02 Mar 2017
Since Lichfields’ first blog, momentum behind the Aviation Powerhouse has grown. Manchester displaced Stockholm as it entered Europe’s top 20 airports with 25.9 million passengers for the first time. The Department for Transport (DfT) published a number of aviation consultations, including the draft Airports National Policy Statement (NPS), the Government has opened consultation on its Northern Powerhouse Strategy, whilst Transport for the North and George Osborne’s Northern Powerhouse Partnership released new think pieces on the Northern Powerhouse. Manchester has also hosted the second Northern Powerhouse conference.
DfT’s consultations have focused on the need for runway capacity in the South East and the proposed Heathrow Airport expansion. This places the onus on Heathrow to demonstrate in any future development consent order application how a new runway will support regional connectivity across the UK. The draft NPS and various ministerial statements have made clear the importance of providing better regional access to Heathrow, once Runway 3 is constructed.
Direct links between Heathrow and the Northern Powerhouse’s airports will be essential to take advantage of the wider range of destinations offered by Heathrow than are currently served by the existing airports in the north. But this benefit is dependent on providing them with access to Heathrow to enable interlining. The Aviation Powerhouse has untapped capacity and is well-placed to capitalise on greater connectivity to Heathrow. But it is important that once finalised, the NPS does not overlook the Aviation Powerhouse’s recent impressive growth and the role it can play in providing capacity for increased global connectivity. As Charlie Cornish of Manchester Airports Group has pointed out, the Government needs to ask “how we are going to make best use of the runway capacity we have in this country, by improving access to airports with capacity which are now growing significantly”.
Transport for the North and the Northern Powerhouse Partnership have been busy promoting the Northern Powerhouse and suggesting ways to strengthen the Aviation Powerhouse. This includes a number of pragmatic steps that DfT should consider.
Central to Transport for the North’s Independent International Connectivity Commission Report is that connectivity needs to be a priority for the Northern Powerhouse to harness the economic benefits from internationalisation. Relying on South East airports for international business travel and freight offers greater international connectivity but increases costs and reduces competitiveness for businesses in the Northern Powerhouse.
Transport for the North offers a solution: secure more direct long haul passenger services in the Aviation Powerhouse, with belly hold capacity for freight. Businesses in the Northern Powerhouse would benefit immediately. It would improve their cost competitiveness and give them greater access to new markets. Transport for the North reasons that improving business-related aviation will give the biggest boost to the Northern Powerhouse’s productivity.
Akin to our suggestion that the Aviation Powerhouse should be treated as a cluster of airports, Transport for the North suggests that establishing new routes should be coordinated across the Northern Powerhouse. Whilst the aviation market is generally responsive to demand, Transport for the North argues that coordinating new route development should improve the Northern Powerhouse’s competitiveness. For example, creating new complimentary short haul routes from Liverpool and Newcastle, and promoting the growth of long haul routes from Manchester will give Northern Powerhouse businesses much greater access to global markets.
Improving connectivity to and from airports within the Aviation Powerhouse has also been promoted by Transport for the North. They recommend a series of ‘surface access’ schemes, such as improving the link road between Newcastle airport and the A1.
By improving accessibility to airports, Transport for the North argues that the proposed schemes will generate more demand from businesses in the Northern Powerhouse and extend airport catchment areas (benefiting a larger area). In turn, this will improve the competitiveness of the Aviation Powerhouse and grow demand for increased frequencies and new routes.
Given the potential for an additional 60 million air passengers a year, the Aviation Powerhouse has significant untapped capacity. This could give a big stimulus to the Northern Powerhouse and UK economies. The currently unused capacity offers great potential in the long term to benefit from Heathrow’s expansion, but it also presents short term opportunities to improve global connectivity to the Northern Powerhouse. The Northern Powerhouse needs to engage with the Government’s aviation consultations to ensure that it maximises the benefits from Heathrow’s proposed expansion. Recent efforts by Transport for the North and the Northern Powerhouse Partnership to promote the strength and potential of the Aviation Powerhouse have been well-received by the business community – capturing the opportunities will reap rewards.
The Government recently announced Growth Deal 3 funding of c. £556 million for Northern Powerhouse Local Enterprise Partnerships, which could help improve connectivity to Aviation Powerhouse airports. Perhaps DfT could look at building on this existing commitment and play a more active role in supporting the Aviation Powerhouse in using its untapped capacity?
 TfN (February 2017) Independent International Connectivity Commission Report
 NPP (January 2017) First Report
 TfN (February 2017) Independent International Connectivity Commission Report
 DBEIS (January 2017) Northern Powerhouse: Growth Deals
Image credit: VIEW Pictures Ltd / Alamy
Stephen Morgan-Hyland & Brendan Edwards
19 Jan 2017
Amidst increasing attention on the Northern Powerhouse agenda, Brendan Edwards (economist) and Stephen Morgan-Hyland (spatial planner) of Lichfields Manchester, talk over the concept of the Aviation Powerhouse.
Morgan-Hyland figures that the term ‘Powerhouse’ conjures up an image of combined energy and strength. The blueprint for the Northern Powerhouse is certainly a coalition. It is a united economic voice, working collaboratively to sell the attributes of the Northern Powerhouse to the world to secure a greater share of international investment. It is a brand that allows the North to establish a single identity and compete with a force greater than the sum of its parts.
