Airlines and regulator warn over rising Heathrow costs after runway approval
British Airways owner says it has ‘serious concerns’ about project, which requires moving M25
Major airlines and the UK’s aviation regulator have warned about the dangers of rising costs at Heathrow, after ministers backed a proposed third runway at the airport that requires moving the M25 motorway.
Transport secretary Heidi Alexander said on Tuesday that Heathrow’s project — part of an overall £49bn investment plan — was more “deliverable” than a rival option put forward by hotel group Arora.
Work could begin on the runway at Britain’s only hub airport before the next election, expected in 2029, ministers found.
But International Airlines Group, the owner of British Airways and Heathrow’s largest operator, said it had “serious concerns about the affordability of the proposals” and would “talk to the government about ways to reduce the overall project cost”.
Airlines have long warned that they will have to pay for the extension, which is part of Heathrow’s £49bn investment plan, through higher landing fees. The airport believes the runway itself will cost £21bn, of which £1.5bn is allocated to moving a portion of the M25.
The Civil Aviation Authority, the industry regulator, appeared to back airlines’ concerns, noting that increased fees at Heathrow were “likely to result in [the airport’s] charges significantly exceeding current charges at other airports”.
The CAA has launched a consultation into changes to Heathrow’s regulatory model, which allows the airport to recoup investment charges through landing fees.
“There is sufficient evidence to warrant revisiting the current regulatory model to determine whether it can be improved or whether an alternative model can better serve the interests of consumers,” it said.
On Tuesday, the chief executive of easyJet said the low-cost airline would not move its planes to an expanded Heathrow if the cost of relocating the M25 to build the new runway became too expensive.
Kenton Jarvis said his company was “interested” in taking slots at Heathrow once the third runway was operational but expressed concern it would lead to higher costs for airlines.
“A lot will depend on how much they spend, moving the M25 . . . and what they’re looking for in terms of take-off fees,” he said.
Jarvis told the Financial Times that easyJet was not averse to operating at high-cost airports, citing its flights to Amsterdam’s Schiphol and Linate in Milan.
“Schiphol is not that different from Heathrow today, but what it means for Heathrow tomorrow we have to wait and see,” he said.
Virgin Atlantic, another major customer at Heathrow, said it was also concerned about the affordability of the project, which ministers have backed as a means of boosting the economy.
The airline said it had “been supportive of growth at Heathrow if, and only if, there is fundamental reform to the flawed regulatory model to ensure an affordable scheme for consumers”.
Heathrow welcomed Alexander’s decision to approve its proposal but said it needed further clarity from the government about how the next phase of the project would be regulated.
“We need definitive decisions from the CAA and government by mid-December so that delay to the project can be avoided,” the airport said.
Arora Group owner Surinder Arora said his company accepted the decision and would bid for the work to build the runway.
The government said the decision meant a third runway at Heathrow was “another step closer to take-off by 2035”, despite the airport’s management suggesting that is the earliest possible date for completion.
Ministers have made the decision despite warnings from airlines that the proposed “Northwest Runway” will make the airport significantly more expensive. Arora had argued that his proposal for a shorter runway would cost less and avoid moving the M25.
Business groups welcomed the government’s decision to press ahead with the third runway, a proposal that has been dogged by political infighting and environmental concerns for decades.
But Tony Bosworth, climate campaigner at Friends of the Earth, said the plan was the equivalent of adding an airport the size of Gatwick, which is the second largest in Britain.
“Expanding Heathrow simply isn’t compatible with our legally binding climate targets, even if the government meets its hugely optimistic assumptions for emerging technologies,” he said.
Tuesday’s decision will feed into the government’s overhaul of the planning framework for any Heathrow expansion, known as the Airports National Policy Statement.
Alexander said selection of the Heathrow airport scheme did not represent a final decision on the third runway scheme or its design. “Any amendments to the ANPS will be subject to consultation and parliamentary scrutiny next year.”