Heathrow Expansion: Britain’s Runway to Growth

Heathrow is arguably the most capacity-constrained transport hub in the world. Allowing expansion could generate nationwide economic growth, but needs to be done in such a way to meet the Government’s ‘Four Tests’ on climate, air pollution, noise and regional growth. This briefing sets out how expansion could be made to be consistent with these tests.

Authors

David Lawrence, Pedro Serôdio

Date

January 23, 2025

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Summary

  • The UK could be the world’s leading aviation hub. Heathrow is one of our greatest national assets. But it is being held back, with consequences for UK growth: the airport is arguably the most capacity-constrained transport hub in the world.

  • The new Labour government recognises the economic opportunity of expanding Heathrow, and has set out four tests. Expansion should be (1) compatible with the UK’s climate change commitments, (2) not worsen local noise pollution, (3) not worsen air pollution, and (4) provide economic benefit to all parts of the UK. 

  • These tests can be met, but only if conditions are attached to expansion. The government should not delay in clarifying its conditions and should consider introducing a hybrid bill to Parliament to fast-track expansion.

  • Even with unabated airport expansion, the UK is on track to have the lowest per capita emissions of any major economy by 2030. Extra emissions could be mitigated by switching just 0.9% of the UK’s petrol cars to electric vehicles each year.

  • UK aviation can hit net zero by 2050 through a combination of fleet upgrades, sustainable aviation fuel (SAF), nature based carbon sequestration, carbon capture and storage (CCS) and other carbon offsets. 

  • There are several options for addressing noise and air pollution, such as by enabling greater restrictions on night time flights and reducing the number of early morning and late evening flights. Heathrow could also ban or financially penalise the noisiest engines, and redraw landing routes.

  • Heathrow could continue to improve local air quality by electrifying its ground operations, incentivising its airlines to transition towards less polluting engines, improving indoor air filtration and building new rail capacity to reduce road journeys.

  • Heathrow expansion offers economic opportunities for all parts of the UK. It would be entirely privately funded, and would raise money for taxpayers. Although the immediate services-based benefits are concentrated in London and the south of England, the benefits to industry and manufacturing are disproportionately felt in other parts of the UK. Furthermore, tax revenues can be used to fund regional road, rail and air infrastructure across the UK. Finally, air passengers across the UK will benefit from lower fares, saving £160 for an average family of four flying on holiday.

Challenge & Opportunity

The World’s Favourite Airport

The UK could be the aviation hub of the world. Indeed, until recently, it was. From the 1970s to the 2010s, London Heathrow was the unrivalled centre of global travel, consistently accounting for more international passenger traffic than any other airport. 

It is only in the last decade that other rivals have begun to challenge Heathrow’s status. Since 2014, Dubai has topped the table, and other European hubs like Paris Charles de Gaulle and Amsterdam Schiphol are nipping at Heathrow’s heels.

Figure 1: Annual international passengers, selected airports 2013-2023

Source: Airports Council International (all listed on Wikipedia, accessed 2025

Heathrow suffered a larger drop in international passenger traffic during the Covid pandemic, compared to other hubs, but has also seen a more significant rebound. However other European airports are closer to challenging Heathrow’s dominance compared to in 2013, and Dubai has overtaken Heathrow to the top spot.

This loss of leadership is entirely self-inflicted. British policymakers on both sides of the political spectrum repeatedly dithered on the decision to expand Heathrow’s capacity in line with demand. Heathrow is severely constrained by its two runways. Among the other top 10 airports for passenger traffic, the average number of runways per airport is 4.9. 

Only one other top 10 airport – Dubai – is limited to two runways. But unlike Heathrow, Dubai does not restrict flights during the night. This means it can operate 24/7, giving it effectively twice the capacity of Heathrow. Furthermore, the UAE has another major international hub airport, Abu Dhabi, and is expanding Dubai World Central (DWC), which aspires to be the world’s largest airport. 

Heathrow’s most immediate European competitors all have multiple times more runways: Amsterdam Schiphol has 6, Paris Charles de Gaulle and Frankfurt each have 4, and Istanbul has 5. Heathrow is by far the most congested major hub, with one take off or landing every minute, per runway, during daytime hours. For comparison, Amsterdam Schiphol has a similar number of take-offs and landings at peak times, but can spread these between six runways, rather than two.

Even with expanded capacity, the UK's per capita emissions are projected to remain lower than the countries where other hub airports are located. While France is expected to remain relatively low in emissions, it is expected to exceed UK per capita emissions, while Germany and the Netherlands are projected to have significantly higher per capita emissions by 2030, at 5.4 and 4.6 tonnes respectively. Heathrow is operating at capacity, struggling to meet demand, and faces severe competition from rivals. This is not just an issue for national pride, but has a tangible impact on Britain’s prosperity, both now and for the next generation. 

