The Civil Aviation Authority (CAA) has permitted Heathrow Airport Limited (HAL) to recover up to £320m in early costs spent on developing its proposed third runway since 2025, through higher airline charges that are typically passed on to passengers. The decision overrode objections from airlines.
Cost recovery and fare impact
The costs will be recouped over 20 to 25 years. Current airport charges are about £26.22 per passenger. The CAA said the decision would increase the maximum charge by approximately 15p in 2028, rising to an estimated 30p in subsequent years.
The CAA also allowed a rival expansion scheme, Heathrow West, led by property billionaire Surinder Arora, to recover £4.1m spent on its plan in 2025 before the government chose HAL’s proposal as preferred. Arora’s refund, deemed necessary to promote competition, will be paid from Heathrow’s additional charges.
Airline opposition
British Airways, the largest airline at Heathrow, argued against early cost recovery, saying it risked making 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 in the world.
CAA director of consumers and markets Tim Johnson said: “Our decision strikes a balance between supporting the delivery of benefits to consumers through timely progress on Heathrow expansion, whilst 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 broader concerns
Heathrow’s third runway project is estimated to cost about £33bn, including additional terminal space and a £1.5bn project to divert the M25 motorway. It would increase capacity by about 50%, allowing 756,000 flights and 150 million passengers a year.
A Heathrow spokesperson said the expansion would give passengers more choice and a “real economic boost to every region and nation of the country,” adding: “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.”
Government and political reaction
The government launched a consultation last month 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 during the current parliament and for it to be built by 2035.
Andy Burnham has expressed concerns that the plans divert infrastructure investment “away from the north and traps it in London.” A study by the New Economics Foundation, based on official Department for Transport passenger projections, found the third runway could divert thousands of jobs that would have gone to Birmingham and the Midlands to the south.
A separate process will decide arrangements for costs from 2027 onwards.
