LONDON, England – 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 ยฃ821m 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 โairline scarcity rentsโ 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.
In its appraisal document last month the Commissionโs recognised that a reduction in excess demand at Heathrow will contribute to lower fares. It also found that “The potential of Gatwick expansion to reduce fare levels due to constraints in the London airport system is expected to be lower than at Heathrow across all scenarios as excess demand at Gatwick is currently lower than that at Heathrow.” Todayโs new research supports that conclusion.
Heathrow Chief Executive, John Holland-Kaye said:
โThis research shows that expanding Heathrow will deliver lower fares, new airline competition, and a greater choice of routes. It finds that the consumer benefits of expanding Heathrow are greater than expanding Gatwick in any future scenarioโ.