Air transport directly accounts for £3.26bn of UK GDP, with employment at Heathrow airport accounting for £2.8bn of gross value added (based on Heathrow and ONS wage figures). However, these figures significantly understate the economic contribution of air travel to the UK economy, whether through services in the immediate vicinity of the airport or wider inbound tourism, which accounted for £31.1bn of spending in 2023, or 1.1% of GDP. Heathrow is the UK’s largest port: according to its own figures, “the value of the goods processed through Heathrow is greater than Felixstowe, Southampton, and the Dover Eurotunnel combined”.

Heathrow expansion is estimated to grow direct employment at the airport by 28.6 thousand people to over 100 thousand. That would mean Heathrow would account for an additional £1bn in GVA annually through wages alone. That excludes all the potential benefits from higher passenger numbers through Heathrow, which would support additional economic activity, both in the immediate vicinity, and through indirect channels, such as:

  • Companies choose to base their European headquarters in the UK, over e.g. Paris, Frankfurt or Amsterdam. 

  • Major international conferences and events are organised in London rather than international rivals. 

  • Trade and cargo is routed through London rather than rivals, reducing costs for UK consumers and supporting the wider logistics sector. 

  • University students may be more likely to choose to study in the UK if there are more direct routes, supporting the large (but struggling) £130bn UK university sector.

  • Increased services exports due to fewer barriers and lower costs to international travel - specifically Mode 4 services.

  • The UK can foster the future of sustainable aviation, from sustainable aviation fuel (SAF) to the most efficient engine and aircraft design. The UK has set ambitious proposals for 22% SAF by 2040, and is already leading the way in SAF design and deployment. Heathrow expansion could provide a market for innovation.

  • The UK has a larger demand base for aerospace development, which has further benefits for national security. 

  • Our supply chains are more resilient: even during Covid, when most planes were grounded, the UK relied on Heathrow for importing PPE and vaccine supplies. Having a globally connected airport can add supply chain flexibility and option value for businesses.

But none of this is guaranteed. Heathrow’s hub status depends on its position relative to international rivals, particularly those in Europe. Heathrow already has the world’s most expensive landing slots, and there is evidence of this damaging its competitiveness with other airports. 

Table 1: Largest airports by total passenger traffic (2023)

Source: Port Authority of New York and New Jersey (2023)

Table 2: Largest airports by international passenger traffic (2023)

Source: Airports Council International (2023)

Table 3: Busiest routes between Europe and the rest of the world (2019)

Source: Database - Transport - Eurostat 

The Four Tests for Expansion

If it were possible to isolate the economic benefits of Heathrow, and – as economists like to do – hold everything else constant, expanding Heathrow would be a no-brainer for policymakers. It would unlock millions of pounds of investment, with potentially billions of pounds of further economic benefit around the country.

Unfortunately, it is not possible to hold everything else constant. Unconstrained expansion could have negative externalities, which correspond to Labour’s “four tests” for expansion. These are:

  1. Climate change: any expansion must align with the UK's legally binding commitments to reduce carbon emissions.

  2. Noise pollution: there must be limits to the impact of increased aircraft noise on local communities

  3. Air pollution: the project should not exacerbate air quality issues. It must comply with established air pollution standards to safeguard public health.

  4. Economic growth: any expansion should contribute to economic growth across the entire country, not just in London and the South East.

We believe these tests can be met on a reasonable interpretation of their requirements. This means that expansion of Heathrow should go ahead, but only certain models of expansion meet the tests. 

Furthermore, the timing of expansion makes it easier to meet several of the tests. A new runway could take up to 10 years to build, by which time the most polluting and noisiest fleets will be replaced with newer, cleaner and quieter aircraft. New technological advances in engine design and sustainable aviation fuel (SAF) will also help, making it generally easier for tests to be met.

Test 1: Climate Change

Even with unabated airport expansion, the UK is on track to have the lowest per capita emissions of any major economy by 2030. Extra emissions could be mitigated by switching just 0.9% of the UK’s petrol cars to electric vehicles each year (see appendix 1).

Aviation contributes about 7% of the UK’s greenhouse gas emissions. This is less than the emissions produced by road transport, electricity generation, industry and residential uses, but it is still one of the larger and less tractable sources of emissions in the UK. 

Other sectors tend to be easier to electrify, and therefore have more potential to be powered by renewable energy. Electricity generation is rapidly decarbonising, and increased wind, solar, nuclear and biofuels will support this transition. This means that road transport, home heating and huge swathes of industry could be completely decarbonised.

The tractability of greening other industries is good news for UK aviation. Net zero does not require zero carbon emissions, but rather any emissions to be ‘paid for’ by carbon offsetting or capture in other parts of the economy. This means that wider efforts to green the economy can free up credit to be ‘spent’ on parts of the economy that are harder to decarbonise. 

There are good reasons for spending carbon allocations on aviation while rapidly greening other parts of the economy. These include:

  • The Government’s aim of decarbonising the electricity grid to 95% renewable sources by 2030. Expanding aviation does not threaten this goal.

  • Falling cost of electric vehicles (EVs) and growing EV infrastructure.

  • Consumer incentives to transition away from gas boilers towards electric alternatives, such as heat pumps.

