Airlines operating out of Heathrow face increased charges after the London airport was given permission to claw back the early costs of its expansion plans.
Increased fees are likely to be passed on via ticket prices for passengers using Britain's biggest hub over an estimated period of 20 to 25 years.
The west London airport, which in May marked its 80th anniversary, will be permitted to charge about 15 pence more per passenger in 2028, rising to an estimated 30p in subsequent years.
The Civil Aviation Authority, the UK aviation regulator, said funding for the early planning and design work will come by allowing the airport to recover what it spent in 2025 and 2026 through airport charges capped at £320 million. It will consult later this year on arrangements for costs incurred from 2027 onwards.
Heathrow, 15 miles west of central London, is operating at full capacity and the government has been moving ahead with its plan to build a third runway, which it wants open by 2035.
Proposals for a third runway stretch back decades and have faced opposition from campaign groups and local residents.
In a blueprint published last month for getting a third runway built, the government described the airport’s expansion as “critical to national growth”.
Rachel Reeves, chancellor at the time, said she was determined to get “spades in the ground”, saying Heathrow was “not punching its weight” as a hub airport.
Two rival bids have been put forward. The airport’s owners – Heathrow Airport Limited (HAL) – want to obtain permission to build a full-length, 3,500-metre runway, which would require the M25 motorway being moved. It also plans to modernise and reconfigure existing terminals.
Hotel tycoon Surinder Arora wants his company to install a 2,800-metre runway which would not involve moving the motorway. That scheme, which was not selected by the government, would be allowed to recover approximately £4.1 million of costs.
Heathrow’s £33 billion ($43.87 billion) expansion plan will be privately-funded, and the CAA is considering what framework to use to facilitate it.
Tim Johnson, the CAA’s director of consumers and markets, said: “Our decision strikes a balance between supporting the delivery of benefits to consumers through timely progress on Heathrow expansion, while also protecting them from undue increases in costs.
“The costs Heathrow can recover are capped, independently scrutinised and subject to efficiency reviews, helping ensure that passengers only pay for efficient costs that are justified.”
A Heathrow spokesperson said: “This project is about making travel more affordable and giving passengers more choice, while providing a real economic boost to every region and nation of the country.
They added: “We are carefully considering the CAA proposals and will make investment decisions accordingly.”
Airlines have complained that Heathrow is already one of the most expensive airports in the world and said costs need to be kept down.
In a submission to the CAA, British Airways warned early cost recovery could create a risk that expansion will be “unaffordable for consumers and inconsistent with a credible benefits case”.
Tim Clark, the head of Emirates airline, which operates six flights a day to Heathrow, has previously warned of a legal challenge if airlines were forced to pay higher landing fees to finance the third runway.
Speaking at the Farnborough Air Show earlier in July, he suggested new Prime Minister Andy Burnham could be forced to nationalise the airport if the battle to expand could not be resolved.
The government estimates that a third runway would result in 217,000 additional flights a year by 2055 across the UK, including 38,000 long-haul, and 45 million additional passengers a year. It believes expansion would attract international investment, boost Britain’s connectivity to new markets, and could deliver more than £40 billion of benefits to the country.
Mr Burnham, formerly mayor of Manchester, has previously expressed concerns over Heathrow expansion, saying the plan diverted infrastructure investment “away from the North and traps it in London”.
