The CAA is weighing rules that could let rivals bid for parts of Heathrow’s expansion amid concern over the airport’s £33bn plan and passenger costs.
Heathrow Airport could be required to let rival firms compete to build parts of its proposed third runway and new terminal under regulatory changes being considered by the Civil Aviation Authority.
The watchdog said the proposals are intended to “better serve the interests of consumers” if Heathrow expands, after concerns that Heathrow Airport Limited’s £33bn development plan could increase costs for airlines, businesses and passengers.
The CAA is consulting on four possible changes to how Heathrow Airport Limited, known as HAL, would be regulated during an expansion. Those include tighter oversight of spending and competitive tendering for elements of the project.
One option would allow another developer to compete to design, finance, build and operate a new terminal. Under that model, the CAA said the developer could provide services directly to airlines and recover revenue from them “in direct competition with Heathrow Airport Limited.”
The proposal would depend on a change in government policy on airport expansion. In November, the government said it preferred HAL’s plan over an alternative put forward by the Arora Group, a hotel chain that had proposed a shorter runway at lower cost.
HAL’s plan includes a new 2.2-mile runway, a new road tunnel under the airport and moving a section of the M25. The Arora proposal would not have required alterations to the motorway.
Businesses have pushed for a review of the regulatory framework, arguing that the current model makes Heathrow the world’s most expensive airport. The CAA’s shortlist suggests the regulator is looking at whether more competition and tighter cost controls could limit the financial impact of expansion.
Heathrow said it supported reforms that improve efficiency but warned against measures it believes could weaken the project. “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,” a Heathrow spokesperson said.
The government is aiming for a planning decision on Heathrow expansion by 2029. If HAL’s scheme proceeds, the airport’s capacity would rise to 756,000 flights and 150 million passengers a year.
The immediate next step is the CAA consultation on its shortlisted regulatory options, which will determine how far the watchdog is prepared to go in opening parts of Heathrow’s expansion to outside competition.
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