Credited to former Chancellor and MP for Tatton George Osborne, the over-arching Northern Powerhouse mantra seeks to respond to a longstanding recognition that the North lacks a competitive economic edge. Edwards notes that whilst there is a productivity gap between the Northern Powerhouse and the rest of the UK, there is an opportunity to attract a greater share of domestic and overseas investment. Morgan-Hyland agrees that the objectives are to rebalance the domestic economy and for the Northern Powerhouse to be pivotal in strengthening the fiscal position of the UK, particularly in a post-Brexit world.
Realising the economic benefits that come from a Northern Powerhouse will be dependent on the success of tackling several strategic challenges: inter-connectivity of cities; improved transport infrastructure; strengthened labour market skills; and a transformation of how inward investment is attracted and secured.
Whilst there are challenges it must address, the Northern Powerhouse boasts many strengths. One of these is the Aviation Powerhouse.
The Aviation Powerhouse is a cluster of aviation industry in the North, reaching from Liverpool and Humberside up to Newcastle. Each airport has its own role to play in forming and strengthening this economic cluster. And it’s not just about passengers and cargo. The Aviation Powerhouse extends to all aviation activity, including: business aviation; emergency services; manufacturing and maintenance – as well as its associated training facilities, helicopter operations, military support, and recreational flying.
Figure 1: Aviation Powerhouse airports
The Aviation Powerhouse boasts seven international airports operating some 500 routes and handling 36.8 million passengers. Morgan-Hyland notes that these combined scheduled passenger numbers put the Aviation Powerhouse on a par with some of the busiest airports in the world.
Manchester Airport accounts for nearly two-thirds of scheduled passengers in the Aviation Powerhouse and 85% of the flights to destinations outside of the EU. Newcastle has a transatlantic offer too and the other five airports provide a comprehensive network of EU and UK linkages, including to European global hub airports in Amsterdam, Frankfurt, London, Madrid and Paris. Manchester also accounts for over 90% of freight by volume, whilst the volume of freight handled at Doncaster/Sheffield is growing rapidly; in 2015 it was over 9-times its 2013 levels.
Figure 2: Aviation Powerhouse Passenger Numbers 2017-2015
Source: Airports Commission, Civil Aviation Authority, Lichfields Think Tank
Figure 3: Aviation Powerhouse Freight (Tonnes) 2013-2015
Source: Civil Aviation Authority, Lichfields Think Tank
Economic role of the Aviation Powerhouse
A key point from Edwards is that the Aviation Powerhouse makes a significant contribution not just to the Northern Powerhouse economy but also to UK plc. In the Northern Powerhouse nearly 20,000 people are directly employed in air transport, supporting services (airport terminals, air traffic control etc.), air cargo handling and warehousing. Significant additional numbers are indirectly employed and the various airports have made important contributions to inward investments.
Employment in the aviation sector has ‘taken off’ in the Northern Powerhouse; it grew by 24.5% between 2009 and 2015. This is well above the sector’s national growth rate of 4%.
Figure 4: Direct Aviation Sector Employment (2015)
Source: ONS (northern regions), Lichfields Think Tank
Morgan-Hyland adds that the Aviation Powerhouse generates numerous additional jobs through its supply chain spending, aviation manufacturing and tourism. For every job in air transport, 2.32 ‘spin-off’ jobs are created in the economy from supply chain contracts and induced spending.
Aviation also helps businesses to grow by improving connectivity to the global economy and facilitating exports. Further growth in freight handling in the Aviation Powerhouse and improved connectivity to Heathrow (part of the Government proposal for handling capacity in the South East) will improve the competitiveness of businesses in the Northern Powerhouse.
Edwards continues that growth in the Aviation Powerhouse offers the potential to help rebalance the UK’s economy. As well as supporting the growth of Northern Powerhouse businesses, the aviation sector is highly productive. Average GVA per employee in UK air transport services is £87,700 – almost double the average in the Northern Powerhouse and higher than the national average. Further employment growth across the Aviation Powerhouse would help to narrow the productivity gap between the Northern Powerhouse and UK.
Figure 5: Gross Value Added per job (2015 prices)
Source: Oxford Economics, Centre for Cities, Lichfields Think Tank
Morgan-Hyland and Edwards agree that there is clear evidence of the economic benefits resulting from recent growth and success of the Aviation Powerhouse. In addition to experiencing considerable employment growth in recent years, aviation is increasing the output and productivity of the Northern Powerhouse. For example, aviation plays an integral role in ‘Just-in-Time’ manufacturing production, by transporting high value and low volume components and personnel. This is particularly important for some of the world’s leading car manufacturers; Ford, Jaguar Land Rover and Nissan are all based in the Northern Powerhouse. In return, these benefits can generate positive secondary aviation impact such as additional business growth, employment, and fiscal benefits locally and nationally including revenue for HM Treasury.
The Aviation Powerhouse has significant potential for future expansion in passenger and freight markets, as well as the business aviation and general aviation markets. It has already experienced significant growth in scheduled traffic in recent years. The Aviation Powerhouse is surely a concept for the Northern Powerhouse and the aviation industry to embrace as it drives growth and helps to rebalance the UK economy.
Brendan Edwards is a Senior Economics Consultant and Stephen Morgan-Hyland a Planning Director, at Lichfields Manchester. For more information about Lichfields' expertise in Aviation, click here.
 Lichfields' research based upon published data from the Aviation Powerhouse airports
 CAA data for scheduled passenger and commercial flights
 ONS, Lichfields Think Tank
 Department for Business Innovation and Skills (2014) Employment Multipliers and Effects by Industry
 Air Transport Action Group (April 2014) Aviation Benefits Beyond Borders