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Blog - May 2010

The New Government

The agreement between the Conservatives and the Liberal Democrats that forms the basis for the new UK government coalition includes transport commitments:  no new runways at Heathrow, Gatwick and Stansted airports; and support for a high speed rail network. 

It looks as though the growth of air travel will be constrained by airport capacity, although there may be scope for airports outside the South East to expand.  This should not constrain economic growth since only a modest proportion of people passing through UK airports are travelling on business.  The large majority are taking holidays or visiting family and friends.  There is therefore room for expansion of business travel which commands premium prices.  Leisure travel will cost more and this will serve to limit demand growth.  We may be approaching the end of the era of exceptionally low prices for air travel, a not unexpected outcome in a carbon-constrained future.

Posted on 14 of May 2010

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