The Civil Aviation Authority (CAA) has approved Heathrow Airport Limited (HAL) to recover £320 million spent on planning its third runway, a decision that will lead to higher passenger fares over the next 20 to 25 years. The CAA also allowed Heathrow West, a rival expansion project, to recoup £4.1 million in costs.
Immediate Action & Core Facts
The CAA’s decision permits HAL to recoup costs through higher airline charges, which will be passed on to passengers. The maximum airport charge per passenger is expected to increase by 15p in 2028, rising to 30p in subsequent years. Heathrow West, led by property billionaire Surinder Arora, will recover costs incurred up to November 25, 2023, when the government announced HAL’s proposal as its preferred option.
Deeper Dive & Context
Cost Recovery and Fare Impact
The £320 million covers planning and design costs for the third runway, including preparations for a future development consent order (DCO). The CAA stated that safeguards will protect consumers from unjustified cost increases. However, British Airways warned that early cost recovery could make expansion unaffordable for consumers and undermine its benefits case. Airlines have previously criticized Heathrow for having the highest charges globally.
Government and Industry Reactions
The CAA’s director of consumers and markets, Tim Johnson, said the decision balances supporting expansion with protecting passengers from undue cost increases. Heathrow’s spokesperson emphasized that the project aims to make travel more affordable and boost the economy. The government had previously favored HAL’s £33 billion scheme over Arora’s alternative plan.
Long-Term Implications
The full impact of the runway’s construction costs on ticket prices remains unclear. The CAA’s approval covers only early planning costs, with the broader financial implications to be determined later.