This report, prepared on behalf of Gatwick Airport Limited (GAL), presents an evaluation of Gatwick Airport’s value in the local economy. Following the impact of the COVID-19 pandemic on traffic in the UK and abroad, Oxera has been asked to update previous estimates of the economic value of Gatwick Airport.

We have used the impact assessment methodology applied in previous work for GAL, including as part of the 2019 Gatwick Master Plan and more recently in supporting the Northern Runway Project DCO application. To reflect the uncertainty around the airport’s wider economic impact due to the effects of the pandemic, we have adapted this methodology to provide a range of impact estimates for 2020.

In the past year, Gatwick has had to adapt its operations to public health measures and travel restrictions that have prevented passengers from travelling, reducing traffic substantially. While the airport operated under normal conditions in the first two months of Q1 2020, it had to reduce operations as the pandemic unfolded during the rest of the year. The economic impact estimates we present in this report correspond to the average economic impact of the airport throughout the year. In these exceptional circumstances, Gatwick Airport and other companies on-site responded to the pandemic by reducing working hours for employees when possible and preserved jobs through the implementation of furlough.

Overall, Gatwick Airport provides significant value to the local economy. It represented a total of 36,700 jobs and £2.1bn in gross value added (GVA) in the UK in 2020 through the economic activity on site (known as ‘direct’ impacts), in the supply chains to those firms (known as ‘indirect’ impacts), and to firms that locate close to Gatwick Airport because of the business opportunities that it offers (‘catalytic’ impacts).

By 2028,¹ the airport’s footprint is projected to increase to 139,700 jobs and £9.3bn in GVA as traffic recovers and expands beyond pre-COVID levels. To put these estimates in context, if we were to convert GVA generated by the airport in the UK in 2028 into the equivalent tax take,² the airport’s value added in the UK could be compared to the cost of providing:

• 248,400 primary school places or 180,500 secondary school places;
• 79,500 nursing positions or 62,900 police positions.

One common critique of the ‘footprint’ measures of economic activity outlined above is that they do not reflect the true economic benefits of an airport because the people employed at the airport would, if there were no airport, be employed in other activities. However, even when taking these effects into account, our analysis suggests that Gatwick Airport makes a significant net contribution to the local area. We estimate that Gatwick provided an additional 28,100 jobs with an annual GVA of £1.6bn in 2020 through greater output and increases in labour supply in the Five Authorities area, rising to 102,700 jobs and £6.9bn of GVA in 2028.

¹ Based on traffic forecasts supplied to Oxera by GAL in November 2020. It is likely that the Covid-19 pandemic will have long-lasting impacts on the structure of the economy and the geographic distribution of economic activity: however, it is too early to assess these impacts with any degree of confidence.

² Using the ratio of GVA to tax take in the UK as a whole.