Narrative Report Midlands Connect – Work Package 5b International Gateways 16 November 2016 Mott MacDonald Mott MacDonald House 8-10 Sydenham Road Croydon CR0 2EE United Kingdom T +44 (0)20 8774 2000 F +44 (0)20 8681 5706 mottmac.com Midlands Connect c/o WMCA 16 Summer Lane Narrative Report Birmingham B19 3SD 371085 NR 1 UK Midlands MCConnect WP5b - Narrative – Report Work - rev12_AdK.docx Package 5b Mott MacDonald International Gateways 16 November 2016 Issue and Revision Record Revision Date Originator Checker Approver Description Issue 1 16112016 Various AdK JC Draft Narrative Report Issue 2 05122016 AdK AdK JC Draft Narrative Report Issue 3 15122016 WH, AdK AdK JC Draft Narrative Report Issue 4 20122016 WH,AdK KA JC Draft Narrative Report Information class: Standard This document is issued for the party which commissioned it and for specific purposes connected with the above-captioned project only. It should not be relied upon by any other party or used for any other purpose. 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Contents Executive summary 8 1 Introduction 12 1.1 Scope of report and report structure 12 1.2 Sources of data and information used in this report 12 1.3 Midlands airports profile 14 1.4 Global aviation market growth context 14 1.5 Drivers of long-term traffic growth 16 1.6 Long-term passenger forecast 19 1.7 Long-term cargo forecast 20 1.8 Midlands airports growth in the global context 21 1.9 Enablers for growth 25 1.9.1 UK Air Passenger Duty (APD) 25 1.9.2 Air Service Agreements 27 2 The air business passenger market 29 2.1 Airports – Connecting the Midlands businesses to the World 29 2.2 Size of the market 30 2.3 Analysis of the Midlands airport route network 35 2.4 Key destination analysis for the Midlands business air passengers 41 3 Airports surface access baseline analysis 48 3.1 Introduction 48 3.2 Key airports location and catchment area 48 3.3 Airport surface access trends 51 3.4 Airport choice and modal split 55 3.4.1 Business passengers and their choice of airports 56 3.4.2 Public transport availability at early morning and late evening airport peaks 56 3.4.3 Leisure passengers and their choice of airports 57 3.4.4 Business passengers and their modal split 58 3.5 Midlands airports public surface access characteristics 58 3.5.1 Birmingham Airport – Access via rail 58 3.5.2 Birmingham Airport – Access via bus 61 3.5.3 Birmingham Airport – Access via coach 61 3.5.4 East Midlands Airport – Access via bus / coach 65 4 High Speed Two and other surface access developments 70 4.1 Introduction 70 4.2 Impact of HS2 on airport access times 72 4.2.1 Regional level 72 4.2.2 City level 77 4.3 Impact of HS2 on Birmingham Airport 81 4.4 Further UK new rail infrastructure projects 83 5 Potential overflow from the Southeast airports 85 5.1 Introduction 85 5.2 Size of the market in the Southeast 86 5.3 Future overflow from the Southeast 89 6 Air freight 94 6.1 Overview of the air freight market within a global and UK context 94 6.2 Air freight baseline - size of the market 96 6.3 Air freight characteristics 97 6.4 Summary of cargo route network 98 6.5 Trade summary 100 6.6 Demand for air cargo in the Midlands 101 6.7 Access of air cargo services to the Midlands 102 6.8 Opportunities for air freight developments in the Midlands 104 7 From gaps to strategic interventions 105 7.1 Introduction 105 7.2 Strategic interventions 105 7.3 Next steps under WP5b – International Gateways 107 7.4 Recommended further work 108 Appendices 109 A. Major road infrastructure projects UK 110 B. Passengers volumes and characteristics maps 112 Executive summary The Midlands region has £210bn GVA produced and 10.3 million inhabitants, and is the second largest economy and the second largest conurbation of the UK after the London and Southeast region. The Midlands is also the ‘export powerhouse’ of the UK, with 17% of national exports originating in the region and a growth rate that is forecast to be above the national average. On 25 October 2016, the Government announced its support for a new runway at Heathrow to address the capacity constraints of the Southeast. This is a positive news for the UK aviation industry – now it i s the opportunity to put forward the Midlands aviation connectivity requirements. The Midlands market and the London market are complementary: there is no conflict between the Heathrow decision and supporting the growth of airports serving the Midlands region. The Midlands has thriving businesses developing their activities in the region, a growing regional economy and increasing high-value export volumes. Air connectivity and accessibility are key requirements for businesses, especially in a context of globalised markets and rapidly growing emerging economies, leading to worldwide aviation demand that is forecast to double in the next 20 years to 7.2 billion annual passengers. Aviation connectivity for the Midlands must be on the agenda of decision makers so that the powerful asset that is Midlands region can maximise its economic potential and deliver benefits for the country’s economy as a whole. The key air access gateways to the Midlands are Birmingham Airport and East Midlands Airport. These airports served 15 million passengers in 2015, while the East and West Midlands regions were the origin or destination for 20 million air travellers. This indicates that Birmingham and East Midlands airports generally cater well for the demands of air travellers in the region, but that there is scope for improvement. These two airports are central to this Narrative Report, which contains the findings of the work undertaken by Mott MacDonald as part of Midlands Connect Work Package 5b – International Gateways. It is an evidence-based study that covers four analysis themes that are of absolute importance to support Midlands businesses growth, as summarised below and elaborated in the report: 1. The air business passenger market in the Midlands Birmingham Airport is generally successful in serving the needs of businesses travellers in its catchment area (mainly the West Midlands) with a good range of destinations and short access time. Business passengers are time sensitive travellers and choose airports primarily based on availability of direct connections with convenient schedules, and access time to airports. Markets where accessibility can be improved are Eastern Europe (where a large share of travellers use London Luton Airport) and North America (where a majority of passengers choose London Heathrow airport). Businesses in the East Midlands region are less well-served. Where direct services are available (mainly on domestic routes), East Midlands Airport is chosen.