The UK's aviation industry is facing a major setback as analysis from the Department for Transport reveals the Heathrow third runway may have a minuscule impact on the economy. The documents suggest the scheme could boost GDP by a mere 0.05%, a staggering 90% less than the previously estimated 0.5%. This raises serious questions about the viability of the project, which has been touted as a key driver of economic growth.
The figures have been described as 'historically bad' by one economist, highlighting the stark reality that the scheme may not live up to its promise. The DfT's net present value calculation puts the scheme at between -£23.4bn and £-62.5bn, despite estimates suggesting £29bn-£42.4bn in benefits from lower air fares and wider economic advantages.
The government's own assessment suggests these gains are vastly outweighed by the social and environmental costs of building a new runway. Airline profits are expected to take a hit of around £25bn, casting doubt on the project's viability. The Chancellor, Rachel Reeves, has championed rapid expansion at Heathrow as a key driver of economic growth, but these figures may change her tune.
Heathrow Airport has disputed the figures, claiming they do not capture all the economic benefits, while a government spokesperson described them as 'only part of the picture'. However, the documents paint a damning picture of a project that may be more trouble than it's worth.
The consultation for the next stage of legislative approval has just launched, but these figures are set to raise eyebrows among MPs and industry experts. With the economic benefits looking increasingly elusive, the case for a third runway at Heathrow is beginning to crumble.