- Impacts of expanding airport capacity on competition and connectivity: the case of Gatwick and Heathrow
- Number of pages
- Paris: OECD
- Volume | Edition (Serie)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
The UK Airports Commission has short-listed three options for expanding airport capacity in the UK. One option concerns expansion of Gatwick with an additional runway. The other options concern expansion of runway capacity at Heathrow. The impacts of expansion on passenger and air freight user welfare do not only depend on the macro-economic and aviation industry future, as defined by the aviation scenarios already developed by the Airports Commission, but also on the airline responses that can be expected as capacity comes on stream.
This report summarises a quantitative analysis of the likely responses from airlines in all segments of the market building on a companion report that identifies the main drivers of airline behaviour and considers the possible influence of changes to existing business models and the introduction of new types of aircraft, such as the Boeing Dreamliner and Airbus A350.
Four sets of airline responses are modelled, two following expansion of Gatwick and two following expansion of Heathrow, to test outcomes under a range of scenarios for the overall development of the global aviation market. The analysis quantifies impacts on connectivity and potential benefits to the consumer through airline competition and relieving congestion at airports and reducing the associated economic rents.
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