UK. The government has approved a third runway at London Heathrow Airport as its solution to expanding UK airport capacity.

The Department for Transport said expanding Heathrow would better connect the UK to long haul destinations in growing world markets, boosting trade and creating jobs.

A new runway at Heathrow will bring economic benefits to passengers and the wider economy worth up to £61 billion, it said. The new runway is also expected to deliver an extra 16 million long haul passenger seats in 2040 as well as lower fares relative to no expansion, fewer delays, and better connections.

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Transport Secretary Chris Grayling said: “The step that government is taking today is truly momentous. I am proud that after years of discussion and delay this government is taking decisive action to secure the UK’s place in the global aviation market – securing jobs and business opportunities for the next decade and beyond.

“This isn’t just a great deal for business, it’s a great deal for passengers who will also benefit from access to more airlines, destinations and flights.

“This is an important issue for the whole country. That is why the government’s preferred scheme will be subject to full and fair public consultation. Of course it is also hugely important for those living near the airport. That is why we have made clear that expansion will only be allowed to proceed on the basis of a world class package of compensation and mitigation worth up to £2.6 billion, including community support, insulation, and respite from noise – balancing the benefits and the impacts of expansion.”

A Heathrow spokesperson said: “We welcome the news that Heathrow is the government’s preferred site for a new runway and look forward to hearing the full details later from the Transport Secretary.

“Expansion of Heathrow is the only option that will connect all the UK to global growth, helping to build a stronger and fairer economy.

“We await the full details, but Heathrow stands ready to work with government, businesses, airlines and our local communities to deliver an airport that is fair, affordable and secures the benefits of expansion for the whole of the UK.”

Heathrow Airport Chief Executive John Holland-Kaye added: “Today, the team at Heathrow start the important work to deliver the vital new runway that the UK needs to compete in the world. A new runway will open trade routes and create jobs up and down the UK. Heathrow will play a key role in making our country stronger and fairer for everyone.

“We look forward to working with Government, businesses, airlines, the CAA and our local communities to deliver an airport that is fair, affordable and secures the benefits of expansion for the whole of the UK.”

Today’s decision signals that a third runway for Heathrow is the government’s favoured option for airport capacity growth. The scheme will now be taken forward in the form of a draft ‘National policy statement’ (NPS), to be published in the new year when the public will be consulted on the proposals. A binding vote will be held in late 2017 or early 2018.

A proposal to build a second runway at London Gatwick Airport was rejected in favour of the Heathrow third runway. Gatwick Chief Executive Stewart Wingate said: “We are disappointed as we do not believe this is the right answer for Britain. Gatwick has put forward a credible financeable and deliverable plan for expansion.

“It is a plan that can guarantee growth and guarantee certainty for Britain. We look forward to studying the full reasons behind the government decision in detail.

“The challenges facing Heathrow have not changed. Our message today is that Gatwick stands ready to proceed when the time comes.”

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A third runway at Heathrow will deliver lower fares relative to no expansion, fewer delays, and better connections according to the UK government

REACTION

KPMG Global Head of Aviation James Stamp: “Now, more than ever, UK plc needs to demonstrate both its ability and willingness to connect to trading partners and investors in the rest of the world. This is the right time to send a strong message that we are open for business.

“Unfortunately, while the cabinet commitment to a Heathrow scheme is positive, the additional delay sends a mixed and somewhat indecisive message to business and global investors. In the UK it means businesses still can’t really plan. To the rest of the world, this country looks increasingly isolated, and unable (or unwilling) to move forward with pace and vision.

“The debate about new runways in the UK has not just about where to lay 3,000 metres of concrete; it’s fundamentally about how we secure our future economic prosperity. The reality is stark: currently London is not directly connected to 128 of the biggest cities in the world; we lack connections to 194 of the 309 cities that will have populations over two million in 2030; and our competitors already connect to 41 of these global growth engines.

“A truly positive statement would have gone a long way to alleviate the concern that we are missing those global connections that are now so important for business, jobs, and growth. However, the partial commitment does nothing to really reassure investors that we are moving forward to establish our place in a post—Brexit world.”

IATA Director General and CEO Alexandre de Juniac: “We fully support the government’s conclusion that Heathrow needs a new runway. It’s the right decision. But it needs to have the right price tag.

“To maximise the potential of the new capacity, Heathrow costs must become even more competitive and cost effective. The government’s desire to keep charges close to current levels cannot be compromised. In fact, the aim should be much more ambitious given the already high costs of doing business at Heathrow.

“The government’s objective to facilitate the expansion without hitting passengers in the pocket must also not be compromised. Passengers using the airport deserve value for money when they fly from Heathrow. Under no circumstances should travellers today be expected to pay for benefits that will only be enjoyed by those traveling after the runway becomes operational. A key component must be a close scrutiny of all costs associated with the new capacity, and how these are allocated to different stakeholders.

“The next step needs a big community effort. Airlines, the airport, the regulator and the government must work very hard together to ensure the success of the new runway. Above all, that means keeping costs at competitive levels.”

ACI Europe Director General Olivier Jankovec: “While a positive development in itself, this is just a first step requiring both swift implementation and a plan for further airport capacity development – not least because this new runway at Heathrow will not be enough to meet future demand for air transport.

“An island economy lives or dies by its air connectivity. If the UK government is serious about its focus on economic growth and preserving the country’s global positioning, it needs to truly embed air connectivity and sustainable airport development in its economic strategy. This has become a common feature of some of the world’s most dynamic and forward-looking economies.

