The Government is clear that the expansion at Heathrow is not only an opportunity to protect and strengthen existing routes but to secure new domestic routes to the benefit of passengers and business across the UK. The Government expects that the majority of these routes will be viable commercially, as many are today, with support from Heathrow Airport. This support includes discounted charges for domestic passengers, and a £10 million Route Connectivity Fund.
The Government will also take action, where appropriate, to secure routes through the use of Public Service Obligations (PSOs). PSOs provide the opportunity to offer exclusive rights to airlines to operate a route. Where this does not deliver the required level of connectivity, the Government may also offer subsidies to an airline to operate the route, which includes exemption from Air Passenger Duty.
The Government’s approach to domestic connectivity will be set out in a Green Paper on the Aviation Strategy towards the end of this year, and the extent to which subsidies will be required can only be determined subject to market conditions nearer to the time of new capacity becoming operational.