Lack of direct flights from UK 'threatens growth'

Heathrow Airport is missing out on flights to emerging markets, said the report

Poor aviation links could cost Britain £14bn in lost business over 10 years, a BAA-commissioned report has said.

Lack of direct flights from the UK to emerging markets may already be costing the country £1.2bn, it said.

The report by economic consultants Frontier Economics comes in response to the government ruling out a third runway at London's Heathrow.

The government defended its decision saying both coalition parties had pledged to cancel third runway plans.

Transport Minister Theresa Villiers said: "Both coalition parties had an electoral mandate to cancel Labour's plans for a third runway at Heathrow.

"We are keeping the promises we made and we are determined to deliver a new approach to aviation policy - one that ensures the aviation sector both supports economic growth and addresses the environmental impacts of flying."

BAA operates six airports in the UK including Heathrow.

The report said Britain "risks being cut off from global growth" and becoming "a less competitive place to do business" because it is losing out to European competitors in the battle for flights to emerging markets.

The cost to the UK could rise to £1.6bn by 2021 - equivalent to one-third of the UK's current balance of trade deficit, the report said.

It said that if Heathrow's capacity remained constrained, Heathrow was likely to lose its position as Europe's busiest airport by 2021, falling to third behind Frankfurt and Paris Charles de Gaulle.

'Keeping promises'

The report found that UK businesses trade 20 times as much with emerging market countries that have a direct daily flight to the UK.

It warned that only a major transfer hub was able to serve such destinations, and because the UK's hub airport at Heathrow was full, Britain was missing out on opportunities for trade.

Paris and Frankfurt already had 1,000 more annual flights to the three largest cities in China than Heathrow, according to the report.

Concerning Heathrow, Villiers: "We are taking active steps to improve the way the airport works."

Colin Matthews, chief executive of BAA, which owns Heathrow Airport, said: "The government has asked the question: 'Is a hub airport important to the UK?'

"This research answers that question with an emphatic 'yes'."

Simon Buck, chief executive of UK airline trade body the British Air Transport Association, said: "This report clearly shows that the government's policy of constraining growth at the UK's only hub airport puts at risk Britain's ability to trade with emerging world economies."