Heathrow Airport third runway costs to fall on airlines and passengers as expansion advances

Heathrow Airport is preparing for its most ambitious expansion to date with a proposed £49 billion plan centred on the construction of a 3500 metre runway crossing the M25 motorway. This expansion, endorsed by ministers as the most deliverable among multiple options, faces significant financial and regulatory hurdles that threaten to delay its progress.

The airport’s management insists that airlines and, by extension, passengers must cover an estimated £500 million in planning fees for the third runway. This bill includes extensive consultations on noise, traffic, emissions, and broader impacts on London, with funds allocated to legal and consultancy services.

Heathrow’s primary shareholders from Saudi Arabia, Qatar, and China are seeking government and regulatory assurances; they require confirmation from the Civil Aviation Authority that costs incurred in the early planning stages will be reimbursed if the project does not proceed. These assurances are necessary before formal planning can commence given current market uncertainties and the scale of private capital involved. The CAA is reviewing whether the established finance model is appropriate for the proposed development or if changes are required that could alter the funding balance between shareholders, airlines, and passengers.

Costs related to the project will be ultimately passed to passengers through higher landing fees paid by airlines, effectively making travellers responsible for these upfront expenses. This approach has drawn criticism from major carriers, including British Airways, which argue that Heathrow is already among the world’s most expensive hubs without delivering commensurate value.

Transport Secretary Heidi Alexander indicated that the government is targeting a decision on development consent within the current parliamentary term, favouring the Heathrow plan due to its potential to meet national transport ambitions. The Department for Transport confirmed that all details of the scheme, including runway layout and associated infrastructure, will remain under continuous review during the planning process.

Despite competitor Surinder Arora’s alternate 2500 metre runway proposal, selected officials have endorsed Heathrow’s longer runway while remaining open to shorter alternatives if proven viable in terms of cost and benefit. Industry stakeholders await the CAA’s forthcoming decision on early cost recovery, which will set conditions for proceeding with the planning application and may influence the project’s ultimate viability.