The UK aviation regulator has proposed allowing other companies to design and build Heathrow's third runway and new terminal, in a bid to reduce construction costs. The Civil Aviation Authority (CAA) argues that rival bids could encourage competition and efficiency for the long-delayed expansion of Europe's busiest airport.
Under the CAA's most radical suggestion, another developer could tender to build and run their own terminals at Heathrow, similar to a scheme at JFK airport in New York. This would require special government approval. The regulator also proposes making Heathrow seek bids from other businesses to design, build and operate parts of the expansion project.
The proposals come amid a row over the cost of the third runway, with British Airways owner International Airlines Group insisting costs be capped at £30bn. Heathrow is considered Europe's most expensive airport, and the CAA recently rejected its plans to raise landing fees to fund upgrades.
Surinder Arora, founder of Arora Group, which has promoted a rival £25bn expansion scheme, welcomed the consultation: 'Two years ago competition at Heathrow wasn't on the cards and now is very much alive and kicking.' Arora is part of Heathrow Reimagined, a group also including BA and Virgin, campaigning to reduce operating costs.
However, Heathrow warned the proposals could 'undermine efforts' to expand the airport. A spokesperson said: '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.'
The CAA acknowledged complications in implementing a model allowing rival bidders, but said it could encourage competition and efficiency if it works in consumers' interests. Heathrow is owned by a consortium including Ardian and sovereign wealth funds of Qatar, Singapore and Saudi Arabia.
