Heathrow airport has said the project to build a third runway will be delayed by at least 12 months after its latest spending plans were rejected by the regulator.
The UK Civil Aviation Authority (CAA) has denied the airport’s request to increase early construction spending from £650 million to £2.4 billion before it is given planning permission. It said it was concerned the increase cost would be foisted onto passengers in the event the third runway does not go ahead.
In response, a Heathrow spokesperson said the airport has “delayed the project timetable by at least 12 months” in order to ensure the increase in spending would not be passed on to the taxpayer.
Under the new schedule, the airport expects to complete the third runway between early 2028 and late 2029.
The CAA’s consultation said “the best approach in the interest of consumers” would be to limit early costs to £1.6 billion.
It also said an assessment of Heathrow’s original timetable to open the third runway by 2026 was an “aggressive schedule” and would require “maximum activity” before the airport knew if would be granted permission for the development.
Paul Smith, the CAA’s group director of consumers and markets, commented: “We believe that more runway capacity at Heathrow will benefit air passengers and cargo owners. Its timely delivery is required to prevent future consumers experiencing higher air fares, reduced choice and lower service quality.
“However, we have also been clear that timeliness is not the only fact that is important to consumers. Passengers cannot be expected to bear the risk of Heathrow Airport Limited spending too much in the early phases of development, should planning permission not be granted.”
The CAA has, however, approved the airport’s proposal to increase spending on planning costs from £265 million to £500 million.
A Heathrow spokesperson responded: “The CAA’s announcement is an important milestone in expanding Heathrow and connecting all of Britain to global growth. It increases certainty for our local communities and for the job creation, increased trade and lower air fares that expansion delivers.
“We will now review the detail to ensure it will unlock the initial £1.5-£2 billion of private investment over the next two years at no cost to the taxpayer.”
This is not the first time the CAA has raised concerns about the cost of building a third runway at one of Europe’s busiest hub airports. In November 2018, the regulator wrote to the Department for Transport calling for Heathrow to be more transparent about where it will get the then-£14 billion it needs for the project and whether the cost would be passed on to passengers in the form of extra fees and charges.
In February this year, the airport claimed it had reached an agreement with its airline partners to keep passenger charges low if the carriers could deliver higher load factors.
Heathrow could also face opposition from transport secretary Grant Shapps, who said shortly after he took over from Chris Grayling – who was in charge of the department when Parliament approved the third runway – that he wants to take a closer look at whether the financial aspect of the plan “stacks up”.