Heathrow Airport seeks higher passenger fees as third runway planning costs top $1 billion

In a letter to the CAA, Heathrow stated it "would not be able to make the necessary investments in gaining planning permission" if it cannot recover these costs through fee increases.

A spokesperson for Heathrow told The Times, "To unlock the benefits of expansion swiftly for consumers and the country, it’s right to invest early to meet the government’s timeline for a new runway within a decade. These upfront costs reflect the complexity and expense of securing UK planning consents, and the inefficiencies of pausing and restarting major infrastructure projects."

Currently, Heathrow charges an average of £28.46 ($38.44) per passenger and aims to increase this rate to £33.26 ($44.92) by 2027. This move has faced opposition from airlines; Virgin Atlantic described Heathrow as "already the most expensive airport in the world," while IAG Group CEO Luis Gallego warned that high fees could leave a future third runway underused.

The final decision on any further fee increases rests with the CAA. While there is concern about losing airline business due to rising costs, all funding for expansion comes from private sources rather than taxpayers.

Heathrow submitted its plan for a third runway earlier this summer with hopes of having it operational within ten years. The government has received seven submissions regarding expansion proposals and has held discussions with three parties. Among these is Arora Group's 'Heathrow West' proposal, which features a shorter third runway designed to avoid relocating existing infrastructure like the M25 motorway—potentially resulting in lower overall costs compared to Heathrow's own plan.

Since 2018, construction inflation has driven up projected costs for Heathrow’s in-house proposal by 50%, bringing them above $28 billion. If completed, a third runway could nearly double capacity from today’s 84 million annual passengers up to 150 million, create around 100,000 jobs, and add an estimated 0.43% to UK GDP.