Businesses Say No to Heathrow Expansion: Funding for Third Runway Unlikely

Businesses and airlines have expressed concerns over the high costs associated with operating at Heathrow Airport, calling it the most expensive airport globally. They argue that significant reforms to Heathrow’s funding model are necessary before any investment can be made in a proposed third runway.

Airlines and hoteliers assert that the current regulatory framework set by the Civil Aviation Authority (CAA) governing what Heathrow can charge must undergo fundamental review. These critics contend that this model is making Heathrow unaffordable, potentially stunting the growth of projects such as the planned third runway.

Surinder Arora, chairman of the Arora Group and a pro-expansion advocate despite his doubts about its feasibility, has highlighted instances where Heathrow’s pricing appears excessive. He mentioned that while he pays 2.62 pence per unit for water at his Renaissance Hotel outside Heathrows boundary, within the airport perimeter (at his Hilton hotel adjacent to Terminal 2), he is charged significantly more 23.27 pence per unit.

Arora also cited other examples of perceived overcharging by Heathrow such as being billed 76,000 for chopping down three oak trees and a smoking shelter that would normally cost between 20-30,000 costing him 1.1 million at Heathrow. He attributes these high costs to the monopoly power wielded by Heathrow in various services.

Heathrow Airport countered Arora’s claims, disputing those figures and pointing out that it is required under its regulatory model to ensure efficient use of funds for essential airport infrastructure and amenities.

Nigel Wicking, chief executive of the Heathrow Airline Operators Committee, echoed Aroras sentiments. He stated that all costs at Heathrow are ultimately passed on to travelers, asserting that unless changes are made, the third runway project would not see fruition due to prohibitive financial implications.

Heathrow Airport has announced its intention to apply for planning permission for a third runway by summer and emphasized transparency in how investments will be managed. According to Selina Chadha, group director for consumers and markets at the UK CAA, while they are open to reviewing Heathrows economic regulatory model as part of their commitment towards effective regulation, any new framework must focus on delivering value-for-money benefits for travelers.

The debate surrounding Heathrow’s third runway continues as stakeholders grapple with balancing growth ambitions against cost management and consumer satisfaction.