Transport CommitteeWritten evidence from Virgin Atlantic Airways (AS 89)

Introduction

1. Virgin Atlantic is pleased to submit evidence to this inquiry. Over 28 years we have grown from a start-up airline to the UK’s second largest global airline. We carried 5.28 million passengers and 210,000 tonnes of cargo in 2011.1 We employ 9,000 people and operate 40 wide-bodied aircraft, serving 30 destinations across four continents from four UK airports.

2. Aviation is a remarkable UK success story. We are home to the world’s busiest airport for international passengers, the world’s busiest single runway airport, and world-leading airlines, engineers and manufacturers. However, success can breed complacency. There is no guarantee that UK aviation will continue to thrive in the decades ahead. Other countries treat aviation as integral to their economic success and are fast catching up and overtaking. As a country we need to decide—and quickly—if we want to remain a leading aviation nation. Given the UK is an island trading nation with an existing competitive advantage in aviation and aerospace, we suggest the answer should be an unambiguous yes.

3. The Committee has posed a large number of questions. We have tried to keep our response brief while answering those questions. We would be pleased to provide additional oral evidence to inform the Committee’s work.

1. What should be the objectives of Government policy on aviation?

4. The Government’s main objective should be to create a legislative, regulatory and taxation framework that facilitates free and fair competition within the UK and allows British companies to compete with their international competitors on a level playing field. The Government will set the environmental parameters within which the industry can operate, but having done that it should let the market operate to meet the needs of passengers. A successful aviation policy would result in:

the British public being able to fly to more places more easily;

more overseas visitors travelling to the UK for business and leisure;

more exports being flown to overseas markets;

fewer British people being prevented from flying by cost;

more jobs in the aviation sector and the industries it supports; and

more passengers using British airlines and British airports.

(a) How important is international aviation connectivity to the UK aviation industry?

5. Vital. The UK aviation industry would not have reached the size and importance it has today without it. We believe international connectivity is best achieved through a world class hub airport (currently Heathrow airport) and world-class point-to-point airports (eg Gatwick, Manchester, Glasgow). The UK needs both.

(b) What are the benefits of aviation to the UK economy?

6. There are direct and indirect benefits to the UK economy. The most recent analysis of the contribution to the UK economy found that UK aviation:2

contributes £49.6 billion (3.6%) to GDP;

supports 921,000 UK jobs; and

pays over £7.9 billion in tax.

7. Aviation drives wider economic growth by:

connecting British businesses to new customers, investment and opportunities and opening up foreign markets to UK exports;

encouraging inward investment from foreign firms which require strong international transport links;

lowering transport times and costs, helping to increase competition because suppliers can service a wider area; and

supporting the adoption of new business practices, such as just-in-time-inventory management, that rely on quick and reliable delivery of essential supplies.

8. Many businesses depend on international air travel. British residents made 6.85 million overseas business visits by air in 2011.3 In the same year overseas residents made 5.4 million business visits by air to the UK.Those visitors spent £3.92 billion pounds in Britain.4

9. Air freight represents less than 1% of UK trade products by tonnage, but 30% of exports by value.5 A BIS study looking at sources of future economic growth found that specialised and knowledge-intensive service and manufacturing sectors are likely to contribute strongly, building on the UK’s relative specialisation in finance, business services, communications, and computer and information services.6 These are all sectors that rely on air freight services, so we expect air freight to grow in importance.

10. Aviation is also vital to meet the Prime Minister’s inbound tourism objectives of generating four million additional overseas visitors over the next four years and making the UK one of the top five visitor destinations in the world.7 73% of all inbound visitors to the UK arrived by air in 2011 and their share of inbound visitor spend was 84%.8 That is 7.95 million holiday visits to the UK, contributing £5.5 billion spend in the economy.9

(c) What is the impact of Air Passenger Duty on the aviation industry?

11. Air Passenger Duty has a significant impact on passengers and therefore the aviation industry. The UK has the highest air passenger tax in the world. Taking air ticket taxes and airport charges together, the World Economic Forum ranks the UK 134th out of 138 countries.10 Only six European countries tax passengers for international air travel and UK rates are twice the level of the next most expensive tax (levied in Germany).

12. APD was introduced at relatively affordable levels in the mid-1990s. The duty has been increased significantly since 2007, particularly on long-haul flights.

