Construction of a new hub airport for London represents a risky investment and would require significant public subsidy, a report by the economic consultant Oxera has found. It said that expected revenues from a new airport – such as in the Thames Estuary – would fall short of the costs needed to develop it and the project would not be commercially viable.

Building a new airport and associated surface transport links would cost between £20Bn and £50Bn. Compensation costs for the possible closure of Heathrow could see the final bill for a new hub rise to around £70Bn.

The report was commissioned by the House of Commons Transport Select Committee which is conducting an inquiry into Government’s aviation strategy. Committee chair Louise Ellman said: “The results suggest a new airport would require public investment and have considerable impact on Heathrow and other London airports.

“Research findings also shed light on the scale of investment required to deliver essential related surface transport links for any new airport.”

Institute of Directors’ senior economic adviser Corin Taylor said: “This analysis confirms our view that a new hub airport would need substantial public subsidy and probably require the closure of Heathrow. Expanding our existing hub airport would be cheaper, quicker and offer far better rail and road connections to the rest of the country.”

A spokesman for the Mayor of London, who has been championing a new hub airport to the east of the capital, said: "There is nothing new in this report. A new airport could be a commercial proposition over time.”

(Photo: Bartosz Hadyniak)

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