by Josh Lew
Last updated: 7:00 PM ET, Mon August 1, 2016
Photo courtesy of Thinkstock
Now that it is leaving the EU, will the U.K. finally make a decision about its long-delayed airport expansion projects? As Heathrow and Gatwick vie for government funding to build new runways, London's "other" airport, London City, has been approved for a $455 million upgrade.
London's "other" airport gets approval for expansion
The London City project will include a parallel taxiway so that more planes can queue for takeoff without disrupting traffic flow. There will also be seven new gates and an extended terminal. This will mean more capacity for the often-overlooked East London airport, which is a favorite of business travelers because of its proximity to the center of the city. The goal of the project is to increase capacity to 6.5 million passengers by 2025.
The funding will reportedly be provided by private sources.
6.5 million passengers per year is still a modest figure, especially compared to Heathrow and Gatwick, the two airports vying for multi-billion dollar makeovers. It seems that what London City wants to accomplish is to maintain its customer-friendly image in the face of growing traffic numbers.
Last year the airport welcomed 4.3 million fliers, which was an all-time record. Travelers choose the airport because of its location, but also because it is not as chaotic and crowded as Heathrow or Gatwick. The expansion should help keep this customer-friendly vibe, which is especially valued by business travelers, intact.
Regardless of Brexit, London is "open for business"
In announcing the government's approval of the project, Declan Collier, CEO of London City Airport, said that the expansion is about more than simply improving capacity at the airport itself; it is about facilitating business in London and the U.K.
"Expansion at London City Airport will create more than 2,000 new jobs in East London, add much-needed aviation capacity in the South East, and generate an additional £750 million per year for the U.K. economy. As the airport serving by far the highest proportion of business travelers in the U.K. (52 percent), who do some £11 billion of trade in Europe annually, today the government has sent a strong message that London and the U.K. are very much open for business."
So whatever happens with the U.K.'s exit from the EU, London will be able to accommodate business travelers (no matter where they are coming from).
Procrastination continues for Heathrow and Gatwick expansions
But what about the other airports? Heathrow's director, John Holland-Kaye, has said that Heathrow already has a plan for expansion and, since it is already the country's most-connected hub, it should get the go-ahead as part of "positive post-Brexit plan."
New London mayor Sadiq Khan, who helped push ahead with the London City Airport expansion after it was blocked by his predecessor Boris Johnson, has come out in favor of an expansion at Gatwick instead of Heathrow. His reasoning is that a Gatwick runway would bring "substantial economic benefits."
New Prime Minister Theresa May has not yet addressed the issue.
Is Heathrow the safest bet for investing in expansion?
Despite the backing of the mayor, Gatwick is not the global brand that Heathrow is. Since no one is quite sure how closely the U.K. will be tied to the EU in the future, the argument for Heathrow expansion is that it already has established links beyond the continent. A majority of the traffic from the Middle East and North America comes through Heathrow, while the other airports' international service is focused on Europe. With the future uncertain, Heathrow is selling itself as the safest bet.
Meanwhile, the London City expansion is a vote of confidence, not only for the airport and the city, but also for post-Brexit England.
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