Band	Example	2007 Economy rate (£)	2012 Economy rate (£)	% increase
A	EU	10	13	30
B	USA	40	65	62.5
C	China, India	40	81	102.5
D	Australia	40	92	130

13. The impact on families and business travellers has been considerable.

Who’s travelling	Class of travel	2007 (£)	2012 (£)	£ increase
Family of 4 to Spain	Economy	40	52	+12
Family of 4 to Florida	Economy	160	260	+100
Business party of 4 to China	Premium Economy	320	648	+328

14. The impact on airlines has been significant. The following table shows that between 2008 and 2011, the number of passengers Virgin Atlantic carried decreased by 7.7%, but the amount of APD paid by our passengers increased by 45.6%.

Year	No. of passengers (m)11	% change (yr-on-yr)	APD paid by Virgin Atlantic passengers (£m)12	% change (yr-on-yr)
2006	4.89	-	55.7	-
2007	5.64	+15.4	122.9	+120.1
2008	5.72	+1.4	134.3	+9.3
2009	5.42	-5.3	129.3	-3.7
2010	5.29	-2.3	149.5	+15.6
2011	5.28	-0.3	195.6	+30.8

15. Setting more internationally competitive rates would benefit the UK economy because APD is much more than a tax on aviation; it’s a tax on exports, business, inbound tourism and families. There is a lack of hard data quantifying the impact of high APD rates. It is surprising that the Treasury has not undertaken such an analysis given it has increased rates significantly over the last six years. With other members of the Fair Tax on Flying Coalition, we are calling on the Government to commission a comprehensive study into the full economic effects of aviation taxation in the UK, including its impact on employment, reporting in advance of the 2013 Budget. APD rates should be frozen until this study has reported.

(d) How should improving the passenger experience be reflected in the Government’s aviation strategy?

16. The Government should focus on the two important parts of the passenger experience where it has direct responsibility: visa applications and entry into the UK. Improving the experience of foreign nationals applying for a visa and the experience of all passengers arriving at our border should be a priority. This will require cross-departmental co-operation and agreement between the DfT, Home Office, FCO, DCMS and BIS.

17. Progress has been made in speeding up, simplifying and making more convenient the visa application process in many countries. Nevertheless, further improvements are required if the UK is to maximise its attractiveness as a destination for business and leisure. VisitBritain issued a consultation document this month on a growth strategy for inbound tourism to Britain from 2012 to 2020. They find that:13

“The UK visitor visa regime is one of the factors inhibiting Britain’s competitiveness as a destination for international tourism. European competitors such as France and Germany are performing better than Britain in attracting visitors from growth markets such as India and China. Britain is not part of Schengen, so visitors intending to travel to the UK and Europe require two visas rather than one; a British visa requires biometrics and the documentation required is onerous. And whilst UK visas are often issued at comparable speeds to the US or European visit visas, the way service standards are set out creates confusion for potential visitors. This results in poor performance in attracting visitors relative to key competitors in Western Europe; and

reduces desire to visit Britain in the longer term, as it perpetuates the idea that Britain is an unwelcoming destination.”

18. The Home Office plans to conduct a global border security assessment in 2013.This is an opportunity to think creatively about practical improvements to the visa application experience without weakening the system. We would like the following ideas to be considered:

Applicants lose only an admin fee, rather than the entire visa cost, if their application is unsuccessful.

Reduced rates for group or family applications.

Reduced rate if an applicant has previously had a UK visa (UKBA should already have the applicant’s details/biometrics on file).

Reduced rate visas for those who hold a biometric passport.

Reduced rate for spouse/children of British Citizens who are resident overseas.

Reduced rate if an applicant already has a Schengen visa (could be limited to Schengen visas issued by trusted states).

More pragmatic enforcement of interview process, for example children under a pre-agreed age not required to attend a personal interview if parents are also applying for visas at that time (in countries such as China and South Africa, the cost of flights to a city with a Visa Application Centre can be prohibitive).

UKBA should engage the Travel Trade by making “Express fees” and the visa services commissionable.

19. The Government and the industry agree that robust controls at the border and a positive passenger experience are not mutually exclusive. The experience at Heathrow during the Olympics and Paralympics is testament to that. Progress has been made since the spring when queues were unacceptably long on a number of occasions. We want passengers to receive an “Olympic welcome” at every airport on every day of the year.

(e) Where does aviation fit in the overall transport strategy?

