British Airways is owned by IAG, who are Spanish, and HAL is owned by Ferrovial, who are also Spanish. There may be an "economic benefit", but it isn't for us.
IAG is a British-Spanish multinational. Plus, there are economic benefits from any major employer in a given location, regardless of company of ownership. Doesn't Nissan provide economic benefit to Wearside?
The total number of connecting passengers is about 40%. The 25% is people who never cross the UK border, so never have any business in the UK.
That's still low - it's 70% at Schiphol, for example.
Why should we blight the lives of everyone who lives in West London so a Spanish airline can undercut a German airline?
Because airlines run networks. The point-to-point model only works in specific market types (and results in more, smaller aircraft, so more take-offs and landings). O&D traffic is clearly BA's main market - and that's relatively unique for London - other traffic fills remaining capacity, and maintains routes that would not otherwise be viable.
As for why should West London be "blighted", well... You can flip that around. Are the economic benefits brought to the area worth the disruption. Plenty of the major employers in the area wouldn't be there without Heathrow's presence. The M4 corridor wouldn't exist without the connections afforded by Heathrow's status.
You can also flip it around and ask, if you're to site it elsewhere, why should regions outside London be blighted for London's benefit? Aircraft noise has a far bigger impact in rural areas than urban, but impacts fewer people. Is that more or less acceptable?
There's multiple questions here: are the environmental impacts of airport expansion worth it for the supposed economic benefits? Can it be achieved by other means? To me, that's the discussion point.
Heathrow is only at capacity because a quarter of everyone there is choosing to fly via Heathrow because it's cheaper than a direct flight. Get rid of them, as they serve no economic benefit to the UK, and Heathrow doesn't need to be expanded.
It's not that simple, though.
First of all, how do you do that without nationalising BA?
They do provide economic benefit, not just because of the airline (which is part-British, and is a major employer) but because they are sustaining routes, connectivity and pricing that would not otherwise be viable. There would be a huge knock-on impact to the tech sector in West London and the M4 corridor from a downgrade of Heathrow's status, and a further knock-on if a reduction of competition resulted in significantly more expensive air travel (airlines are very marginal businesses at best).
BA doesn't sell cheap tickets from Frankfurt to New York to undercut Lufthansa. It does so because it allows it to manage capacity and optimise yield on both Frankfurt-London and London-New York sectors, which makes its operation and revenue much more predictable. They are cheaper because, well, nobody would choose to fly indirectly otherwise. But then, direct options aren't always available. Who would fly from Hannover to San Diego non-stop? Nobody. That's where hub and spoke comes in, and airlines compete with each other. And without the yield management that comes along with it, half the routes out of London would not be viable. And yes, that solves the capacity issue through BA, but seriously harms the businesses that rely on the ability to readily and cheaply travel from London to various parts of the globe (and don't underestimate the importance of this, even in the world of Skype).
The other benefit of connecting traffic is that it allows airlines to run bigger aircraft on core routes, giving much greater capacity between certain city pairs. By restricting it, you can equally end up with the same network being served, only using smaller, cheaper aircraft. Which means that you have fewer passengers, more expensive fares, but the same number of aircraft movements, and you've gained nothing at all.
There definitely needs to be a discussion about aircraft expansion in the SE, and it definitely needs to take the environmental (including both noise and pollution) impacts into consideration, and weigh it up against the economic benefits. Simply to try and constrain it with anti-competitive measures, or arguing that BA's merger with an airline from another country means the economic benefits are lost, doesn't make a case.
If the government is serious about promoting the "Northern Powerhouse", it could consider expanding Manchester airport, and encouraging an airline to set up a hub there, for example. Or it could improve high-speed rail links into Birmingham Airport, and have a national hub there.
Or we could simply decide to wreck the nation's economy (by referendum, perhaps) and then the demand will simply shrink of its own accord. Er, no comment.