New London hub airport ‘would need £30bn of public subsidy’

16:41 24 January 2013

File picture: Steve Parsons/PA Wire

File picture: Steve Parsons/PA Wire

A new hub airport in London could attract flights currently intended for Heathrow Airport - but would need £30billion of taxpayers money, it is estimated.

A report was commissioned by a group of MPs to find out if it would be commercially viable for a private investor.

The report, by Oxera, considered various hub scenarios, rather than any of the actual plans which have been put forward. Researchers did not look in detail at the expansion of existing airports.

The potential impact on Heathrow and other airports were also imagined as this would also have an impact on commercial viability. Compensation to Heathrow needed to be arranged in scenarios where it had to close. Landing charges plus operating costs, all based on current Heathrow usage figures, were also viewed. Policy options towards existing airports was another factor.

The closure of Heathrow was among the potential situations imagined by the researchers which would influence financial viability and demand.

If Heathrow closed, all its traffic would move to the new hub airport. If Heathrow stayed open, the new airport would soak up all unmet traffic and attract some of Heathrow’s existing demand.

Transport committee inquiry chairman Louise Ellman said: “The results suggest a new airport would require public investment and have considerable impact on Heathrow and other London airports.

“The research findings also shed significant light on the scale of investment required to deliver essential related surface transport links for any new airport.

“We hope this work delivers something new to a crucial debate.”

The MPs are set to use information in their ongoing examination of aviation policy.

The report did not look at whether Government support for a new hub would offer good value for money or to suggest what the overall social and environmental benefits could be.

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