The possibility of London Heathrow Airport being expanded by a rival company has moved a step closer, once again pitting rival options for a third runway against each other.
Regulator the Civil Aviation Authority (CAA) has announced an alternative developer model is among four shortlisted options for how the west London airport could boost its capacity. A consultation on the shortlist will run until June 15.
This would be consistent with the Heathrow West proposal by hotel tycoon Surinder Arora’s company, Arora Group, to build, own and operate a third runway and new terminal at Heathrow.
Mr Arora, founder and chairman at Arora Group, said: “Two years ago competition at Heathrow wasn’t on the cards and now is very much alive and kicking because the case for change is so strong. We welcome this consultation from the CAA.”
The airport’s owner – Heathrow Airport Limited (HAL) – is keen to obtain permission to deliver the expansion project itself, arguing that a single body maintaining control of all terminals would be more efficient.
In November, the UK government backed Heathrow's proposal to build a 3,500-metre third runway. The £33 billion ($43 billion) project involves moving a section of the M25 motorway and would nearly double the number of passengers to 150 million a year, cementing Heathrow's place as one of the busiest airports in the world.
Arora Group's proposal consists of a less expensive, £25 billion version involving building a shorter, 2,800-metre runway without affecting the M25, the orbital route that encircles Greater London.
An alternative developer would be in direct competition to HAL, which largely consists of overseas investors, led by private equity giant Ardian and the sovereign wealth funds of Qatar and Saudi Arabia.
The implementation of this regulatory model would depend on amendments to the government’s Airports National Policy Statement – set to be consulted on by July – and a developer obtaining planning permission.
Mr Arora has argued that competition is vital as the airport has “the most expensive charges in the world”. He said Heathrow Airport Limited's proposed cost “jeopardises the future of the airport as a globally competitive hub and its ability to aid the UK’s economic growth agenda”.
The shortlisted options include improving the existing framework for regulating the airport, such as more scrutiny of spending, and a model to support cost effective longer-term financing at the airport.
The final option would create new obligations on HAL to competitively tender elements of expansion – potentially resulting in a third party designing and building assets – while retaining overall responsibility for co-ordinating and financing the work.
Arora Group said it wanted to install a new 2,800-metre runway at Heathrow. That would not require moving the M25, unlike the airport’s own plan to build a 3,500-metre runway.
In November, Transport Secretary Heidi Alexander announced her preference for the full-length runway.
HAL’s scheme is estimated to cost £33 billion, including £1.5 billion to move the M25, and is expected to be fully privately financed.
It would see Heathrow’s capacity increase to 756,000 flights and 150 million passengers a year.
A Heathrow representative said: “Heathrow’s success as one of the world’s top and most punctual airports is built on private investment and strong airline partnerships.
“We support reform that boosts efficiency, cuts red tape and keeps investment flowing, but not proposals which will undermine our efforts to improve the airport for consumers or delay the economic growth the country needs. We look forward to working with government and the regulator to turn these proposals into positive outcomes.”
Earlier this week, Heathrow reported its passenger numbers fell by 5.3 per cent last month because of the war in the Middle East.
The airport said 6.7 million passengers passed through its four terminals in April, compared with 7.1 million during the same month last year.
The reduction reflects “the ongoing impact of the Middle East conflict on some markets and short-term adjustments to travel plans”, the airport said.
Thomas Woldbye, chief executive of Heathrow Airport Holdings, said: “We know passengers want certainty when planning their hard-earned summer holidays, so we are supporting the government and airlines as they work through their plans to get passengers on their journeys.
“While we have seen some short‑term disruption linked to the Middle East conflict, demand for travel remains strong with current fuel supplies stable.
“April was still our busiest month so far this year, underlining the strength of a global hub airport that can adapt quickly in times of uncertainty.”
Heathrow said it will update its 2026 passenger forecast in June “in light of the Middle East conflict”.