  • Better insulation in new and existing homes.

  • Higher energy efficiency in household appliances and elsewhere.

  • Promising signs from new nuclear, propelled by demand from AI data centres.

The global economy of 2050 will not have zero emissions. But, to achieve net zero emissions, successful economies will spend their carbon allocations wisely on areas of economic advantage. The UK has a comparative advantage in aviation, thanks in part to Heathrow’s dominance as a global hub. Many European counterparts are economically dependent on carbon intensive heavy industry and manufacturing, to a greater extent than the UK. Our dominance in services, which can generally be powered through renewable sources, means that we do not need to reserve as much of our carbon allocation towards industry, and can instead ‘spend’ it on aviation, with benefits for our service industries. 

The UK hopes to offset a significant proportion of its carbon emissions through nature based solutions and carbon capture and storage (CCS). There is also potential for advances in direct air capture (DAC), enhanced weathering and soil carbon sequestration.

Nature based solutions, such as restoring and expanding woodlands, could sequester 72.15 million tonnes of CO₂ per year - more than twice that currently produced by aviation in the UK. The government plans for CCS to capture and store a further 8.5 million tonnes of CO₂ annually by the late 2020s. 

Furthermore, the UK can use some of the economic benefit from the aviation industry to fund carbon offsets. The traded carbon value used by the Government for economic modelling gives a price of £63 per tCO2e (2024). We estimate that, with a 25% rise in air passenger demand, achieving net zero across the entire UK aviation sector (not just Heathrow) will require up to 21.3 million tonnes of CO2e to be accounted for. If international offsetting made up a third of this, that would cost around £450 million with today’s carbon price. This is a large figure, but is dwarfed by the current and potential economic contribution of aviation to UK GDP. 

The Government’s own estimates support this analysis. After factoring in environmental costs, inclusive of carbon emissions, alongside the possibility of reduced airline profits due to competition, economic appraisals show Heathrow expansion delivering a net benefit to society. Furthermore, these appraisals do not quantify many of the likely benefits associated with increased capacity.

There are also good reasons to believe that the carbon intensity of flying will decrease, even if complete decarbonisation is unrealistic in the medium term. Modern long haul jets such as the Boeing 787 or Airbus A350, which are increasingly the norm at Heathrow, are up to twice as carbon-efficient as more traditional jets such as the Boeing 747, which dominated Heathrow when a third runway was first proposed, but is now almost nonexistent. 

The UK’s Sustainable Aviation Fuel (SAF) Mandate requires jet fuel to be at least 10% composed of sustainable aviation fuel (SAF) by 2030, rising to 22% by 2040. SAF is 70% less carbon intensive than traditional jet fuel. 

It is also not impossible – though we should not depend on it – that carbon-free short haul flying will be possible by 2050. EasyJet, the UK’s largest short haul airline, has partnered with Wright Electric to develop fully electric passenger jets, and with aircraft manufacturer Jet Zero to develop hydrogen powered aircraft. Studies indicate that hydrogen-fueled flights could commence on UK domestic routes as early as 2026, with the potential to replace the entire regional fleet with zero-emission aircraft by 2040.

Lastly, it is possible that Heathrow expansion will reduce emissions through swapping indirect flights for direct ones, e.g. by increasing the number of direct flights between the UK and Asian and African destinations. Heathrow’s capacity constraints mean that passengers are often forced to fly to many Asian or African destinations via alternative hub airports, such as Amsterdam, Frankfurt, Istanbul, Dubai or Doha. This can be because destinations are unavailable from Heathrow, or because flights are more convenient or cheaper from elsewhere (e.g. it is impossible to fly direct from London to Chengdu, but one could change at Frankfurt). Since these routes are less direct, the total mileage and therefore overall emissions are higher. Furthermore, some of these routes rely on smaller aircraft which have higher per-passenger emissions, and may benefit countries or airlines with less stringent climate commitments than those in the UK. 

Figure 2: Direct flights produce less emissions than layovers

Flying from London to Beijing via Dubai adds 40% to the distance compared to a direct flight. In the same aircraft, this means at least 40% more emissions - probably more, as the most carbon-intensive part of flying is during take-off and climb, and there is an additional take-off from an indirect flight.

We do not prescribe exactly how the UK should make its aviation sector consistent with net zero, but evidence suggests that it is possible. Table 4 illustrates how this might be achieved, even with a 25% increase in flight demand, by 2040. 

Table 4: A possible route to net zero for UK aviation

Achieving net zero while increasing aviation demand by 25% would require the UK to devote the equivalent to a seventh of its nature based sequestration and a quarter of its planned CCS to offsetting aviation emissions, and spend the equivalent of £450 million (in today’s carbon prices) on carbon credits. However, given that aviation is likely to be one of the largest remaining carbon-intensive sectors by 2040, this allocation seems reasonable. Furthermore, it is reasonable to expect the cost to be borne by the airports and airlines which will profit from expansion.

