The Economics of Airlines and airport Case Study

The Economics of Airlines and airport - Case Study Example It was approved by the Government on the basis of figures that were provided by Oxford Economic Forecasting in two reports commissioned by the aviation industry, and which projected economic benefit to the UK of 5 billion pounds over a period of 70 years (BBC report). The benefits from the use of all existing runways before expansion was estimated to be 6.7 billion pounds, with costs being 1.9 billion pounds and net benefits being 4.9 billion pounds.(Dept of T, 2003). Estimated investments made into Heathrow were 3599 million in the last ten years, with projected investments over the next ten years being 6398 million, with a net economic contribution of 5 billion pounds to the economy(www.heathrowairport.com). In the graph above, Series 1 represents the total benefits of the construction, Series 2 represents the costs associated with the construction, while Series 3 represents the new benefits of the construction. The Government finally commissioned one new terminal at Heathrow airport, which has just become functional and this expansion was justified on the basis of the projected gains of 5 billion pounds. ... Estimated investments made into Heathrow were 3599 million in the last ten years, with projected investments over the next ten years being 6398 million, with a net economic contribution of 5 billion pounds to the economy(www.heathrowairport.com). However, with the expansion of Heathrow airport to include one additional terminal, the economic benefits were projected as follows: (Source: DT, 2003). In the graph above, Series 1 represents the total benefits of the construction, Series 2 represents the costs associated with the construction, while Series 3 represents the new benefits of the construction. The Government finally commissioned one new terminal at Heathrow airport, which has just become functional and this expansion was justified on the basis of the projected gains of 5 billion pounds. The arguments that have been advanced suggest that an expansion of Heathrow through the additional terminal will contribute to better management of passenger traffic and provide effective transportation with other European airports, which are emerging as attractive destinations (www.stopheathrowexpansion.com). But a Report on the Heathrow expansion questions whether it is really necessary and concludes that the competitiveness of the airport will not necessarily be impacted negatively without it (www.stopheathrowexpansion.com). Social and Environmental aspects The Department of Transport in 2000, produced forecasts for air traffic and according to this, there are likely to be 400 million passengers per