The Civil Aviation Authority (CAA) has given Heathrow Airport Limited (HAL) permission to recoup £320 million spent on its third runway proposal since the start of 2025. The money will be recovered through higher airline charges, typically passed on to passengers, over approximately 20-25 years.
Cost impact on passengers
The CAA said its decision will increase the maximum airport charge per passenger by about 15p in 2028, rising to an estimated 30p in subsequent years. A rival expansion scheme, Heathrow West led by property billionaire Surinder Arora, has been allowed to recoup £4.1 million spent on its plan up to November 25, when the Government selected HAL's proposal as its preferred option.
Airline and regulator reactions
British Airways, the largest airline at Heathrow, warned that early cost recovery by HAL could make expansion “unaffordable for consumers and inconsistent with a credible benefits case”, according to a CAA document. Airlines have repeatedly complained that Heathrow has the highest charges of any airport globally.
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."
Expansion plans and political context
The recoverable costs include planning and design work needed for a credible expansion proposal, including material for a future development consent order (DCO). A separate process will decide arrangements for costs from 2027. Last month, the Government launched a consultation on its Heathrow expansion national policy statement.
Former chancellor Rachel Reeves said she was determined to get "spades in the ground" for the third runway in the current Parliament, with completion by 2035. Prime Minister Andy Burnham, who sacked Ms Reeves, has previously expressed concerns that the plans divert infrastructure investment "away from the North and traps it in London".
Project costs and benefits
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 increase Heathrow's annual capacity to 756,000 flights and 150 million passengers.
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."
