Expanding Heathrow will deliver greater reductions in ticket prices for passengers than expanding Gatwick, according to new research published today by the Airports Commission.
The findings are contained in new independent analysis conducted for the Airports Commission by the OECD and SEO economic research.
The research finds that even in the most favourable scenario for Gatwick, where the future of aviation is focussed on low-cost long-haul travel, Heathrow expansion will deliver greater benefits for consumers than Gatwick expansion. The report puts the total benefit to passengers of expanding Heathrow over expanding Gatwick at £821m per annum in this scenario.
The research finds that even in the most favourable scenario for Gatwick, where the future of aviation is focussed on low-cost long-haul travel, Heathrow expansion will deliver greater benefits for consumers than Gatwick expansion. The report puts the total benefit to passengers of expanding Heathrow over expanding Gatwick at £821m per annum in this scenario.
When passenger demand to fly exceeds the physical capacity of airports, ticket prices rise to balance capacity and demand. This results in higher prices for consumers than if there was sufficient airport capacity. The report finds that the reduction in these “airline scarcity rents” is the most important element of the consumer price benefits that will flow from airport expansion.
Heathrow has been full for ten years and this capacity constraint means supply has not been able to keep pace with demand.