20. Aviation should be an essential element in a multi-model transport strategy. Our passengers need excellent connectivity between our services and other transport modes. Passengers want to be able to travel and from airports and their final destination easily by a variety of transport modes: bus, coach, rail, taxi and car. The same applies to people who work at airports. If your shift starts at 6am, the only option is often private car. Whether it’s deciding on rail franchises (Gatwick) or access to HS2 (Heathrow), the ability to transfer quickly and easily between transport modes should be carefully considered.

2. How should we make the best use of existing aviation capacity?

(a) How do we make the best use of existing London airport capacity? Are the Government’s current measures sufficient? What more could be done to improve passenger experience and airport resilience?

21. Airlines respond to passenger demand and operate services accordingly. Heathrow is operating at full capacity and Gatwick is full at peak times because passengers want to fly from those airports. Stansted, Birmingham and other airports with excess capacity can attract more passengers and airlines by reducing their charges, improving their passenger experience and marketing their services. We do not believe the Government should intervene in a well-functioning market by somehow forcing airlines and passengers to fly from airports they do not want to fly from or by distorting the aviation taxation system. We need more capacity at airports people want to use. Avoiding this difficult issue by trying to force more people to fly from airports they don’t want to use is not a realistic or long-term solution.

22. Recent experience has shown that a few inches of snow can cause significant disruption for our passengers. While airport resilience depends on effective airport management and communication between the airport, airlines and other bodies, capacity also plays an important role. Spare capacity creates flexibility during every day operations and specific events. Spare capacity also enables an airport to recover and return to normal operations quickly after an event. Airports operating at full capacity will be less resilient than airports with spare capacity.

(b) Does the Government’s current strategy make the best use of existing capacity at airports outside the south east? How could this be improved?

23. We operate services to our key leisure routes from Manchester and Glasgow airports. We have responded to passenger demand and operate flights that are viable based on the passenger demand profile of these airports. However, our regional airports are not able support viable services to the broader range of long-haul destinations that are viable from Heathrow. The best way to increase the use of regional airport capacity is to stimulate economic growth in those regions. Airlines will respond as passenger demand grows.

24. The Government already encourages foreign airlines to use regional airports. Since 1998, unconstrained third/fourth freedom access to regional airports has been offered (subject to UK airlines being able to operate without restriction on the same routes) and since 2005, applications from foreign airlines to operate new fifth freedom services via regional airports are welcomed. While airlines such as Emirates and Etihad have taken up these opportunities, foreign airlines will only take action if there is sufficient demand to make a route viable. They are able to make a limited number of services work because they can connect passengers to a variety of other destinations via their home hub airport, not because there is sufficient demand for that destination alone.

25. When we attend bilateral talks between the UK Government and other countries, UK officials always promote the other London airports and regional airports, but the response is usually the same: foreign governments are generally only interested in Heathrow. When foreign governments are unable to access or increase their own airlines’ access to Heathrow, they are understandably reluctant to open up or increase UK carriers’ access to their airports. Insufficient capacity at our hub airport is restricting the further liberalisation of air service agreements and therefore holding back new services to new markets.

(c) How can surface access to airports be improved?

26. We are particularly keen to improve rail access between London and Gatwick airport. We have four priorities for the new combined franchise:

Returning to a dedicated airport service and maintaining a truly express service between London and Gatwick airport. Since 2008 the Gatwick Express has not been a dedicated airport service, with trains running through to Brighton and back at peak times. It is in our view that this extension to Brighton should be discontinued. Air passengers have different needs from the rolling stock (eg luggage space) and at peak times the train is already full when it reaches Gatwick from Brighton. We would not support the introduction of additional stops on this service (eg at East Croydon or Clapham Junction) that would result in a slower service.

Ensuring appropriate rolling stock. The rolling stock operating on the Gatwick Express service should meet the needs of air passengers. The current Class 442 trains are sub-optimal with limited luggage space, narrow internal doorways and a large step from carriage to platform at Gatwick. The previous Class 460 trains had wider doors and more luggage rack space; although there were issues with comfort and noisy air conditioning. Given passengers are paying a premium price to use the Gatwick Express rather than local services, they deserve rolling stock that meets their needs.

Maintaining/improving the frequency of services. Our passengers value the regular four trains per hour service, especially when travelling from London to Gatwick before their flight. The status quo should be the minimum standard.

Removal of ticket barriers at Gatwick Airport. The recently installed barriers at Gatwick continue to cause annoyance, queues and sometimes fines for our passengers. Previously, the Gatwick Express used to carry out 100% on board ticket inspections to avoid revenue loss. The introduction of the gates has not improved the revenue collection for this service, but it has created an additional burden for passengers.

