Heathrow’s £33bn expansion is ‘like a luxury Mercedes’, says airline group boss
Head of Star Alliance warns of ‘eye-watering’ costs of third runway project
The head of a major airline alliance that includes Lufthansa and United has likened Heathrow’s third runway plans to an unaffordable luxury car as he urged the airport to cut back some parts of the “eye-watering” project.
Theo Panagiotoulias, chief executive of Star Alliance, warned that the £33bn runway and terminal risked pricing out airlines.
“I’d love to have a fully specced Mercedes-Benz that’s top of the line. I don’t know if I can necessarily afford it, but I’d like it,” he said. “It’s the same parallel.”
“I’ve seen some numbers thrown around and they’re eye-watering. We’ve got to be able to have conversations to determine what’s the ‘nice to have’ and what are the things we must have,” he told the Aviation Club in London.
Star Alliance’s 26 members account for one in six planes that take off from Heathrow. Panagiotoulias’ intervention is the latest in a chorus of airlines warning about the potential cost of building a third runway.
British Airways and Virgin Atlantic, the airport’s two largest carriers, have both been vocal about the risks of rising costs at the airport. Lufthansa is the third-largest carrier at Heathrow, while United is the fifth.
Panagiotoulias said the members of the Star Alliance, which also includes Turkish Airlines, Air China and Singapore Airlines, “fully support [a third runway] conceptually”.
He added: “We think expansion is the right thing for the market. It’s the right thing for the airlines, because the airlines are wanting to grow at Heathrow, [but] there’s no simple solution to this. This is going to cost a lot of money.”
Heathrow has long argued that its costs are high because of its proximity to London, as well as the challenges of building in a congested area. Its plan for a third runway includes moving part of the M25.
BA has publicly backed plans for a shorter, cheaper alternative put forward by Arora Group.
Panagiotoulias said he needed to see more details from both sides before endorsing one of the projects.
Earlier this week, the boss of Heathrow lambasted Arora’s plans as “drawings on the back of an envelope”, in his strongest criticism yet of the rival scheme.
Chief executive Thomas Woldbye said the airport’s own proposal for a 3,500-metre runway that crosses the M25 was the only viable option.
“There’s no lower-cost option, there are drawings on the back of an envelope - and that’s all there is,” he said, in an unusually direct attack of the alternative scheme. “If we want a third runway we need to get on with the scheme on the table.”
Arora’s project has been put together by Bechtel, the engineering consultancy behind the Elizabeth Line and the expansion of Perth Airport.
Its plans would involve building the new runway in two stages: a 2,300-metre runway sandwiched between the M25 and M4 that it says could take many of the narrow-body planes that use Heathrow, with the option to extend over the M25 at a later date.
Arora has argued that a shorter runway would be operational earlier, and would avoid the costs and complexity of moving the M25 as well as relocating power plants and diverting rivers that are currently in the way of the proposed full-length runway.
But Woldbye said the company had no intention of building the second phase — and warned that entertaining Arora’s proposal would draw out the process for years.
In response, the group’s founder Surinder Arora said Heathrow “has a poor track record on development, which has led to it being, year-on-year, the most expensive airport in the world”.
He said that his scheme “can deliver new runway capacity in line with the Government timeframe of 2035, demonstrating just one benefit of competitive bids for expansion”.
Woldbye’s comments come days after ministers released a draft Heathrow policy that leaves the door open for a competitor to present a runway plan.
The policy allows the runway to be built in stages, but requires any company seeking to win the work to obtain planning permission for the full-length runway.