The impact of soaring oil prices on the UK economy will significantly reduce fut ...

The impact of soaring oil prices on the UK economy will significantly reduce future air passenger numbers, bringing into question the need for airport expansion, according to new independent research released by WWF. The case for airport expansion, including the third runway at Heathrow, is based on the premise that there will be more air passengers in the future than the UK’s airports can currently handle. The research reworked the government’s air passenger forecasts for 2030, examining the impacts of a more realistic price of oil, the knock-on effect this could have on UK GDP, and the potential introduction of policies encouraging a switch towards alternatives. Combined, these factors are reported to produce an estimated figure of 350mn air passengers in 2030 - nearly 150mn less than the government assumes will be taking to the skies, says WWF, and well within the current UK airport capacity of around 425mn passengers per year. WWF states that the government’s air passenger forecast assumes that oil prices today are only $60/b and will fall to $53/b by 2012, remaining at that level indefinitely. At the time the research was published, oil cost $136/b, with some analysts forecasting prices as high as $200/b in the near future. By doubling the government’s estimate to a conservative assumption of $106/b in 2030, the impact of the increased oil price on air fares alone would cause an estimated 15% reduction in the growth of air passengers, states WWF. The research also examines the economic modelling used by the government specifically to justify the third runway at Heathrow, noting that expanding the UK’s airports means ‘locking the UK into a carbon-intensive future that is incompatible with the government’s climate change targets’ WWF calculates that greater use of videoconferencing and alternative methods of travel combined could serve to reduce passenger growth by up to 13%. These figures are backed up by its recent report, Travelling Light, which discovered that 89% of major businesses expect to cut their flights in the future and that a similar number believe videoconferencing is the key way to achieve this.