3. What constraints are there on increasing UK aviation capacity?

(a) Are the Government’s proposals to manage the impact of aviation on the local environment sufficient, particularly in terms of reducing the impact of noise on local residents?

27. The aviation industry has a strong track record of reducing the impact of noise on local residents. For example, around 2 million people lived within the Heathrow 57dBA contour in the 1970s, but by 2011 that number was down to less than 250,000, despite a significant increase in the number of flights flown per year over the same period. Sustainable Aviation is currently developing a Noise Road Map that will show how noise impacts are predicted to change over the next few decades.

28. Noise understandably remains a key concern of local communities and the industry is committed to working with them to find constructive solutions. We support the internationally agreed, ICAO “Balanced Approach” principle to aircraft noise management which has four elements:

reduction at source (quieter aircraft);

land-use planning and management;

noise abatement operation procedures (optimising how aircraft are flown and the routes they use to minimise noise impacts); and

operating restrictions.

29. The Government has proposed the concept of “noise envelopes”. The broad principle of providing greater clarity and certainty for communities and the industry is welcome, but much more detail about how they would work in practice is still required to comment in any depth.

30. The Government is right to recognise the interdependencies between noise and carbon emissions. The Government proposes the general rule that airports and air traffic service providers should give particular weight to the management and mitigation of noise in the immediate vicinity of airports, compared with CO2 emissions. We do not oppose this in principle, but great care will have to be taken to strike an appropriate balance.

31. Overall, the Government position on noise appears to be still developing. The draft Aviation Framework asks more questions than it answers. We await further detail to provide a full evaluation of its effects.

(b) Will the Government’s proposals help reduce carbon emissions and manage the impact of aviation on climate change? How can aviation be made more sustainable?

32. The previous Government set a target that gross aviation emissions (emissions before an adjustment is made for trade in carbon credits) should return to 2005 levels by 2050. The Committee on Climate Change believes this is feasible, compatible with significant demand growth and broadly cost-effective, with different scenarios for demand growth and technology deployment reaching a similar emissions outcome:14

“Our review of aviation emissions in 2009 showed that there are various options for meeting this target, including fuel efficiency improvement, operational efficiency improvement, use of biofuels, modal shift and constraints on demand growth. We presented scenarios with baseline demand growth of 150% from 2005 to 2050, falling to 115% when exposed to a carbon price that reaches £200/tCO2 in 2050; in our ‘Likely’ scenario, emissions reductions were delivered through a 0.8% annual improvement in fuel efficiency, by meeting 10% of fuel demand with biofuels and by constraining demand growth to 60% from 2005 (a 75% increase from 2010 given that demand fell during the recession).”

33. Virgin Atlantic individually, and the industry collectively through Sustainable Aviation15, is working hard to address the environmental impact of flying. For example, we are currently taking delivery of ten new Airbus A330–300s that are 15% more efficient on a per seat basis than the aircraft they replace. From 2014 we will start receiving 15 Boeing 787s that are approximately 25% more fuel efficient and produce a 60% smaller noise footprint than the A340–300s they will replace.

34. The Government is right to focus on action at a global level, with action at European level a second best option. We do not support unilateral actions at the national level that create competitive distortions in the international market. The proposed approach broadly echoes the Committee on Climate Change who argue that the appropriate approaches are at the global, or possibly EU level, but warns that “a UK unilateral approach would have limited impact reducing emissions and could result in perverse outcomes or leakage.”16

35. When negative externalities occur such as CO2 emissions and noise, we support market-based measure, such as emissions trading, to address them. We support aviation’s inclusion into the EU Emissions Trading Scheme as a first step to a global mechanism for the reduction of aviation emissions. As a market-based cap and trade scheme, EU ETS will be more effective than APD which is a blunt tax that does not cap emissions. Nevertheless, the risk of retaliatory action from foreign governments remains high and should not be ignored. ETS revenues should be off-set against APD revenues to prevent the overall tax burden on industry increasing. The Government should continue to work in ICAO for a global agreement.

36. The Government should support further improvements by fostering an economic and regulatory environment that allows aviation businesses to generate the profits needed to make technological, fleet and operational improvement investments. The Government should also work with industry to tackle barriers that will be difficult to overcome through the market alone, such as the development of advanced biofuels and more efficient airframes.

