Manchester’s ‘China Dividend’ highlights economic impact of air services

10 November, 2017

Manchester Airports Group (MAG) has revealed that its non-stop Hainan Airlines link to Beijing, the UK's first direct regular flight to China from outside of London, is delivering a significant economic reward, or 'China Dividend', to Northern England. A study by the economic consultancy Steer Davies Gleeve has revealed that in its first year of operation the service has driven a significant increase in exports, inward investment, and international student numbers into the North.

The report, 'The China Dividend: One Year On', shows that with annual passenger numbers reaching 90,000 due to strong demand and increased frequencies, up 15% on pre-launch estimates, the service has generated a visitor spend of GBP138.8 million and boosted export value from Northern England by 265% to GBP200 million per month. Additionally, the pipeline of inward investment projects is increasing with inquiries from China to Manchester property and investment agents doubling and the Northern Powerhouse experiencing a marked uplift in inward investment projects (a 24% increase in 2015/16 over the previous year).

CHART - Hainan Airlines expanded its flights between Beijing and Manchester this past summer and switched from deploying the Airbus A330 to the Boeing 787 summer, including its larger 787-9Source: The Blue Swan Daily and OAG

There has also been a 54% increase in Chinese investments in property in Manchester in 2016, compared to a year earlier, according to the report, while the number of Chinese students enrolling at the University of Manchester is double the rate of other universities in the UK.

Based on the range and scale of benefits realised in just 12 months, the report recommends that securing further direct links to China and other key growth markets should sit at the heart of strategies to drive Northern prosperity and rebalance the UK economy. MAG is understood to be close to adding direct flights to Shanghai and Guangzhou and other second tier cities could follow in the future.

Another clear example of the impact of key long haul connectivity to the UK is evident when you look at the arrival of Emirates into Newcastle with the launch of a daily Dubai connection from 01-Sep-2007. Now celebrating more than ten years of operation and boosted from an Airbus A330-200 to a Boeing 777-300ER, a UK Trade & Industry report estimates the route to have delivered a rise in trade from GBP150 million to GBP275 million between North East England and Australasia over the five years of operation. Net economic benefits to the region from the route are thought to have exceeded GBP50 million over its ten years of operation.

CHART - Almost two million passengers have used Emirates Airline's flight between Dubai and Newcastle since its launch in Sep-2007Source: The Blue Swan Daily and UK CAA

A further report earlier this decade by The Confederation of British Industry (CBI) into capacity constraints at the UK's airports highlighted the economic value of new air services to the country. In its Trading Places - Unlocking Export Opportunities Through Better Air Links to New Markets study, the CBI, one of the UK's leading independent employers' organisations, the addition of one daily flight to a key emerging market could boost UK trade by as much as £127 million a year.

In the report, the CBI warns the UK is failing to keep pace with major European competitors in winning new direct connections to Brazil, Russia and China, hitting long-term export potential, damaging competitiveness and deterring inward investment. Its analysis showed that adding just one additional daily flight to each of the eight largest high-growth markets would increase UK trade by as much as £1 billion a year, with every increase in 1,000 passengers generating up to £920,000 in new business. Each flight to one of the high-growth economies increases trade by as much as £175,000, estimates CBI, meaning a daily route between the UK and an emerging market is worth as much as £128 million a year.