Heathrow 'needs two more runways'
Heathrow should expand by "preferably two more runways", business leaders have said.
The Air Passenger Duty (APD) airport departure tax was "much too high" and should be frozen, and visa and immigration systems should be improved, said the IoD.
Entitled Flying into the Future, the report said: "Heathrow should expand by one, or preferably two, runways."
In a poll, 59% of IoD members said a lack of spare capacity at Heathrow was damaging inward investment. A local agreement means that no extra runway can be built at Gatwick in West Sussex before 2019.
Putting forward a case for a second runway at Gatwick, the report said: "There is no reason planning permission could not be sought now, so building could begin swiftly after the agreement expires."
On APD, the IoD said only six of the 27 EU states had such a tax and several, including Holland and Denmark had recently reduced or scrapped their tax. The report said: "If APD is as damaging in the UK as it was in the Netherlands, it could be costing the British economy £12 billion a year."
IoD senior economic adviser Corin Taylor, who wrote the report, said: "British aviation faces several key crunches which require swift, co-ordinated action. Aviation is economically crucial, and the world is only going to become even more interconnected. We cannot afford to ignore the reality that demand for air travel in south east England will soon be more than our airports can handle. This means airport capacity must expand, alongside other measures to improve our competitiveness in terms of taxes and immigration processes."
Aviation Minister Simon Burns said: "London is one of the best-connected cities in the world, with direct flights to more destinations and more flights each week to many global cities and emerging markets than any of our European competitors.
"We know that to stay ahead we need to plan for the future and build a strong political consensus, which is why we have asked Sir Howard Davies to conduct a detailed, independent review of all the options for maintaining our connectivity. By the end of next year he will have delivered a shortlist of credible proposals as well as identifying ways in which we can make even better use of the capacity which already exists."