A tale of two routes: London Heathrow to Austin, Texas and Chengdu, China

The owners of Heathrow and Gatwick are currently campaigning for their respective airports to gain an additional runway (a third runway in the case of Heathrow and a second runway in the case of Gatwick) as part of The Airports Commission’s appraisal of the options for additional runway capacity in the South East of England.

The nub of Gatwick’s campaign under the banner “Gatwick Obviously” is that, as well as being able to secure a new runway at much less cost, additional capacity at Gatwick is essential to provide effective competition between Gatwick and Heathrow.

Key to Heathrow’s campaign for a third runway is that additional capacity is essential to secure links between the UK and international growth markets in Asia and elsewhere.

In favour of this argument is the fact that both Amsterdam and Frankfurt airports serve substantially more international destinations (particularly in Asia) than Heathrow.

However, the quid pro quo is that neither Amsterdam nor Frankfurt have 30 flights a day to New York.

For an illustration of the relative difficulty of Heathrow in serving new and emerging markets in Asia, we need look no further than compare the performance of two relatively new BA routes from Heathrow to Austin and Chengdu.

London Heathrow – Austin launched in March of this year. It started as a five weekly service and now operates daily. London Heathrow – Chengdu launched in September last year. The route is currently five weekly and reverts back to its launch frequency of three times a week in late October.

In spite of being a relatively new route, according to International Airlines Group CEO Willie Walsh, London Heathrow – Austin achieved a 90% load factor in June, whereas Chengdu achieved only a 56% load factor, some nine months after launch.

According to provisional CAA data 11,617 passengers flew (in both directions) between London and Austin in June, compared to just 4,391 between London and Chengdu

How can the difference be explained?

Well, in part, it’s due to the fact that North America is a mature market for BA. It has the support of its joint-venture partner American Airlines. It is also the only airline to provide a transatlantic link to Austin. BA can make no such claims in respect of Chengdu.

But another factor is simply geography.

Heathrow, being in West Europe, is geographically in the right place to pick up connecting traffic from mainland Europe on to transatlantic flights. This is in much the same way that Helsinki’s geographical advantage has enabled Finnair to slowly but surely build a niche in serving Asia.

Routes to Asia, beyond the trunk routes of Hong Kong, Singapore et al, require connecting traffic to support them. Heathrow is simply in the wrong place to pick up connecting traffic from mainland Europe as it would require backtracking by passengers.

Even if Heathrow was to expand, it is far from certain that the UK will gain links to a vast range of new destinations in Asia. Something we expect will be confirmed by new route announcements by BA in the coming years. Heathrow and others may promise new links to emerging markets but we suspect BA and others will not be able to resist the lucrative, and already very well served, transatlantic market.

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