Uk Will Miss Out On Investment Because Of Poor Air Connections Say Emerging Market Business Leaders
26 January 2012 in Chamber News
• 67% of business leaders in Brazil, China, India, South Korea, and Mexico say that better air connections from their home country to France, Germany and Holland mean they are more likely to do business with those countries rather than the UK
• 92% say direct flights are important to inward investment decisions
• 62% say they will only invest in the UK if flight connections are improved
• The British Chambers of Commerce calls for government to urgently set out a clear aviation strategy that includes measures to keep Heathrow competitive as a global hub and build new routes to emerging markets over the next ten years
New research shows that business leaders in high growth or emerging economies see direct air links as vital to maintaining the UK’s prospects in global markets. Nine out of ten (92%) of these business leaders say direct flights influence their inward investment decisions; while eight in ten (80%) say they would trade more with the UK if flight connections were improved to their home markets.These are the views of 350 business travellers who are directors of companies in Brazil, India, China, Mexico and South Korea in a survey commissioned by the British Chambers of Commerce and Heathrow Airport.[i]
In a worrying development, while 82% of the overseas business respondents see Heathrow, the UK’s hub airport, as being a major contributor to the UK economy, 64% believe the UK will miss out on economic growth because of London’s declining flight connections to growth markets. A similar proportion (67%) feel that better air connections with France, Germany and Holland mean they are more likely to do more business with those countries rather than the UK; and 62% will only consider trading with the UK in future if flight connections to their home markets are strengthened.
Heathrow is already full, operating at 99.2% of its annual flight capacity, creating a ‘connectivity crunch’ that is preventing the UK from linking with the trading partners of the 21st century.
John Longworth, Director General of the British Chambers of Commerce, said:
“There is an aviation-shaped hole in the government’s growth strategy. While businesses very much welcome ambitious infrastructure projects like high speed rail, they can’t catch a train to China or Brazil. The UK will miss out on investment and jobs if the government does not act now to improve capacity at our airports, strengthen links between regional airports, and develop more connections to emerging markets. Growth cannot wait. While Britain dithers, our international competitors are forging ahead.”
“Encouraging more trade between UK firms and overseas markets is crucial to the rebalancing of our economy. But while firms are being urged to trade with new partners in emerging markets, they are hindered by the lack of connections to these countries - in turn hurting both inward investment and Britain’s export potential.”
The UK’s aviation connectivity crunch already means that:
Airlines are prevented from developing new routes from the UK’s global hub to emerging market destinations such as Manila, Guangzhou, Mexico City and Jakarta;
Twenty-one emerging market destinations now have daily flights from Continental European hubs but not from Heathrow - this lack of connectivity is already costing the UK economy £1.2bn a year in lost trade.[ii]
UK businesses trade 20 times as much with those countries that have daily direct flights to compared to those countries that have less frequent or no direct services.[iii]
There was only a small increase in passenger figures to and from China through Heathrow, up by just 57,509 (3%) in 2011 - less than the overall increase in passenger numbers at the airport.
Paris and Frankfurt already have 1,000 more flights each year to the three biggest Chinese cities than London and almost double the number of flights from Heathrow.
Colin Matthews, Chief Executive of BAA, said:
“The view from business leaders in emerging markets is alarming. If anyone doubted that Heathrow’s capacity crunch is harming UK growth then here is the evidence: business leaders in the world’s fastest growing economies say they are being put off from investing in the UK because of a lack of direct flights. Capacity constraints are damaging the UK economy today when the country can least afford it.
“A new hub airport has been proposed in the South East, but this has a projected cost of £50billion and may take decades to build. In the intervening period we would be handing over on a plate the UK's historic trade advantages to our European competitors.”