“Today’s announcement can be no substitute for much needed legal certainty over the future of the UK-EU aviation relationship. There must be quick reassurances that as part of its Brexit strategy, the UK government will seek to ensure that the UK and EU aviation market will remain closely integrated – with EU and UK airlines continuing to enjoy free market access.”

Dale Keller, Chief Executive of the Board of Airline Representatives in the UK (BAR UK): “We welcome that a decision has finally been made to allow an additional runway at Heathrow, and yet for us this is simply the beginning and the real work starts now.

“We look forward to engaging closely with the government and Heathrow Airport Limited during the public consultation and National policy statement process that follows, to ensure that the new capacity can be financed without pre-funding by today’s passengers and be delivered on-time and at a cost that is affordable to airlines and the travelling public.

“The new runway will deliver further vital connectivity for the whole of UK’s economy in an increasingly globalised world.”

Airport Operators Association (AOA) Chief Executive Darren Caplan: “We have consistently said that the UK needs to compete in both established and emerging markets. This decision today is a first step in the process towards ensuring the UK has the additional capacity it needs to help the country deliver, sustainably, the connectivity it requires in the future. At this time of increased uncertainty following the Brexit vote, we need to maintain momentum, remove uncertainty and ensure the UK gets the additional capacity it so vitally needs as soon as possible to demonstrate the UK is open for business and confident about its future.

“The AOA is also clear that the UK requires excellent aviation connectivity right across the country, both vibrant point-to-point airports and world-class hub capacity. So we support all airports that wish to grow and believe in also making best use of existing capacity at all UK airports. The government needs to refresh its Aviation Policy Framework as soon as possible to enable better surface access to airports, airspace modernisation, the lack of which is currently constraining our sector’s ability to grow, and a planning system with a presumption in favour of sustainable development.”

British Hospitality Association Chief Executive Ufi Ibrahim: “We welcome the government’s decision on airport expansion at Heathrow. The challenge from other European hub-airports vying to replace Heathrow is serious, especially once the UK has left the European Union. This decision demonstrates that the UK is open to visitors and investment from across the globe, and will also allow space for domestic air links to support regional tourism right across the country.”

London Luton Airport CEO Nick Barton: “With the decision made the government must now focus on how to meet the already growing demand for air services during the 10-15 years it will take to deliver the new runway. Passenger numbers continue to be way ahead of forecasts and so there has to be a much higher utilisation of existing runway capacity at other airports. Rail links are currently the major limiting factor and must be improved to temper the capacity crunch in the short-term.”

EasyJet CEO Carolyn McCall: “This is good news for UK consumers and businesses and will help ensure that the UK is better connected to the rest of the world. With the right charging structure and the right infrastructure for our efficient model, easyJet plans to operate from Heathrow, in addition to our existing London bases, providing new routes and lower fares to customers.”

Virgin Atlantic: “We support Heathrow expansion provided that it delivers for our customers. This is an exciting, once in a generation opportunity to radically transform airline competition at the UK’s hub airport. New capacity must be allocated in a way that brings more choice, better service and lower fares for customers. We will work with Heathrow, the CAA and the government to ensure that the final scheme is affordable, cost-efficient and that the customers of today are not overburdened by paying for runways and facilities that won’t be open until the mid-2020s.”

Star Alliance CEO Mark Schwab: “Today’s decision is good news for the millions of customers who opt to travel every year through Terminal 2: the Queen`s Terminal – Star Alliance`s home in Heathrow. London Heathrow is already one of the most active hub airports for Star Alliance, served by 24 of our 28 member airlines. This decision opens up the possibility for our airlines to offer even more flights to more destinations and comfortable connections to all parts of the world.”

AGS Airports [owner of Aberdeen, Glasgow and Southampton Airports]: “We welcome today’s announcement that the UK government has decided to back expansion at Heathrow. We have consistently supported the expansion of Heathrow on the basis of the onward connectivity it provides and the fact it’s the UK’s only hub airport. It plays an important role in supporting the Scottish economy, so it is imperative that an expanded Heathrow delivers further access for both Aberdeen and Glasgow airports.”

British Air Transport Association (BATA) Chief Executive Tim Alderslade: “We agree with the government’s decision that additional capacity at Heathrow offers greater potential economic and social advantages than expansion at Gatwick. Tough discussions now have to be had by all parties – and our airline members will be closely involved in these next stages of preparatory work. The needs of passengers, cargo customers and local communities must be met.

“Our members are clear that the cost of expansion that they and their customers pay for is key and we will be scrutinising this decision and future, more detailed, plans. Heathrow is the most expensive hub airport in the world – and airports are not funded by the taxpayer, but by passengers. Therefore any new infrastructure must be cost effective. We must ensure that it is affordable and that the price paid by customers does not increase. Today’s passengers must not pay for capacity that will not be operational until the mid-2020s. In short, we need the right solution at the right price, at the right time, in order to meet the needs of customers.”

Blackjack Promotions Managing Director and OmniServ Director of Retail and Experiential Services Sally Alington: “The UK must expand its airport capacity, particularly after our vote to leave the EU, if we want to remain competitive in world markets. Given some of the massive infrastructure projects under way around the world, Heathrow would have fallen further and further behind in terms of passenger capacity and also in terms of the passenger experience, which is becoming an increasingly important element when it comes to air travel.

“When the new Terminal 2 at Heathrow opened in 2014, it offered a glimpse of the future of travel retail and of the passenger journey through a 21st Century airport. Now, Heathrow has the opportunity to build even more of that future; I expect to see technological innovations applied across the board to improve passenger flow and build excitement into the whole travel experience including the retail environment.”