Heathrow to spend £2.9bn on expansion before construction begins

The increased cost forecasts were outlined by the Civil Aviation Authority [CAA] in a consultation document it launched relating to the early costs and regulatory timetable for Heathrow Airport Limited’s [HAL] expansion programme.

In the document, the CAA claims the airport operator now needs to spend £2.9bn developing the concept and acquiring land and buildings before applying for its development consent order (DCO) which is needed to proceed with construction.

The £2.9bn figure comprises ‘Category B costs’ related to planning and early ‘Category C costs’ related to acquiring and relocating buildings and community compensation.

The CAA’s consultation document highlights how HAL’s estimated Category B costs have risen from an original £265M in 2017 to more than £500M and estimated early Category C costs have risen from £650M to £2.4bn in the same period.

In addition, the CAA says ‘Category C’ costs incurred by HAL have “increased significantly and are now very material”.

The release of the consultation document by the CAA has come a month after HAL released its final expansion masterplan in which it detailed plans to lower the M25 beneath the third runway, to divert rivers and enhance surface access for transport links.

HAL’s current estimates suggest that its total capital costs to facilitate the opening of a new runway in 2026 will be in the region of £14bn. Meanwhile, its current estimates for total expansion capital costs are £32.5bn.

In response to the consultation document, a spokesperson for rival expansion promoter Heathrow Hub said: “At last the CAA is starting to focus properly on the huge costs of Heathrow Airport’s own plan. It is an outrageously expensive and disruptive proposal, which involves knocking down 780 houses, BA’s headquarters and the Lakeside Energy from Waste Plant.

“Their plan also involves trying to build the new runway over the M25 right by the M4 junction and will cause years of jams. As the CAA concedes, this will potentially have an important impact on consumers via higher air passenger fees.”

Heathrow Hub has argued that extending one of the existing runways at Heathrow is a more cost-effective way of expanding the airport than the construction of a third runway.

A HAL spokesperson said: “Heathrow has a long track-record of delivering multi-billion pound airport infrastructure on-budget. We’re confident that our plans and experience will deliver a new runway at Heathrow for £14bn. It is great that the CAA are increasingly confident in our cost projections.

“We value their input and will continue to work alongside them to ensure this critical project for Britain is delivered within the robust budget that we have outlined.”

Stakeholder on all issues raised in the consultation document have been requested by the CAA. The response for the consultation is 22 August.

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