37. Virgin Atlantic is disappointed not to see development of any further initiatives to support sustainable aviation fuels. Drop-in sustainable fuels are a practical solution to reducing aviation emissions as they need no new infrastructure or handling costs. The Climate Change Committee’s recent Bioenergy report set out the role of biofuels in meeting emissions reductions targets.17 It demonstrated two scenarios (with and without carbon capture and storage (CCS) technology). In both scenarios the use of biofuels in aviation is highlighted as an important part of the policy solutions needed, with this role even more critical in a world without CCS.

38. In the short-term, many sustainable aviation fuel pathways are not economic in their own right and carry with them material first-of-a-kind technological risk for investors and lenders. Moreover, despite strong interest and support for a more sustainable alternative to kerosene, there are also a number of practical barriers to the development of this emerging new market and the widespread adoption of sustainable aviation fuels. Since these fuels will not be derived from a single technology but a portfolio of technologies at different stages of development, a range of policy measures will be necessary. The appropriate types of policy incentive vary depending upon the proximity of a technology to market. We believe there is a role for the Government in developing policy measures to ensure these vital technologies can be developed.

39. Ultimately, the most effective instrument to achieve this objective is a global carbon trading regime, creating a carbon price linked to economy-wide marginal abatement costs. In the short term however, there is an urgent need to ensure aviation is not disadvantaged compared with other transport modes and sectors. For example, under the EU Renewable Energy Directive, 10% of all energy in the road transport sector must be from renewable sources in 2020. This creates a bias in favour of biomass being directed to biodiesel rather than aviation biofuels. This bias does not make sense because unlike ground transportation where practical alternatives to combustion already exist, it is clear that aviation will be dependent on liquid fuels for the foreseeable future. Finally it is also important that biojet can make the most of existing incentives. This means the ETS needs to be amended to allow aviation to use a purchase-based (or “book and claim”) accounting methodology instead of a consumption-based methodology, similar to that used for the energy industry.

4. Do we need a step-change in UK aviation capacity? Why?

40. The case for increasing hub airport capacity is overwhelming. The number of passengers using UK airports is forecast to rise from 211 million in 2010, to 335 million in 2030 and to 470 million in 2050.18 As noted above, significant growth is compatible with the nation’s climate change targets. The Committee on Climate Change argues that an increase in flights (Air Transport Movements (ATMs)) from 2.05 million in 2011 to a maximum of 3.4 million in 2050 is compatible with the target to reduce UK aviation CO₂ emissions back to 2005 levels by 2050.19

41. The following table shows that there is excess airport capacity across the country as a whole, but an acute shortage of capacity at our hub airport Heathrow. Heathrow operated at 99.2% capacity last year, whereas Birmingham, for example, operated at 44.4% capacity.

Airport	Maximum runway capacity (ATMs, ‘000s)20	Actual use in 201121	Capacity utilisation (%)
Heathrow	480	476	99.2
Gatwick	260	245	94.2
Stansted	259	137	52.9
Luton	104	72	69.2
London City	120	61	50.8
Manchester	321	158	49.2
Birmingham	189	84	44.4
East Midlands	200	54	27
Bristol	200	53	26.5
Liverpool	200	46	23
Newcastle	200	45	22.5
All UK airports	5,790	2,046	35.3

42. Heathrow now serves fewer destinations than its three main EU competitors (Paris Charles de Gaulle, Frankfurt and Amsterdam Schiphol).22

No. of routes	Heathrow	Amsterdam	Frankfurt	Paris	Madrid
Short-haul	46	67	74	78	63
Long-haul	82	64	75	77	32
TOTAL	128	131	149	155	95

43. Heathrow is also poorly connected to some of the world’s fastest growing economies. There are no daily flights between Heathrow and Mexico, Indonesia, Venezuela, Colombia, Chile, Philippines, Pakistan, Peru, Ukraine and Vietnam.

44. Constrained hub capacity has resulted in long-haul services squeezing out some short-haul services. This is not sustainable because most long-haul routes depend on the transfer passengers provided by short-haul services. As the figures for Amsterdam, Frankfurt and Paris show, successful hub airports have a mix of short-haul and long-haul services. The capacity crisis will not be solved by forcing airlines to move short-haul flights out of Heathrow to other London airports.

45. Constrained hub capacity restricts competition between airlines. Following its acquisition of bmi, British Airways now owns 50% of slots at Heathrow. The next biggest operator owns approx. 5% and Virgin Atlantic, the third biggest slot holder, owns just 3% of slots. The lack of slots makes it difficult for Virgin Atlantic to launch new services to offer much needed competition on key routes.

