Heathrow could be forced to allow other firms to build third runway to cut costs

"A long-awaited review by the Civil Aviation Authority (CAA) proposes changes to the regulatory model that governs how Heathrow runs and covers its costs. These include making the operator seek bids from other businesses to design, build and operate parts of the long-delayed expansion project at Europe's busiest airport, which it said would allow for direct competition between Heathrow and an alternative developer [that] could encourage competition and efficiency."

"The CAA's most radical suggestion, which would require special approval from the government, would allow another developer to tender to build and run their own terminals at Heathrow, similar to a scheme at JFK airport in New York. Last November ministers backed Heathrow's plan for the runway to be up and running by 2035, over the rival proposal submitted by Arora Group, although the airport operator is still seeking formal planning approval to start construction by 2029."

"Earlier this month it emerged that Philip Jansen, Heathrow's new chair, had moved to open talks with airlines and Arora Group's chair, Surinder Arora, to attempt to progress plans to expand the airport amid a row over how much the scheme would end up costing carriers, retailers and, ultimately, passengers. British Airways dominates Heathrow, accounting for more than 50% of slots, and Luis Gallego, the chief executive of BA's owner, International Airlines Group, has said the cost of the third runway and associated works must be capped at 30bn."

"Heathrow is considered to be Europe's most expensive airport, and in March the UK aviation regulator rejected its plans to significantly raise its landing fees to fund a multibillion-pound upgrade. Arora has been promoting his own 25bn expansion scheme and is part of Heathrow Reimagined, which also includes BA."

A UK aviation regulator proposes changes to how Heathrow is regulated and how it covers expansion costs. The proposals would require Heathrow’s operator to seek bids from other businesses to design, build, and operate parts of the third runway and new terminal. The aim is to create direct competition between Heathrow and alternative developers to encourage efficiency. A more radical option would allow another developer to tender to build and run its own terminals at Heathrow, similar to a model used at JFK. Ministers previously supported Heathrow’s plan for a 2035 runway, while Heathrow still seeks planning approval to begin construction by 2029. Talks are underway with airlines and Arora to address disputes over the total cost to carriers, retailers, and passengers, with British Airways pushing for a 30bn cap.

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