Air industry plans for future boom

Heathrow is not the only European airport planning for expansion to meet expected growth

LONDON, England (CNN) -- The decision to approve a fifth terminal at Heathrow Airport will come as a surprise to those whose memories go no further back than September 11.

The move, announced on Tuesday by UK Transport Secretary Stephen Byers after the longest planning inquiry in British history, appears to fly in the face of the major setbacks airlines have suffered as a result of the U.S. terror attacks.

Tens of thousands of air industry workers have lost their jobs, airlines have gone out of business and confidence in flying as a safe means of transport has been severely damaged.

Add to that the post-September 11 fatal air incidents in Italy and New York, the accidental shooting down over Ukraine last month of a Russia passenger airliner, and last year's Concorde crash, and there is little surprise that the industry is facing a crisis.

In a recent report, the International Air Transport Association (IATA) said: "In a monthly fall of a size not seen since the immediate aftermath of the Gulf war, more than 10 years ago, passenger traffic on the international scheduled services of IATA airlines declined 17 percent in September, compared to September 2000."

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But despite the gloom, analysts predict the crisis, in the long term, will not persist and that the industry is poised not only to recover but face a massive expansion in demand.

A spokesman for the British Air Transport Association told CNN: "We hope we will see a recovery in pre-September 11 demand. Of course, some parts of the industry are seeing growth anyway.

"We believe there will be a return to normal levels of activity and growth. We also believe that that the need over the next 30 years of further capacity (in the UK) is inevitable."

'Britain could lose jobs'

A fifth terminal at Heathrow is deemed necessary to avoid losing custom to other expanding European airports in Germany (Frankfurt), France (Paris) and Holland (Amsterdam) -- all of which join Heathrow in representing Europe in the top 10 airports in the world.

Byers said the new terminal would enable Heathrow to remain a "world class airport."

Last year, Heathrow handled more than 62 million passengers. The fifth terminal, which will be able to cater for about 30 million travellers a year, will help the airport to handle about 80 to 85 million passengers a year.

To add to the argument in favour of the expansion, forecasts by the Department of Transport show passenger numbers at UK airports rising from 160 million in 1998 to 400 million in 2020.

Tim Goodyear, a spokesman for the Geneva-based IATA told CNN: "In normal circumstances the air industry grows between five and seven percent.

"That is equivalent to a doubling in size every 10 to 14 years, so plans have to be made far in advance since it can take 10 years for facilities to come on stream.

"Terminal 5 at Heathrow is a good example. Once finished, it will be 14 years since planning permission was applied for."

In April, Digby Jones, the director-general of the Confederation of British Industry, warned that Britain was in danger of losing jobs and investment to its European rivals if it failed to build new capacity.

"If UK airports can't sustain a level of service throughput that is at least as good as that available to our competitors in northern Europe there is a real danger of us losing out when companies take investment decisions," he said.

The CBI said that over the past 20 years passenger flights had trebled, but Britain had simply been "squeezing more and more capacity out of existing airports."

To offset any threat to its status by rival airports, Heathrow may also get a third runway to protect premier status as Europe's leading international airport.

British Airway chief executive Rod Eddington has already warned that Heathrow is rapidly losing its pre-eminence as the leading aviation hub in Europe and that the British transport infrastructure was 'noticeably inferior' to that of Germany, France or the Netherlands.

European expansion

Heathrow is not the only European airport looking to the future and considering or implementing expansion plans.

It is not even the only airport in the UK expecting increase demand. Plans to double the size of two other London airports -- Gatwick and Stansted -- and the regional airport at Southampton, on the south coast, are being studied, while Manchester's second runway opened earlier this year.

Heathrow is already likely to lose its position as Europe's biggest international airport by 2010 to Charles De Gaulle airport in Paris, where a fourth runway is due to open within weeks.

In addition, Paris is planning a third airport on a site near the A1 motorway and the Eurostar cross-Channel railway line.

Schiphol airport in Amsterdam will have five runways by 2010, while Frankfurt is making improvements that will allow it to increase passengers by 20 million a year and add a fourth runway.

Goodyear said: "The bottom line is that unless airports have a margin of spare capacity to cope with passenger growth they will die.

"In this business, you can't just stay where you are, otherwise you will begin to fall back. Despite the events of recent weeks and the gloom in the industry planning ahead for expansion if the only way fpor the industry to survive.

"It is far too premature to say that planning for growth is no longer appropriate."