Ultimately, it is up for the UK government, in partnership with airlines and airport authorities, to decide how to spend its carbon allocation. But the point of the proposed allocation in Table 4 is, firstly, to turn what sounds like an intractable scientific problem (greening aviation) into a tractable, economic problem (how the UK allocates its carbon budget in achieving net zero). 

We also want to illustrate that the wide variety of available levers means that achieving net zero aviation does not hinge on moonshot bets on any particular technological advancement. If hydrogen planes or direct air capture should suddenly advance and become affordable and effective, then we might be able to avoid other forms of sequestration. But even if these technologies do not work out, there are more realistic alternatives, such as SAF, nature based sequestration and international carbon markets. 

Heathrow should consider creating a strategic mitigation fund to pay for carbon offsetting, capture, and other measures that could mitigate the climate and wider environmental impacts of expansion.

Meeting the Government’s first test on climate change is eminently doable. It will require a range of solutions and policies, and cost money, but can be achieved without sudden advances in more speculative technologies. 

Test 2: Noise pollution

Heathrow generates noise pollution for residents in the area. Expanding the airport could increase the number of residents who experience noise pollution, and also the number of instances of noise pollution, by increasing the number of flights. 

But increased capacity could reduce the negative impact of noise pollution. A new runway further west could move low-flying traffic away from the city, and more overall capacity could reduce the number of early morning or late evening flights. Heathrow’s flight paths need renewing, and Heathrow is involved in the UK-wide Airspace Modernisation Strategy led by the Department for Transport. A new runway offers an opportunity to properly review flight paths, as well as angle of descent, and thereby reduce the impact of noise pollution in residential areas. 

Labour has not specified what noise levels would constitute meeting this test, but we assume that the aim is for noise levels to be no worse, and preferably better, than they are currently. This could be achieved by adopting policies such as:

1) Reducing night time flights

Currently a maximum of 5,800 night-time take-offs and landings are permitted annually, divided seasonally into 3,250 movements in summer and 2,550 in winter. Furthermore, there are operational restrictions which mean that no departures are scheduled between 23:00 and 06:00, and no arrivals between 23:00 and 04:50 - late departures or early arrivals can be accommodated, but eat into an annual allowance. Additionally, Heathrow has a voluntary ban preventing flights scheduled between 04:30 and 06:00 from landing before 04:30. Finally, the noisiest aircraft are prohibited from operating during the night period. 

Increasing daytime capacity through a new runway could enable Heathrow to introduce more stringent and straightforward restrictions on night-time flights. For instance, the morning arrival time could be set slightly later than 04.50 (e.g. at 05.30), and the maximum numbers of night-time take-offs and landings could be reduced (e.g. reduced to 2,500 in summer and 2,000 in winter). 

Early morning arrivals cannot be completely banned, as they are necessary for many transatlantic and East Asian flights, due to time zones and flight times. But it is reasonable to suppose that a new runway would allow for more flexibility: since 50% more planes can land at 5.30am, there is less need to begin landing flights at 4.50am.

This would improve the experience for residents near Heathrow even while increasing the overall number of flights, by moving them to a more favourable time of day. Ultimately this is why we care about noise pollution, and so this measure seems like a good compromise.

2) Landing planes at steeper angles

Modern aircraft, the kind found at Heathrow, can generally accommodate steeper approaches, typically up to 3.5-3.8 degrees, compared to the standard 3.0-degree slope. This reduces noise pollution because planes are close to the ground for less time, and the biggest noise impacts are felt when planes are closer to the ground. 

Heathrow has trialled steeper landings but not yet implemented them. There are some operational costs to this, including ensuring pilots know how to safely land planes steeply, and adjusting air traffic control processes. These costs are by no means insurmountable, but easier to enforce if there is some private benefit to Heathrow from doing so. Policymakers could require that a certain proportion of landings must be conducted at a steeper angle, by a certain date. This could form a part of the much needed review of flight paths. 

3) Situating the new runway further west

Heathrow’s most up-to-date proposal places the new runway to the northwest of Heathrow, and therefore slightly further from central London than current runways. When combined with steeper angles of descent, this could reduce both the number of people impacted by noise pollution, and the overall noise level. This means that the new runway would have a smaller noise footprint than the current ones. Since the total number of flights would be spread between the new and old runways, the number of flights close to central London could in theory be lower. In practice, this would depend on the new number of total flights, and how Heathrow decides to allocate them between runways.

Figure 3: Heathrow’s northwest runway proposal

Source: Heathrow Airport Expansion Consultation (published by the BBC, 2020)

4) Banning the noisiest aircraft

Lastly, Heathrow should consider banning, or at least financially penalising, the noisiest aircraft to reap the benefits of quieter, new aircraft. Progress has already been made since expansion was originally proposed at Heathrow. When Tim Leunig proposed banning the noisiest aircraft at Heathrow, in 2012, he cited the A300, A310, B747 - all which are now almost entirely absent from Heathrow, as airlines have updated their fleets. 

