Heathrow rival could lead expansion, watchdog says

An important development from the financial markets: Heathrow rival could lead expansion, watchdog says36 minutes ago Share Save Add as preferred on GoogleKaty AustinTransport correspondentReutersHeathrow Airport could be forced to allow rival firms to bid to build its third runway and new terminal, under proposals by the aviation watchdog aimed at keeping a cap on construction costs. It is one of several regulatory changes being considered by the Civil Aviation Authority (CAA) if Heathrow expands, to "better serve the interests of consumers". It follows concerns that Heathrow's £33bn development plan could push up costs for airlines, businesses and consumers.

Heathrow Airport Limited (HAL) said it welcomed reforms that improved efficiency but warned against policies that could "undermine" its plans or delay economic growth. Businesses have been calling for a review of the regulations, claiming the current model makes Heathrow the most expensive airport in the world. The CAA said it was looking at four potential changes to how HAL is governed.

Economic Details

They include tighter control over its spending and competitive tendering elements of the expansion. 'Direct competition with Heathrow'Another proposal would allow an alternative developer to compete to design, finance, build and operate a new terminal. Under this scenario, the CAA says, the developer could "directly provide services to airlines and recover its revenues from them, in direct competition with Heathrow Airport Limited".

This option would depend on a change in government policy regarding airport expansion. In November, the government announced it preferred plans put forward by HAL over those proposed by a rival firm - hotel chain the Arora Group. Heathrow proposed a new 2.

5km) runway, which would require a new road tunnel under the airport and moving a section of the M25. Arora's alternative plan was for a shorter runway at a lower cost, and did not require altering the M25. The CAA will now consult on its shortlist of potential changes.

Analyst Views

The government hopes for a planning decision on Heathrow expansion by 2029. HAL's scheme would see the airport's capacity increase to 756,000 flights and 150 million passengers a year. A Heathrow spokesperson said: "Heathrow's success as one of the world's top and most punctual airports is built on private investment and strong airline partnerships.

"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. "Listen to the best of Radio London on Sounds and follow London on Facebook, X and Instagram. Send your story ideas to hello.

ukMore stories like thisChange Heathrow funding or third runway won't happen - businessesHeathrow's plan for longer third runway chosen by governmentWhat's the plan for a third runway at Heathrow Airport?

Financial markets are tracking the development closely as investors assess the likely impact.