Annex B: Commissioned research: Would
a new hub airport be commercially viable?|
The Transport Committee is conducting an inquiry
into the UK's aviation strategy.
Commissioned by the Committee and prepared by Oxera, this report
assesses the conditions under which a new hub airport is, or is
not, likely to be commercially viable.
The assessment does not evaluate a specific proposal
for a new hub; rather, it includes a range of scenarios covering
various airport designs, demand forecasts, cost estimates and
assumptions about the level of airport charges.
In all of the examined scenarios, Oxera's analysis
suggests that a new hub airport would not be commercially viable.
- all the scenarios have a negative value at a
rate of return that a private investor would require; and
- the analysis implies that substantial public
support/subsidy would be needed (in the range of £10-30 billion
in today's money for the base-case scenarios examined).
Nevertheless, from a public perspective, the project
may still offer good value for money, depending on the scope of
wider benefits that the airport could facilitate.
282 See http://www.parliament.uk/business/committees/committees-a-z/commons-select/transport-committee/news/aviation---tor/. Back