Large, loud aircraft like the Boeing 747, once ubiquitous at Heathrow, have been replaced by quieter alternatives such as the Boeing 787 and Airbus A350. Similarly, the newest models of the smaller Boeing 737 and Airbus A320 are much quieter than their predecessors, as shown in table 5. We can expect further improvements in the future.

Table 5: The noise impacts of traditional versus newer aircraft

Sources: Aviationfile, ICAO Noise Database, UC Davis

The above measures show that concerns about noise pollution are a question of how – rather than if – the airport is expanded. That is, the impact of noise on local communities will depend on the conditions attached to expansion, rather than expansion per se. 

Test 3: Air pollution

Half of Heathrow’s ground-level pollution comes from aircraft, and the rest from road transport and the boiler plant, which uses biomass to produce energy and reduce Heathrow’s climate impact.

Figure 4: Sources of air pollution at Heathrow

Source: HAL air quality strategy

As with the third test on noise pollution, advances in technology are already supporting air quality improvements. First, aircraft engines are already becoming less polluting, in terms of nitrous oxides (NOx) emissions and particulate matter.

Engines such as those on the Airbus A320neo and Boeing 787 are engineered to operate more efficiently compared to earlier models. The A320neo, for instance, uses newer engines like the CFM International LEAP-1A and Pratt & Whitney PW1100G-JM. These engines achieve up to a 50% reduction in NOx emissions compared to previous-generation engines. Similarly, the Boeing 787 uses cleaner engines, including the General Electric GEnx engines, which emit NOx levels approximately 30% lower than earlier models. 

Rolls Royce, Europe’s largest commercial jet engine manufacturer, is developing its UltraFan engine, which aims to include an Advanced Low Emissions Combustion System (ALECSys). According to Rolls Royce, “UltraFan is 25% more efficient than the first-generation Trent and offers 40% less NOx and 35% less noise and almost zero nvPM particulates at cruise.” Heathrow could require low-polluting engines, or reduce landing slot fees for airlines that use them. This would help create a market for these engines and speed up their development, while supporting British industry. 

Furthermore, since Heathrow expansion was originally proposed, London has introduced stricter regulations for road transport emissions, namely the Ultra Low Emission Zone (ULEZ), which was extended to cover Heathrow and the surrounding area in 2023. Vehicles within ULEZ must meet certain emissions standards or face a daily charge: between £12.50 for cars, motorcycles and vans, up to £100 for heavier vehicles like lorries and buses.

Road transport has also become less polluting. Since 2015, when Labour first introduced its ‘four tests’, the proportion of electric vehicles (EVs) has risen from 1.1% to 18.7%. The proportion of hybrid vehicles has also increased, and petrol vehicles have become less polluting after the Volkswagen diesel emissions scandal. In 2015, diesel cars constituted approximately 50% of new car registrations in the UK. By 2023, this had fallen to 3%.

Although there is no readily available data, it is also likely that the Elizabeth Line has reduced road transport around Heathrow. The new line provides a cheap, quick and direct connection between central London and Heathrow, as well as much of east London and the area west of London, as far as Reading. Passenger numbers on the Elizabeth Line have far exceeded expectations, implying significant replacement of alternative forms of transport. The Piccadilly Line will also be upgraded from 2025, which Transport for London claims will increase capacity by 64% compared to current levels, through larger trains, more frequent services and higher speeds. 

These factors, combined with Heathrow’s air quality strategy, mean that air pollution is far lower today than when Labour first set out the four tests. According to Heathrow Airwatch, which monitors local air pollution, pollutant levels have decreased by 32%, 45% and 34% for NO2, PM10 and PM 2.5 respectively between 2013 and 2023. 

The general trend of road and air transport technology, as well as local and national regulations, means that air pollution around Heathrow is likely to continue improving even with expansion. Even if EV adoption falls far short of the government’s target of 100% of new car sales by 2035, continued growth of EV sales at the current rate would significantly reduce air pollution from cars, in addition to a collapse in demand for diesel and improvements to petrol engines. 

Table 6: Impact of different factors on air pollution over time 

As with noise pollution, meeting the test for air pollution depends on how, rather than if, Heathrow expands. Since 2015, air pollution has become a more salient political priority, particularly thanks to intervention from the Mayor of London, but also as a result of backlash to the Volkswagen emissions scandal. Economic and climate-based pressures to produce more efficient engines (for both road and air) mean that technology and regulation, rather than demand suppression, will continue to be the most important determinant for local air quality. 

That said, policymakers and airport authorities must make the right choices to ensure air pollution continues to improve after expansion. These should include: 

  1. Financial and regulatory incentives for airlines to use less polluting aircraft and engines. This could include increased landing charges for airlines using older, more polluting engines.

  2. Government support for the development of low emission engines, such as Rolls Royce’s UltraFan. This could take the form of financial or regulatory support, innovation prizes, or facilitating advance purchase commitments from airlines. 

  3. Strengthening ULEZ, or equivalent road transport regulations, to incentivise the transition towards hybrid and electric road vehicles. 

