Whitepaper: What is the likely impact of the third runway at Heathrow for local residents and the UK as a whole?

The proposed third runway at Heathrow has created a lot of tense discussion all over the UK, from family front rooms to the House of Commons. On 25th June this year a key vote in Parliament paved the way for the controversial third runway to go ahead. The vote, which was expected to be close, passed by 415 votes to 119, which was a majority of 296. So, although the third runway has its detractors, they have not been enough to prevent the third runway from starting construction. In this white paper we will look at the reasons behind building a third runway at Heathrow, how this could affect the construction industry, the way in which off-site hubs will feature in the construction process, as well as the key pros and cons of the runway being built.

The issue of space at London airports

London is the country’s transport hub and current resources are already stretched very thin. Heathrow is already at 98% capacity of its existing facilities with Gatwick not far behind. While City Airport and nearby Luton and Stanstead have provided some respite they don’t have the location or the facilities to provide the kind of resources that would enable London to compete with other major transport hubs around Europe.

Why Heathrow?

Currently, Heathrow is the UK’s only hub airport. A hub airport creates benefits for passengers via economies of scale, pooling together demand for destinations and regular flights to be able to offer better service and more cost effective deals. Transfer passengers are the key to the success of hub airports, as airlines can use them to fill flights via locations like Heathrow as a stepping stone, making more routes viable. As a result of Heathrow’s hub status, passengers can currently access 80 different airlines flying to 180 destinations in 85 countries. It is also a key location for those looking to make flights to long haul destinations.

However, Heathrow is beginning to fall behind other airport competitors, such as Paris and Amsterdam, which is one of the reasons why the third runway has been identified as a key development. While there were other options in terms of position (e.g. Gatwick or a new Thames Estuary airport), it was the location and potential of Heathrow that eventually won out for a number of reasons:

  • Heathrow is not just a destination for people travelling to other countries but for cargo too. Current facilities leave many businesses frustrated with the inability to book flights for cargo as a result of the restrictions on volume and availability that are created by the existing structure of the airport. A third runway at Heathrow would relieve the pressure on the airport and enable it to offer a more extensive schedule of cargo flights.
  • Flight numbers. With the third runway at Heathrow the number of flights coming into and out of the airport would be increased significantly, providing greater economies of scale for passengers and a more competitive infrastructure at the UK’s only hub airport.
  • Flight choice. A new runway means a much broader variety of flights will become available and to a wider range of different destinations. Heathrow will be increasingly able to tap into offering direct flights to emerging and fast growing markets, such as flights to China, Russia and Brazil. This means more choice for consumers and more opportunity for airlines to attract key business travelers who may previously have been forced to travel another way.

The addition of the third runway at Heathrow will not only have benefits for flights and passengers but also for the infrastructure of the airport and the transport networks around it. Two new terminals will form part of the construction of the airport: Heathrow East and Terminal 6. Not only will these new terminals provide additional facilities but they will also reduce the minimum connection times at the airport from 75 to just under an hour. With the development of the runway will come a huge upgrade to the transport that supports Heathrow, including trains – which will double to 40 trains an hour – and an increase in bus and coach services.

Who has objected?

Local residents have raised some serious concerns about the new runway at Heathrow. A major issue is the number of homes that will have to be demolished to make way for new construction, which will significantly affect the local population. New flights will also mean new flight paths and so many more people will find themselves dealing with the pollution and noise of planes going over head. And pollution is a separate standalone issue that has angered some environmentalists – a third runway at Heathrow will turn the airport into a major polluter and one of the biggest sources of CO2 in the country.

It’s also worth noting that many questions have been raised over the solidity of the business case that was made for the third runway at Heathrow. Some believed that this was greatly exaggerated to facilitate the decision making process in Heathrow’s favour. There were other options that may have made a better choice, for example a new airport hub to be built in the Thames Estuary, away from residential sites and existing pollution hot spots.

The pros and cons of the third runway

MPs on both side of the House of Commons have come down both for and against the third runway at Heathrow. The controversy has also ignited arguments between business leaders and environmentalists over whether Heathrow really is the best location, or whether some of the negative effects of the expansion could be mitigated if the additional airline capacity was found by building a runway elsewhere. So, what are the headline pros and cons behind the arguments over the new runway?

The cons of a third runway at Heathrow

  • An increase in air pollution. This is a big problem for London and especially for residents who live close to Heathrow. Pollution levels in the west of the Capital towards Heathrow are already incredibly high, some reported “dangerous” in places. According to John Stewart, of the Airport Watch campaign, with its new third runway, Heathrow will become the biggest emitter of carbon dioxide (CO2) in the country.
  • The impact on the health and wellbeing of local people. The short-term impact of air pollution could be headaches, aggravation of conditions such as asthma and allergic reaction. Longer term effects of living with polluted air could be anything, from lung cancer to chronic respiratory disease and heart disease. The substantial increase in air pollution as a result of the third runway could make life very uncomfortable for local residents, health-wise.
  • The impact on local quality of life. More than 700,000 people already live under Heathrow’s flight path and suffer ongoing disruption to daily life as a result of the noise and pollution from the airport and the traffic that results from travel to and from Heathrow in the area. With the new third runway this disruption will increase substantially and even more local people will suffer lower quality of life as a result.
  • The environmental impact. An increase in pollution will have an impact on the UK’s environmental goals and targets, not just for the people who live in the immediate vicinity of Heathrow. As a result, many environmental groups have called for measures to be taken to make flying more expensive and not less – to reflect the social and environmental cost that each flight has. Low cost, frequent, cheap flights might be great for holidays but is it worth the damage done to the environment?
  • Demand for flights. With technology increasingly closing the distance between geographic locations and many big global businesses already cutting their travel budgets as a result of the need to streamline, there is a big question mark over whether this additional capacity is even really necessary.

