Monday, March 31, 2008

The third way for Heathrow

The Economist this week carries a Leading Article on the future of Heathrow. It's worth reading. Rather than its future being a simple question of "Third runway - yes or no?", the Economist suggests that there is a third way:

A new airport may yet be needed. But, in the meantime, there are ways of making Heathrow better. It is crowded because it is too cheap for airlines to use and because BAA has been encouraged to stuff it full of transit and leisure passengers who it hopes will spend money in its shops. Business travellers, who generate the most value for the wider economy, account for only a third of the airport's passengers.

This suggests a better solution to the overcrowding. First, the price for using Heathrow should reflect the value and scarcity of its capacity. Second, any new capacity should be built at London's other airports. And, third, these airports should be set free to compete with Heathrow by breaking up BAA.

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