Aviation Watchdog Proposes Rival Firms Build Heathrow Third Runway, New Terminal
The Civil Aviation Authority (CAA) has tabled proposals that could compel Heathrow Airport Limited (HAL) to permit rival companies to tender for the construction of its third runway and associated new terminal. These measures are designed to curb projected construction expenditures, which have raised concerns regarding their potential impact on airlines, businesses, and consumers.
Controlling Expansion Costs
The aviation watchdog’s review follows criticisms that HAL’s £33 billion expansion scheme could inflate costs, making Heathrow one of the world's most expensive airports. The CAA is examining four potential modifications to HAL's governance, including stricter oversight of spending and the introduction of competitive tendering for elements of the expansion project.
A significant proposal involves enabling an alternative developer to compete directly to design, finance, build, and operate a new terminal. Under such a scenario, the CAA suggests this developer could “directly provide services to airlines and recover its revenues from them, in direct competition with Heathrow Airport Limited.” Implementing this option would necessitate a change in governmental policy concerning airport expansion.
In November, the government favoured HAL's proposed 2.2-mile (3.5km) runway plan over an alternative from the Arora Group, which advocated a shorter, less costly runway that would not require altering the M25 motorway. HAL's scheme, if realised, aims to increase the airport’s capacity to 756,000 flights and 150 million passengers annually.
A Heathrow spokesperson stated that while the airport supports reforms that enhance efficiency and reduce bureaucracy, it cautions against proposals that could “undermine our efforts to improve the airport for consumers or delay the economic growth the country needs.” The CAA is now consulting on these proposed changes, with a government planning decision on Heathrow expansion anticipated by 2029.
