UK Politics

New London airport 'would need public subsidy'

Aeroplane
MPs are carrying out an inquiry into the UK's aviation strategy

A new hub airport for London cannot be built without substantial support from the taxpayer, new research suggests.

A public subsidy of between £10-30bn in today's money would be needed to build the facility, consultancy firm Oxera said.

But it said this should not necessarily mean an end to the idea.

The research was conducted for the Commons Transport Committee, which is conducting an inquiry into the UK's aviation strategy.

Oxera said that, under most scenarios, expected revenues from a new hub airport - i.e. one that hosts a high proportion of connecting passengers - would be less than the expected costs of construction, which would not be commercially viable without substantial support from the taxpayer.

But it added: "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."

Labour MP and chair of the committee, Louise Ellman, said: "This work was framed specifically to help the committee assess the commercial viability of a new hub airport by asking whether any future owners could make adequate returns sufficient to obtain finance.

"The results suggest a new airport would require public investment and have considerable impact on Heathrow and other London airports."

She said the report also "shed significant light on the scale of investment" required to provide surface transport links for any new airport.

Ms Ellman added: "We hope this works delivers something new to a crucial debate. It doesn't provide answers but it does set out in a systematic way which areas of questioning the Davies Commission must address and answer fully."

The former Confederation of British Industry chief, Howard Davies, is currently conducting an inquiry into the UK's aviation policy.

Mr Davies has been asked not to come back with any recommendations until after the next elections in 2015, although he is allowed to rule out any options deemed patently unviable before that date.

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