The pros of a third runway at Heathrow

  • Coping with the increase in air passenger traffic. Figures from the Department for Transport have estimated that, by 2020, passenger numbers will rise to 400 million a year in the UK. Currently 40% of visitors from overseas who are coming into the UK are doing so via Heathrow.
  • The argument from the business community. From airline owners through to those who need to regularly ship cargo or transport staff, many have highlighted how much easier a third runway would make things. Others have focused on how overdue they believe this to be – for example, Richard Branson of Virgin Atlantic said the airline has not been able to put on new routes for years as a result of the restrictions on capacity.
  • Job creation and the local economy. Heathrow already supports around 250,000 jobs in the area and the third runway will be responsible for many more, connected to the airport itself and also its construction.
  • The cost effective argument. Heathrow already benefits from an established transport infrastructure that many argue enables it to support a third runway more cost effectively than a completely new site.
  • More flights and a more competitive airport. The third runway has been identified as the fastest way to improve capacity at London’s airports and to ensure that the area can compete with other international hubs.

The “London only” argument

One of the arguments raised against Heathrow was the fact that the construction of the airport – and the benefits it would bring – would be limited to the local economy. Big London based construction projects like the third runway are often delivered by London based businesses and so it’s only the local employment and business economies that benefit. Key to the Heathrow expansion will be the use of off-site hubs that are designed to ensure that it’s not just London businesses that feel the positive effects.

The off-site hub

Off-site hubs are not a new concept in construction but are being integrated into the plans for extension at Heathrow in a big way. An off-site hub can be used for anything, from managing systems to constructing materials, so that whatever the hub is tasked with completing is handled away from the main project site. Off-site management and construction is crucial to the industry, as it allows for a broader range of skilled parties to be involved in a construction project and helps with management of quality and costs.

How will off-site hubs be used at Heathrow?

So far a long list of potential hubs has been reduced down to 65 businesses that are based all over the country, from Scotland and Yorkshire to the East Midlands and Wales. A goal of 60% procurement outside of London has been set for the Heathrow third runway to ensure that it’s not just businesses in the local area winning the contracts and benefitting from the trade. Each of the 65 businesses on the short list will be assessed for suitability to be part of the airport’s supply chain and will have a key role to play in ensuring that the £187bn economic benefit of the expansion is spread to regions right across the UK. The use of off-site hubs in this project will deliver two key benefits:

  1. Reducing the impact of construction on the local area. Rather than local residents and transport networks bearing the brunt of the entire construction, off-site hubs mean that parts of the construction can be handled elsewhere in the country instead.
  2. Spreading the economic benefit of the construction. Just as the pressure of the construction is spread to areas outside of the main site, so too is the economic benefit. According to WPI Economics, an approach such as this – if adopted more widely than simply the Heathrow expansion – could generate productivity worth £30bn for the industry outside of London by 2025.

The Heathrow third runway and the construction sector

The decision to build the third runway at Heathrow is significant in the construction world – it will be the first full length runway to be built in the UK since the Second World War and will have a key role to play in ensuring the UK’s transport networks are competitive.  It will necessarily have an impact on the construction sector in the UK and this could become apparent in a number of different ways.

  • More work and more jobs. 77,000 local jobs will have been created by 2030 as a result of the third runway at Heathrow, many of them relating to the construction sector. For construction sector businesses, large UK-based projects like this provide the opportunity for lucrative contracts and sustained employment.
  • Countrywide economic benefits. The entire UK construction sector could benefit from the opportunities presented by the expansion of the third runway at Heathrow thanks to the use of off-site hubs, as mentioned. For those 65 firms that have made the off-site hubs shortlist for Heathrow’s supply chain there will be the opportunity to generate income and improve business profile based on the Heathrow work.
  • Attracting fresh talent to the industry. Large, high profile construction like the third runway at Heathrow draws attention to what the sector can achieve and is great promotion for the industry. This is particularly so when it comes at the same time as initiatives to make it easier for new talent to get a foothold in various industries, such as the government commitment to create 5,000 new apprenticeships by 2030.
  • The skills shortage issue. It’s widely acknowledged that the construction sector is in the midst of a serious skills shortage. This has led to concerns about a negative impact of the third runway on the construction sector, in particular whether businesses in the industry will be able to cope with the demand that the additional work will place on companies that may already be short on talent. This could mean that demand cannot be met, that costs escalate or – crucially – that completion dates are simply not achievable.
  • An opportunity for equality. The construction industry does not currently do particularly well in terms of the number of women who work in it and achieving a more equal gender balance is already a key priority. The increased pressure that the third runway will put on the construction sector also represents a significant opportunity for the industry to diversify and grow. Attracting more women now would help to solve the skills shortage that has the potential to slow down big construction projects like Heathrow. It could also lay firmer foundations for the industry to continue to thrive into the future with a deeper talent pool.

There is no doubt that the construction of the third runway at Heathrow has its cons – and there are plenty of people who still voice serious concerns over issues such as air pollution and local area disruption. However, the project looks set to go ahead and that could mean good things for the construction industry, especially those businesses that are ready and able to take the strain of one of the most sizeable and high profile transport infrastructure projects about to commence with the eyes of the rest of the world watching.

At RG Group we are always focused on the latest developments that may affect the construction industry. Contact us to discuss your projects and needs.

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