46. Constrained hub capacity limits the UK Government’s ability to negotiate liberal bilateral air traffic agreements with other countries. Other countries are understandably reluctant to open up or extend access to their main airports for UK carriers, when the UK Government is unable to offer the same level of access to Heathrow. Pointing to spare capacity at Gatwick, Stansted or the regions has so far proven unpersuasive.

47. Some people argue that we don’t need more hub capacity because regional airports have spare capacity. If we are to maintain and increase long-haul services, particularly to the BRIC and emerging economies, we need a hub airport with more capacity because most long-haul services are not viable from our regional airports.

48. Hub airports combine larger point-to-point demand with domestic and international connecting traffic to make many more routes viable. This is particularly important for long-haul routes where airlines have higher fixed costs and larger aircraft to fill. The CAA has estimated that two thirds of Heathrow destinations are supported by more than 20% of transfer passengers.

49. Our regional airports perform an important but different role. With relatively smaller catchment areas and limited connecting services, no frills, charter and scheduled airlines operate direct point-to-point short-haul services from regional airports. The biggest regional airports do support a limited number of long-haul leisure routes operated by UK airlines and business routes operated by overseas airlines feeding their home hub airport, but far fewer than Heathrow.

50. The following table demonstrates the scale of the difference between Heathrow and our top regional airports.23

Airport	Total passengers (m)	Total passengers connecting
		Number (m)	Share of all passengers
Heathrow	66.9	23.5	35%
Gatwick	34.5	4.5	13%
Stansted	23.6	2.2	9%
Manchester	21.6	0.6	3%
Birmingham	9	0.2	2%

51. Gatwick has attracted a handful of direct long-haul services to Vietnam, Korea and China in recent months. It remains to be seen if they can be made viable. Delta has recently dropped its Gatwick-Atlanta route, the carrier’s last route from the airport, and started an additional Heathrow-Atlanta frequency.24

(a) What should this step-change be? Should there be a new hub airport? Where?

52. We believe the UK needs one internationally competitive hub airport located where people where to fly to and from. We supported the proposal for a third runway at Heathrow because it delivered significant extra capacity at an affordable cost, in a convenient location for passengers, within a relatively short timeframe. We are not, however, wedded to one solution. If a superior alternative solution comes forward during the Davies Commission process we will give it full consideration. Airport infrastructure is privately funded in the UK, so any solution must command the confidence of the industry. The Davies Commission should analyse every solution to the hub capacity crisis objectively on its merits.

(b) What are the costs and benefits of these different ways to increase UK aviation capacity?

53. Until existing airports or new developers present detailed proposals during the Davies Commission process, it’s impossible to answer this question.

54. We are extremely sceptical of the concept of a “virtual” hub airport. Successful hub airports have low minimum connection times (the time it takes to leave one aircraft and board the next as part of an indirect journey). Even with a dedicated High Speed link between two UK airports, we cannot see how a “virtual” hub could deliver either. Without a competitive transfer proposition, passengers will choose to connect at other competing hub airports, rather than in the UK.

55. The following table shows minimum connecting times at the main European hub airports:25

Minimum connecting time in Europe	Minutes
Vienna	25–30
Munich	30–35
Copenhagen	45
Frankfurt	45
Amsterdam	50
Brussels	50
Paris	60–90
Heathrow	60–90

56. Heathrow, as a single hub airport on one site (albeit with five terminals) where many transfer passengers remain airside in transit, is only capable of delivering minimum connection times of between 60–90 minutes. We cannot envisage how a Heathrow-Birmingham or Heathrow-Gatwick “virtual” hub airport on two sites, with the existing challenges of Heathrow, with passengers having to collect their bags, clear immigration, catch a train, check-in at the other airport, go through security, then get to the departure gate, could deliver anyway near the same connection times. For immigration and security reasons, it’s difficult to envisage how passengers could remain airside for the whole transfer process.

57. We are not aware of a comparable successful “virtual hub” airport operating anywhere else in the world. In countries such as France, Germany and Holland, each of their hub airports have been given the opportunity to grow on one site. A “virtual” hub airport is no replacement for one hub airport that has sufficient capacity to meet future demand.

58. With regards to another airport taking on a limited hub role while Heathrow is at maximum capacity, we believe the UK is only able to support one internationally competitive hub airport. This is consistent with other comparable countries. We note that British Airways sought to run a second hub operation at Gatwick in the 1990s that was unsuccessful. The airline ended up consolidating its hub operations at Heathrow.

22 October 2012