  4. Electrification of all ground operational transport at Heathrow. 

  5. Improved EV infrastructure at Heathrow, including charging points and/or cheaper parking for electric vehicles.

  6. Better rail connectivity. The Elizabeth Line and Piccadilly Line upgrades will continue to ensure that rail is the cheapest and easiest way to travel from London to Heathrow. However, there is a need for better rail connectivity between Heathrow and the rest of the country. The government should provide clarity around HS2 and Old Oak Common, and support initiatives to connect Heathrow with the Western and Southwestern mainlines. 

  7. Indoor air filtration: although it is not explicitly part of Labour’s air pollution test, there is a growing body of evidence highlighting the risks of indoor air pollution, which can include particulate matter as well as airborne pathogens. Given Heathrow’s importance as an international transport hub, it is especially important to reduce disease spread. New terminal buildings should include HEPA filters and conform to the highest air quality standards.

Test 4: Nationwide economic benefit 

Figure 5: Expanding Heathrow would have nationwide economic benefits

Heathrow is in the south of England, near London, and therefore disproportionately benefits these areas. However, this does not mean that expansion would not be positive for other or even all parts of the UK. Many UK-based companies that supply Heathrow and its associated economic activity would experience increased demand for goods and services, resulting in higher wages. However, while London and the Southeast absorb more of the benefits from expansion, these areas suffer disproportionately more of the costs - including any increase in noise, air pollution, traffic or congestion on public transport. 

Work carried out on behalf of the Airport Commission attempted to capture some of the economic benefits associated with this expansion, the scope of which was subsequently updated and revised downwards due to greater uncertainty over the estimated effects. It is worth disaggregating the various channels identified throughout various appraisals to highlight the scale of scope of potential benefits that our current analytical frameworks cannot capture.

These are divided as follows:

Table 7: Breakdown of monetised economic benefits

Re: Lower fares. These figures include benefits for I to I passengers. Earlier attempts to capture this effect excluded these passengers, but there was limited evidentiary basis to justify this distinction in the data. 

Table 8 illustrates that, while the most direct economic benefits will be felt in London and the Southeast, a range of benefits will be spread across the UK. In particular, the benefits from increased aerospace manufacturing, energy production and materials for construction are more likely to be felt in poorer parts of the country – particularly the West Midlands, North Wales and parts of Scotland and Northern Ireland. The tax benefits from Heathrow’s expansion are also likely to disproportionately benefit other parts of the UK, and could be more intentionally used to support local infrastructure and regeneration.

The government should consider announcing Heathrow expansion alongside investment in regional transport infrastructure in other parts of the UK. Some of this could be part-funded by Heathrow, where there is direct benefit to passenger numbers. While the UK only really has capacity for one hub airport, and that airport should be Heathrow, there are many parts of the UK that need more investment in road and rail infrastructure. 

Heathrow expansion should strengthen the business case for investment in regional airports across the UK, as well as in Midlands, Western and Southwestern rail capacity. Previous proposals have included reserving a certain proportion of landing slots for domestic flights. This could form part of a requirement of expansion.

Importantly, however, it is clear that a large number of potential benefits can prove difficult to quantify, leading to their exclusion from comprehensive cost-benefit analyses of the economic effects of Heathrow expansion. In the central scenario of the analysis carried out by the Department for Transport, the net economic benefit ranges from -£2.2bn to £3.3bn without considering most of the benefits highlighted above. While the most recent analysis by DfT quantifies a very small share of these benefits, previous work carried out by the Airports Commission estimated that the wider economic impact of the expansion could be as high as £100bn.

We have little doubt that the fourth test can be met. The range of industries that stand to benefit from expansion means that there will be opportunities for all parts of the UK. The government should build on this further by actively directing tax revenue and market-shaping mechanisms towards driving regional growth.

Plan of Action

Since the four tests can be met, the government should not delay in pursuing Heathrow expansion. However, all of the tests, to some extent, can only be met with some conditions attached to expansion. 

Ultimately it is up to the Government to set out what these conditions should be, and what trade-offs they are willing to make, as most of these conditions will have some sort of cost attached to them. Below are some options for how the tests could be met:

Test 1: Options for addressing climate change

  1. Ground operations at Heathrow should be completely decarbonised, including use of electric vehicles, and electricity from 100% carbon-free sources. 

  2. This is supportive of the Government’s 2030 target to decarbonise the electricity grid (by 95% or more), and will free up carbon credits to allocate towards aviation, which is harder to decarbonise. 

  3. Heathrow and airlines operating at Heathrow should commit to net zero emissions by 2050. This can include financial contributions towards carbon sequestration through nature-based solutions, and/or CCS investment. Any remaining emissions should be covered through spending on international offsetting. This would also incentivise investment in sustainable aviation fuels (SAF) and more efficient aircraft, including electric aircraft. 

  4. Heathrow can incentivise these policies by introducing lower landing charges for airlines with net zero commitments.

  5. Heathrow could also create a strategic mitigation fund to directly pay for carbon offsets through increased revenues from expansion.

  6. Airlines must commit to the government’s SAF mandate, for 22% of airline fuel to be SAF by 2040, and the laddering system of increasing proportions between now and 2040.

