Heathrow passengers will pay higher fares for decades to cover the early costs of developing the airport's third runway expansion plan. The Civil Aviation Authority (CAA) has approved Heathrow Airport Limited (HAL) to recover £320 million spent on the proposal, allowing the airport to increase airline charges—typically passed on to passengers—for about 20 to 25 years.
Passenger charge increases
The CAA said its decision will raise the maximum airport charge per passenger by about 15p in 2028, rising to an estimated 30p in subsequent years. The recoverable money includes spending on planning, design work, and preparation of materials. A separate process will decide arrangements for costs incurred from 2027.
Expansion costs and rival scheme
HAL's third runway scheme is estimated to cost £33 billion, including £1.5 billion to move the M25, and is expected to be fully privately financed. It will increase Heathrow's annual capacity to 756,000 flights and 150 million passengers. Meanwhile, Heathrow West, a rival expansion plan led by property billionaire Surinder Arora, will also be allowed to recoup £4.1 million it spent on its proposal in 2025 up to November 25, when the government announced it would use HAL's proposal.
Regulatory oversight
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, whilst 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."
Industry reactions
A Heathrow spokesperson said the project will give passengers more choice while providing a "real economic boost to every region and nation of the country." He added: "We have been clear from the start that unlocking the private investment that will deliver these benefits requires a supportive regulatory framework. We are carefully considering the CAA proposals and will make investment decisions accordingly." However, British Airways, the largest airline at Heathrow, warned that early cost recovery by HAL would create a risk that expansion will be "unaffordable for consumers and inconsistent with a credible benefits case," according to a CAA document.
