INNOVATIONS ON REGIONAL AIRPORTS DEVELOPMENT AS AN EXAMPLE OF UK
INNOVATIONS ON REGIONAL AIRPORTS DEVELOPMENT AS AN EXAMPLE OF UK
Farid Mehdi
Associate Professor of Economics, PhD, Doctoral student of Azerbaijan State Oli and Industry University,
Azerbaijan Republic, Baku
Before going to the deep analysis of the regional airport development in the United Kingdom, it would be much more plausible if we focus on the current condition of the United Kingdom. The United Kingdom is located in the northwestern part of Europe, and this kingdom include four countries which are England, Wales, Scotland, and the Northern Ireland. The capital city of the kingdom is London which is one of the most attractive city for tourists every single year. The United Kingdom is one of the countries that contributed to the world a lot during the World War 2 in economy. Regarding the fact, the technological and industrial development of the country was the key during that period. The geographical situation of the country is sustainable for trade. Being surrounded with Atlantic Ocean, the North Sea helps a lot for delivering the goods to other countries within limited time.
The airport development is very dependent on the economic condition of the countries because it would be meaningless to realize the new airport infrastructures in the economically bad countries. Thus, the chart below will illustrate the Gross Domestic Product Growth Rate of the United Kingdom through years [1, p. 18].
Figure 1. UK GDP Growth Rate
As we know in the year of 2008 the economic condition was in the boom level in the United Kingdom, but unfortunately, starting from 2009 this flourishment went down immediately and the reason behind it is based on the huge economic crisis that our world confronted because of the mortgage – backed securities [2, p. 44]. Although the crisis started in the United States of America, it directly spread to other developed countries in the world, and the United Kingdom was one of those countries that affected while after the crisis the economy started to revive again. On the other hand, if we look at the figures, during last years we can easily witness that there is a downward trend again and the main reason behind is some changes in the United Kingdom. As a matter of the fact, the government of the United Kingdom decided one of the mostly debatable amendment, and they left the European Union which is known as “BREXIT” [3, p. 75]. The figure below clearly shows that how “BREXIT” decision affected to the inflation rate in the United Kingdom (Pettinger, 2017).
Figure 2. UK Inflation (CPI)
After analyzing the current condition of the United Kingdom, in this part we will focus on the regional development issue. It was stated that the development of the regional airports in the United Kingdom continues in a positive direction. According to the published sources: “Last year, a survey by the Civil Aviation Authority (CAA) indicated that a huge 95 million holidaymakers hopped on a flight at a regional airport - a nine % increase compared with the 87 million people who used a local hub two years previously” [4, p. 9]. This trend also resulted with the slow growth rates in the massive airports such as the “Heathrow Airport” which is located in London. The regional airports are mainly located near the big cities, and many people start to refer to these airports for the travelling purposes. There are many reasons that bring this reality to the conclusion, and it would be better if we talk about them. First of all, the passengers should not wait a lot during the queues. According to the statistics that was published in the year of 2015: “One in four of all non-European passengers arriving at Heathrow's Terminal 5 during April had to wait longer than the target time of 45 minutes to get through passport control, according to official airport figures” [5, p. 52]. On the contrary, people who travel through the Birmingham Regional Airport will wait not longer than 12 minutes. Additionally, it should also be mentioned that every year there are a lot of investments in the equipment of the regional airports in the United Kingdom. Regarding the fact, £1.5 million was invested in the Birmingham Airport for the development of the better X – Ray technology which allows passengers to pass the security check in a limited period of time.
Secondly, the destinations that people want to visit in the United Kingdom is increasing, and it is much easier for them to go there via close regional airports rather than huge far airports. As an example of statistics in Azerbaijan, the number of people that use some of regional airports were less which indicated the result that the regional airport investment in this country is meaningless in some places while we cannot claim the same argument in case of the United Kingdom.
Thirdly, the regional airports are the best destinations for the low – cost airlines. Regarding the fact that during last years the demand for the low – cost airlines is going up such as Ryan Air, WizzAir, GermanWings and so on. On the contrary, landing to the big airports is not profitable for these airlines, and they try to focus on the small regional airports. Hence, regional airports are the best destinations for these airlines. From the table below, we can also witness that the number of the passengers that traveled through the Birmingham Airport is increasing every single year.