  7. The most polluting engines should be banned from Heathrow, and financial incentives should favour SAF and/or next generation engines (e.g. through cheaper landing fees). 

Test 2: Options for addressing noise pollution

  1. Heathrow should reduce the current limits on night time flights, and continue to schedule no night time flights.

  2. Heathrow should reduce the number of late evening and early morning flights.

  3. Heathrow should require that a certain proportion of flights land at a steeper angle, as part of a wider review of flight paths. 

  4. The new runway must be further from central London than existing runways. 

  5. Heathrow should ban the noisiest engines, and offer financial incentives for airlines to switch to quieter aircraft (such as differential landing fees). 

Test 3: Options for addressing air pollution

  1. The government should introduce financial and regulatory incentives for airlines to use less polluting aircraft and engines. This could include increased charges for use of older, more polluting engines.

  2. The government should support the development of low emission engines, such as Rolls Royce’s UltraFan. This could take the form of financial or regulatory support, innovation prizes, or facilitating advanced purchase commitments from airlines. 

  3. London authorities should use ULEZ, or equivalent road transport regulations, to incentivise the transition towards hybrid and electric road vehicles. One option would be to ban, rather than just charge, vehicles that currently do not meet existing regulations.

  4. Heathrow should continue to develop its EV infrastructure at Heathrow, including charging points and/or cheaper parking for electric vehicles.

  5. The government should commit to better rail connectivity for Heathrow, including providing clarity around HS2 and Old Oak Common, and supporting initiatives to connect Heathrow with the Western and Southwestern mainlines. 

  6. Heathrow should set standards for indoor air quality. Any new terminal buildings should include HEPA filters and conform to the highest air quality standards. Existing terminals should be retrofitted where possible. 

Test 4: Options for addressing regional economic growth

  1. Heathrow expansion could be announced alongside public funding for new rail infrastructure outside London and the Southeast. 

  2. The government should also give the green light to investment in regional airport capacity outside of London and the Southeast, particularly those airports that can capitalise on connectivity with Heathrow.

  3. The government should give the go-ahead to Luton’s planned terminal expansion, and operationalise Gatwick’s northern runway.

  4. Tax revenues from Heathrow expansion could be used to fund regional transport infrastructure outside London and the Southeast. 

  5. The government should use market shaping and regulatory mechanisms to support British aerospace clusters and SAF production, which disproportionately benefit parts of the UK outside London and the Southeast. For instance, the government could run an innovation prize for SAF-ready engines. 

The above shows how the four tests can be met. However, these are just suggestions - another set of conditions, more or less stringent in different areas, may also be consistent with the tests. 

Within the next 3 months, the government should clearly define and publish its conditions for expansion. The government should consider introducing a hybrid bill to Parliament which empowers ministers to enable expansion and addresses potential planning roadblocks. A hybrid bill has the further benefit of avoiding risk of Judicial Review and further delay. 

An expanded, efficient and sustainable Heathrow could be a project of nationwide pride. At a time of economic stagnation and populist forces which seek to shut Britain off from the wider world, Heathrow could be a symbol of openness, growth and opportunity.

FAQs

Why not expand other airports?

Heathrow is the only hub airport in the UK, and is also the airport with the strongest claim to be operating at full capacity. Heathrow’s central location also means that expansion benefits more parts of the UK, compared to London’s Gatwick, City or Stansted airports. 

Hub airports connect passengers flying between destinations with no direct flights, for example: Manchester to San Francisco, Belfast to New York, or Newcastle - Hong Kong. Passengers travelling these routes can choose to fly via Heathrow, but may equally stop over at major European hubs like Amsterdam or Paris, or (for flights to Asia) hub airports in the Gulf, such as Dubai or Doha.

The economic case for a hub airport is distinct from that of other airports. Specifically, hub airports demonstrate increasing returns to scale. For every additional Heathrow connection, the value of other connections rises, as more potential passengers can be captured. Suppose Heathrow adds a direct flight to Chongqing, a city of 30 million in central China. This benefits anyone in or around Chongqing who wishes to fly to London, for work, tourism or study, but also benefits anyone who wants to connect to a European, North American or North African airport which is served by Heathrow. Furthermore, anyone living in the UK or Europe now has an additional way to get to Chongqing. The route becomes more valuable for each additional available route. Note that this logic applies not just by adding more long haul routes to places like Chongqing, but also by adding smaller short-haul destinations in the UK and Europe.

Transfer passengers make up between a quarter and a third of total passengers at Heathrow. Given the narrow margins on which airlines operate, and the vast sums airlines are willing to pay for Heathrow landing slots, this implies that transfers are essential to airlines’ business models at Heathrow. This is distinct from other UK airports, which primarily serve point-to-point flying, or connect passengers to other hubs (e.g. passengers can fly from Gatwick to Amsterdam or Dubai, and then take onward connections). 

