK regions. Currently there are direct services from Heathrow to 10 UK airports; Aberdeen (two carriers), Belfast International (one), Belfast City (one), Edinburgh (two), Glasgow (two), Jersey (one), Leeds/Bradford (one), Manchester (two), Durham Tees Valley (one) and Newcastle (one). Routes from the west or south-west (e.g. Bristol, Cardiff, Exeter, Newquay and Plymouth) are non-existent. Some of these services used to exist, often served by smaller turbo-prop aircraft, but they were ‘squeezed out’ when the lure of accepting offers for the valuable slots from the ‘big boys’ became just too tempting. Also, BA decided it was more profitable to use slots on such services on higher revenue generating longer-haul routes. It would be nice to report that great improvements in the UK rail network have been made to encourage domestic passengers to reach Heathrow by rail, but this has palpably not been the case.
UK regional passengers can go via Amsterdam?
It has often been noted that there are more UK airports served from Amsterdam than from London Heathrow. This is indeed true and the latest schedule data shows that Amsterdam is connected to 22 UK airports. However, if we exclude the five London area airports (for obvious reasons) that figure is reduced to 17. Amsterdam has no direct flights to either Belfast City nor Jersey so there are nine UK regional airports with Amsterdam flights but not Heathrow flights.
These are Birmingham (sector length to Heathrow of 141 kilometres), Bristol (157 km), Cardiff (201 km), East Midlands (163 km), Exeter (222 km), Humberside (272 km), Liverpool (264 km), Norwich (180 km) and Southampton (85 km). All of these routes are short enough that a good high-speed rail service to LHR would make them unviable air routes, but the UK is a very long way from achieving such a network. Of these nine UK regional airports only five of them are connected to Amsterdam by KLM, the obvious choice for onward connections. East Midlands services are operated by bmibaby, Exeter and Southampton by Flybe, and Liverpool by easyJet.
53% of Heathrow passengers are foreign
Analysis of the origin of Heathrow passengers and their primary reason for travel reveals that around 55% of passengers are originating from outside of the UK with around two-thirds travelling for leisure. Around 36% of passengers are travelling on business meaning that 64% (or almost two-thirds) of Heathrow passengers are actually travelling for non-business purposes.
|Foreign Originating||UK Originating|
|Source: UK CAA Passenger Survey 2007|
|Canadians at Covent Garden’s Maple Leaf pub celebrating their national day with warm English beer. Curiously Canadians make up the second biggest foreign group using Heathrow (after Americans, and ahead of any Europeans).|
Of the 67 million passengers in 2007, 30 million are originating in the UK while 9.4 million are American. The next biggest nationalities at Heathrow are Canadians (2.7 million), Germans (2.4 million), Australians (2.0 million) and Irish (1.9 million). The number of Americans comes as no surprise as three of the top 10 routes (in capacity terms) from Heathrow are to the US. The top 10 destinations from each of the hub airports are shown below ranked by current seat capacity.
The top domestic destination from Heathrow is Edinburgh which ranks 13th in capacity. Frankfurt has three domestic routes in its top 10 while Paris has none as much of Paris’ domestic capacity is split between CDG and Orly. Curiously London Heathrow ranks in the top two at each of the other hub airports.
|London Heathrow||Amsterdam||Frankfurt||Paris CDG|
|New York JFK||London Heathrow||Berlin Tegel||Rome FCO|
|Dubai||Paris CDG||London Heathrow||London Heathrow|
|Hong Kong||Madrid||Paris CDG||Amsterdam|
|Singapore||London City||Madrid||Milan Malpensa|
|Paris CDG||Frankfurt||Chicago O’Hare||Geneva|
|Los Angeles||New York JFK||Vienna||Frankfurt|
|Chicago O’Hare||Zurich||Singapore||New York JFK|
|Source: OAG Max Online for w/c 16 February 2009|
|The Conservative opposition says it will overturn the runway’s go-ahead if it gets back to power (but probably wouldn’t).|
Economics versus the environment
Both London mayor Boris Johnson and Tory party leader (and potential next Prime Minister) David Cameron have categorically stated that they will not allow the third runway to be built. BA’s boss Willie Walsh recently suggested on a TV panel debate that what a political party says in opposition may not be the same as what it decides to do when in power, but there seems to be a growing belief in the media that the business case is not as strong as its supporters make out. Hopefully our analysis will help contribute to the debate and we look forward to receiving your comments.
It seems ironic that on the day that Heathrow’s third runway received support from the UK government Frankfurt airport was given the go-ahead for its fourth runway. Both runways will have an impact on the environment, require businesses and people to be relocated, and meet with considerable opposition. It will be interesting to see which (if either) gets to become operational first.