Lack of capacity at Heathrow 'costing the UK £14bn a year in lost trade'

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The UK is missing out on £14bn a year in trade due to capacity constraints at Heathrow, a sum that could rise to £26bn by 2030 if the Government blocks further runways at the airport, its owners have claimed.

Heathrow group, previously BAA, said a third runway at the airport would provide capacity for an extra 35m passengers a year and allow it to compete with rival hubs in Europe (Chicago Options: ^REURUSD - news) “for a generation”. Heathrow, which is 99pc full, currently transports about 70m passengers a year.

Britain has plenty of spare capacity at other airports such as Stansted, but what is costing the country dear is a lack of hub capacity, Heathrow said, as it published its first submission to the Davies Commission on aviation.

The report argues that airlines find it more profitable to offer long-haul routes from hubs, as opposed to point-to-point airports such as Gatwick. This is because they can take advantage of local demand and transfer passengers to fill flights.

Typically one third of the passengers on a flight from Heathrow have transferred from another flight. On some routes, such as to Hyderabad in India, transfer passengers can account for as much as 80pc.

Colin Matthews, chief executive of Heathrow, said a lack of capacity at the UK’s only hub airport is limiting Britain’s ability to connect to growing cities in emerging markets, such as Chengdu in China. This, in turn, is stifling trade.

The aviation chief is pressing the Davies Commission to give UK hub capacity “specific consideration”.

Heathrow is pushing the hub argument before setting out its own expansion proposals. Several groups, including the centre-right think tank the Policy Exchange, have gone beyond the previous third runway debate and argued that four or five runways will be required at Heathrow to serve future aviation needs.

The estimates on lost trade, calculated by Frontier Economics, have been dramatically revised upwards a report by the same consultants last year which estimated the annual cost at just £1.2bn.

Frontier said the revised figures were based on the potential trade with a large number of countries over a longer timescale.