Finally, hub airports exhibit international, rather than domestic, competitive dynamics. An airport like Luton competes with Stansted or East Midlands Airport for short-haul routes for UK holidaymakers, and (to some extent) with rail and road transport for domestic travel. Expanding Luton is likely to be value-adding, but in a different way to Heathrow, which competes with the likes of Amsterdam Schiphol, Paris CDG and Frankfurt. There are reasons to believe this competition is more acute. While passengers living near Gatwick or Luton will strongly favour routes from those airports, international transfer passengers are less likely to distinguish between Heathrow, Amsterdam and Paris on the basis of geography. Instead, availability of routes, price and length of layover will be the main determinants. Expanding Heathrow increases UK capacity at the expense of international competitors, and not just other UK airports. 

Heathrow expansion therefore generates a unique kind of growth opportunity for the UK, not offered by other airports. A hub airport has increasing returns to scale from additional routes, and is central to Heathrow’s operating model, and the model of airlines operating at Heathrow. And international competition between hub airports means that Heathrow expansion is more critical for the UK’s interests. 

However, we believe there is also a strong economic case for expanding Gatwick by fully operationalising its standby northern runway. This would require changing the legal constraints on Gatwick’s northern runway, which is currently used as a taxiway, and can only be used for take-offs and landings in emergencies and exceptional situations. Based on 2023 statistics, the number of flight movements per operational runway at Gatwick is higher than that of Heathrow (though Heathrow’s flights tend to have more passengers). Given the growing demand for flights from Gatwick, this would help to absorb demand and take some of the pressure off Heathrow, particularly for holidaymakers, non-transfer passengers, and those living south of London. 

There is also a strong case for giving the green light to Luton Airport’s expansion plans, which include a new terminal. This would also add much needed capacity and ease pressure elsewhere. As with Gatwick and Heathrow, expansion need not cost the taxpayer anything. However, due to hub dynamics, the economic case for expanding Gatwick and Luton is different from that of Heathrow. 

Table 9: Flight movements and passenger numbers for UK airports (2023)

Source: Civil Aviation Authority (2023)

Is Heathrow’s dominance actually under threat?

Heathrow has already been overtaken by Dubai as the airport with the most international passenger traffic, since 2014, and during the pandemic other European airports overtook Heathrow. Since the pandemic, Heathrow’s numbers have shot back up, but European competitors are close behind. In particular, Istanbul has seen a dramatic take off in the number of international passengers, with its new airport.

Figure 1: Annual international passengers, selected airports 2013-2023

Source: Airports Council International (all listed on Wikipedia, accessed 2025

Heathrow suffered a larger drop in international passenger traffic during the Covid pandemic, compared to other hubs, but has also seen a more significant rebound. However other European airports are closer to challenging Heathrow’s dominance compared to in 2013, and Dubai has overtaken Heathrow to the top spot.

New entrants could make the hub market more competitive. Istanbul Airport, when fully completed, is designed to handle up to 200 million passengers annually, making it one of the busiest airports in the world (Heathrow saw 80 million passengers in 2023). 

The UAE is building Al Maktoum International Airport just outside Dubai, which aims to eventually have capacity for 260 million passengers, and Saudi Arabia has similarly ambitious plans for King Salman International Airport in Riyadh. 

Closer to home, Poland is building Warsaw Solidarity Transport Hub, which includes a hub airport designed to handle 40 million passengers a year, connected to Warsaw by high speed rail. Lisbon is set to open its new Luis de Camoes Airport, which aims to eventually handle 100 million passengers per year. Meanwhile, Frankfurt Airport is constructing Terminal 3, expected to commence operations in 2026. This expansion will increase the airport's capacity to handle up to 100 million passengers annually.

Appendix

Carbon calculations

Extra emissions could be mitigated by switching just 0.9% of the UK’s petrol cars to electric vehicles each year.

This is calculated by taking figures from the Heathrow Association for the Control of Aircraft Noise (HACAN), an organisation that opposes expansion, which estimates that expansion would lead to a 7 million tonne increase in carbon emissions. The actual figure could be lower, if some of the measures we describe are adopted.

7 million tonnes of CO2e is equivalent to the difference in lifetime emissions between 175,000 petrol vehicles and electric vehicles, according to comparative estimates. Since there are 19.2 million petrol cars on the road in the UK, this is equivalent to 0.9% of UK cars. An annual replacement of this many petrol cars for EVs would deliver a sufficient emissions reduction to completely offset additional emissions from Heathrow expansion.

David Lawrence

David Lawrence is Co-Director of UK Day One. He has worked in Westminster policy for the last decade, including at Chatham House, in Parliament, and as a Labour parliamentary candidate. His areas of research include technology and growth policy. He holds degrees from the University of Oxford and the London School of Economics. 

Pedro Serôdio

Pedro Serôdio is UK Day One’s Chief Economist. He was previously Head of Analysis at the UK’s Office for Life Sciences, leading a team that provided economic analysis and produced official government statistics in one of the UK's key growth sectors. Before that, he held academic positions at the Universities of Warwick, Middlesex and Essex, specialising in macroeconomic policy. 

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