Policy paper

Heathrow north-west runway domestic connectivity explanatory briefing

Published 21 June 2018

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A new approach

Maintaining and enhancing domestic connectivity is one of the key benefits of any expansion at Heathrow. It will ensure new connections, increased frequency and greater competition for domestic routes, guaranteeing that the whole of the UK benefits from the government’s decision to support a third runway at Heathrow.

Government has set a clear expectation that about 15% of slots made available under expansion at Heathrow Airport will be used for domestic flights and has identified the tools to make this happen. If new capacity coupled with the commercial incentives offered by Heathrow does not deliver on these expectations, then government will ring-fence slots at appropriate times of day, and provide financial support [footnote 1] through exemption from Air Passenger Duty (APD). All of these measures can be delivered through the implementation of public service obligations (PSOs).

Government will put in place these PSOs on an airport-to-airport basis[footnote 2]. This new approach is consistent with existing EU regulations[footnote 3] and for the first time would allow government to provide protection for flights that are specifically to Heathrow. In addition, government will consider the introduction of unfunded PSOs to Heathrow Airport. This would provide a safeguard for domestic connections but without direct cost to the taxpayer.

Declining connectivity without expansion

Since 1997, the annual number of domestic flights to and from Heathrow Airport has decreased from around 62,000 to 40,000 and the number of domestic passengers has decreased from 6.7 million to 4.8 million. Without expansion, we expect domestic routes to continue being squeezed out of Heathrow in favour of more profitable international routes[footnote 4].

Increased connectivity and competition after expansion

The proposed Airports National Policy Statement (NPS) requires Heathrow to work with airlines to strengthen existing routes and deliver new connections. Government expects Heathrow to deliver at least 6 additional domestic routes, and sets out a number of potential airports: Newquay, Liverpool, Belfast International, Durham Tees Valley, Humberside and Prestwick. This would increase the number of domestic routes from 8[footnote 5] to at least 14.

To help deliver this, Heathrow has announced a 50% increase in the discount for domestic passengers, rising to £15 — and has also committed to a £10 million Route Development Fund to support the introduction of new routes. Alongside the large increase in slots that expansion will deliver, these measures will create the commercial opportunities for airlines to provide the enhanced domestic connectivity that government seeks from expansion.

Airlines have responded positively to these commitments, and both easyJet[footnote 6] and Flybe[footnote 7] have published indicative routes that they would expect to serve from an expanded Heathrow. More recently, easyJet has confirmed that it intends to launch flights to UK airports that do not currently have a connection to Heathrow and to introduce competition on existing domestic routes — potentially reducing fares by up to 30%.

Next steps

Government will consult later this year on how to take its ambitions further by securing slots over the long-term, including after an expanded Heathrow fills its newly-created capacity. Following consultation, government will set out its new approach to domestic connectivity in full in a new Aviation Strategy in the first half of 2019.

  1. Subsidies are currently also provided to support services between London and Londonderry, Dundee and Newquay. ↩

  2. Government has previously put in place PSOs on a region-to-region basis, for example, to London. ↩

  3. France currently applies PSOs on an airport-airport basis. ↩

  4. Our forecasts show that, without expansion and without the commercial incentives currently provided by Heathrow, domestic passengers using Heathrow could halve from today’s numbers to around 2.5 million by 2030. ↩

  5. Aberdeen, Belfast City, Edinburgh, Glasgow, Inverness, Leeds Bradford, Manchester and Newcastle. ↩

  6. easyJet response to the Airports Commission identified at least 5 domestic routes they would look to operate. These include Belfast, Inverness and Glasgow. ↩

  7. Flybe have identified 8 routes including Dundee, Londonderry and Durham Tees Valley ↩

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