Figure 3. Birmingham Airport passengers statistics
The investment on the regional airport development in the United Kingdom has much more advantages. First of all, the demand is increasing every day. In the first part, we saw the number of the passengers that travel via Birmingham Airport, and it indicated that although the growth rate is going down a little bit, number of the passengers are increasing. The decrease in the growth rate is understandable because this is based on the microeconomic phenomena: Decreasing Returns Scale. It means that after some period of time, the number will still increase but from the percentage perspective it will decrease. The graph below shows this concept clearly. As we can see from the graph, as the quantity increases one by one, the output level is not increasing the in the same level of the percentage.
Figure 4. Decreasing Return Scale
Secondly, the government of the United Kingdom supports the investment on the regional airports. According to the act in the year of 1983, the airports can also be owned by the private companies and owners [8, p. 58]. As a matter of the fact, in many countries it is so challenging for investors to have the access to the mainly publicly areas while the United Kingdom is much more welcoming. Another advantage of investing in the regional airports of the United Kingdom is based on finding the available workforce that can work in this industry.
The stated information and facts clearly show that the development of the regional airports in the United Kingdom is straightforward. On the contrary, it would be much better to analyze this claim from different perspective which will show the disadvantages of this investment. It is the reality that “In every region of the country except London airports take more money out of the country than they bring in” [6, p. 27]. What does it mean? The development of the regional airports is great, and it attracts a lot of tourist to the country. On the other hand, it also ends with the left cash from the country. Many citizens of the United Kingdom visit other countries a lot because of the nearby regional airports and low – cost airlines. They spend much more money (except London) in other European countries which paves the way for the deficit in the financial figures. Although airport development is good for new employment opportunities for the people, it also results with this kind of deficit. Additionally, one of biggest portion of the travelers who visit the United Kingdom aim the business meetings which mean using the low – cost airlines for this purpose is an excellent choice while it is a damage for the economy of the United Kingdom.
Another disadvantage of the regional airports development in the United Kingdom is based on the huge emission of the CO2. According to the Regional Airports Paper which was published in 2009: “In 2008 all regional airports (i.e. all the UK airports outside Heathrow, Stansted and Gatwick, Luton and London City) accounted for 26% of emissions from aviation. If current growth trends continue, this is predicted to rise to 34% by 2030 and could be anywhere between 40% and 80% by 2050” [7, p. 32]. This will directly affect to the improvement in the Global Warming which is one of the most devastated problems in the world, and there should be some precautions by each country including the United Kingdom.
Figure 5. Global Average Temperature
The line graph above shows that the Global Warming is still in the increasing direction, and not only the United Kingdom but also other countries should focus on this problematic issue.
References:
- David Millward. (2010). Was the Privatisation of Our Major Airports a Mistake?. https://www.telegraph.co.uk/news/uknews/road-and-rail-transport/8214827/Was-the-privatisation-of-our-major-airports-a-mistake.html
- Airport Watch. (2009). The Expansion of Regional Airports Really a Good Thing?. http://www.aef.org.uk/downloads/AW_Regional_Airports_Paper_Sept2009.pdf
- Berkeley Earth. (2017). Global Temperature Report for 2017. http://berkeleyearth.org/global-temperatures-2017/
- Birminghamtoolkit.com. (2016). Birmingham’s Visitor Economy 2016. http://birminghamtoolkit.com/files/downloads/VisitorEconomyHeadlines2016withupdatedSTEAMfigures.pdf
- University of Birmingham. (2017). The Birmingham Economic Review 2017 – The Visitor Economy. https://blog.bham.ac.uk/cityredi/the-birmingham-economic-review-2017-the-visitor-economy/
- Statista.com. (2016). Average Cost Per Square Meter of Internal Area in the United Kingdom (UK) For Building an Airport in 2016, by Region in GBP. https://www.statista.com/statistics/601800/airport-building-cost-uk-2016/
- Airports Council International. (n.d). ACI Airport Statistics Infographics. http://www.aci.aero/Data-Centre/Airport-Statistics-Infographics
- Paul Cox. (2015). The Discount Rate: A Report for the Ministry of Justice. https://consult.justice.gov.uk/digital-communications/discount-rate/results/discount-rate-report.pdf