International Transport Forum Policy Papers

The ITF Transport Policy Papers provide evidence-based policy insights and recommendations. The series assembles reports from case-specific policy analyses carried out by the ITF on request of member countries, thematic reviews carried out in agreement with local institutions, studies completed in the context of the ITF Corporate Partnership Board, and other work focused on supporting policy decisions. The papers in this series will be of interest to policy makers, industry, researchers and transport experts.


Expanding Airport Capacity

Competition and Connectivity: The case of Gatwick and Heathrow

The Airports Commission was set up by the Government of the United Kingdom in 2012 to take an independent look at the UK’s future airport capacity needs. It has been tasked with setting out the nature, scale, and timing of steps needed to maintain the UK’s status as an international hub for aviation, alongside recommendations for making better use of the UK’s existing runway capacity by the end of 2013; and setting out recommendations on how to meet any need for additional airport capacity in the longer-term by the summer of 2015.

In December 2013 the Commission published its Interim Report, which included a short-list of three options for increasing the UK’s aviation capacity in the long-term: two at Heathrow and one at Gatwick. To determine which alternative would provide the largest benefits to passengers, freight businesses and the UK economy overall it is important to understand how airlines are likely to respond to increased runway capacity.

This report examines the likely responses from airlines in all segments of the market: the local hub carrier, BA, other network airlines, short and long haul low-cost carriers and charter airlines. It identifies the main drivers of airline behaviour and considers the possible influence of changes to existing business models and the introduction of new types of aircraft, such as the Boeing Dreamliner and Airbus A350. The report develops six sets of responses, three following expansion of Gatwick and three following expansion of Heathrow, to test the likely evolution of the market. As the future of the highly dynamic aviation market is uncertain, it checks the resilience of each across five different scenarios of how the global aviation sector may develop in the future. The analysis maps the implications for connectivity and potential benefits to the consumer through airline competition and relieving congestion at airports and reducing the associated economic rents.

This report is part of the International Transport Forum’s Country-Specific Policy Analysis (CSPA) series. These are topical studies on specific transport policy issues of concern to a country carried out by ITF on request.


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