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

Lead

Heathrow could be forced to allow other companies to design and build its third runway and new terminals under government plans to reduce costs, according to a review by the UK's aviation regulator.

The Civil Aviation Authority (CAA) has proposed changes to the regulatory model that governs how Heathrow operates and covers its costs, including making the airport seek competitive bids from other businesses to design, build and operate parts of the long-delayed expansion project. The move could also see rival developers allowed to build and run their own terminals at the airport, the Guardian reported.

Coverage Comparison

The proposals, reported by the Guardian, come amid intense behind-the-scenes negotiations between Heathrow's new chair, Philip Jansen, and the airport's biggest customers, including British Airways, over the escalating cost of the project. The expansion is now estimated to cost £49bn, a figure that has alarmed airlines who fear they will foot the bill through increased fees.

Media reports indicate that Jansen has already met with executives from International Airlines Group (IAG), BA's parent company, as well as representatives from Virgin Atlantic and Surinder Arora, the billionaire hotelier who has proposed his own rival £25bn expansion plan.

Key Claims

• Regulatory push for competition: The CAA's review argues that requiring Heathrow to seek rival bids could encourage competition and efficiency, potentially lowering the overall cost of construction.

• Cost and timeline pressures: Heathrow has said it could have the third runway operational by 2035, but this depends on securing formal planning approval and final investment decisions. Airlines, led by IAG chief executive Luis Gallego, have insisted that costs be capped at £30bn.

• Airlines' concerns: British Airways controls more than 50% of slots at Heathrow, and the airline's parent has been vocal about capping costs. The airport, which is already considered the most expensive in Europe, had its plans to raise landing fees rejected by the regulator in March.

• Arora Group's rival bid: Surinder Arora has proposed an alternative expansion scheme, and his company is also part of the 'Heathrow Reimagined' coalition, which includes BA and Virgin Atlantic, lobbying for cheaper expansion.

Perspectives

The CAA's proposals represent a significant intervention in the long-running debate over Heathrow's expansion. If adopted, they could fundamentally alter the relationship between the airport and its airline customers, who have long complained about high fees and poor service.

However, the commissioner's traditional authority over airport regulation means the ultimate decision on whether to force Heathrow to open up its infrastructure projects to competition will rest with the UK government. The regulator has suggested that allowing another developer to bid to build and run their own terminals could emulate successful models at other large international hubs.

A source familiar with the talks emphasised the common ground over the need for expansion, noting that "all airlines and their stakeholders agree over the necessity and long-term economic value of a third runway." The source added that while there are differing points of view on cost, "whatever happens, we are all going to have to work together."

The Road Ahead

The CAA's proposals, if implemented, would require special approval from the UK government. Meanwhile, the airport is still seeking formal planning permission to begin construction by 2029, a timeline that now appears increasingly difficult amid ongoing disputes over costs.

Under the current timetable, the third runway would not be operational until at least 2035, with the airport continuing to operate under strict regulatory oversight.