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The Avenue

How much would London benefit from a Heathrow expansion?

A decision from British Prime Minister David Cameron about whether to expand Heathrow Airport (LHR) is imminent, following a commission’s recommendation to pursue expansion at Heathrow rather than Gatwick. The Economist reports that “The case for it is largely based on the idea that hosting a hub airport, connected to a large number of destinations and with much through traffic, would benefit Britain’s economy more.”

Although many features of the proposed Heathrow expansion are unique to the history and politics of the issue in London and the U.K., it also represents simply another instance of a common economic development mantra: Bigger, higher capacity airports are good for cities.

But, is it true? The answer depends on what you mean by “bigger airport” and “good for cities.”

In a recent book chapter, I summarized three different ways that airports might be viewed as big and function as hubs. First, airports can be big because they serve as a connecting intermediate stop for passengers and have a large volume of through-traffic. In the United States, the classic example is Atlanta’s Hartsfield-Jackson (ATL)—exceptionally busy, but mainly as a layover stop. Second, airports can be big because they offer nonstop service to many other cities providing convenience and speed. In the United States, think of Chicago’s O’Hare (ORD), located in the middle of the country and an operational base for multiple carriers. Finally, airports can be big because they, or more precisely their local regions, are the final destination for large numbers of passengers. Here, New York’s LaGuardia (LGA) offers an example; most passengers fly to LGA to get to and from New York City, not to connect elsewhere.

Each of these types of airport bigness can generate economic growth, but an analysis focused on U.S. airports suggests they are not created equal. The type of bigness exemplified by ATL and ORD, and to which LHR aspires if the proposed expansion becomes reality, can lead to substantial growth in airport-related jobs. After all, it takes workers to transfer baggage between connecting flights, to staff gates, and to serve up coffee to weary connecting passengers. However, this type of bigness has essentially no impact on jobs in any other sector. Why? Because the passengers never actually leave the airport, any economic stimulus generated by this kind of extra traffic stays at the airport and has no chance to spill over into the city.

In contrast, the type of bigness exemplified by airports like LGA can lead to growth in non-airport-related jobs, including jobs in the creative sector. In fact, it can even have a slight negative effect on airport-related jobs. Why? Because when passengers reach their final destination, their bags are offloaded once (which doesn’t take as many airport personnel), and then they leave the airport…to spend money in the local area.

Airport expansion can be a powerful lever for local economic growth. However, it’s important to remember that LHR does not equal London, and that not all types of airport expansion are created equal when it comes to their economic growth effects. For regions looking to stimulate growth across a broad range of sectors, it is more about attracting visitors—both business and leisure—than it is about building infrastructure to take them somewhere else.

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