IAG warns the “costs and complexity” of bridging M25 could be major problem for Heathrow runway plans
British Airways’ owner International Airlines Group (IAG) estimates bridging the M25, close to the M4 junction, would cost £2 billion-£3 billion. The Airports Commission suggested the cost could be higher, with £5 billion for local road upgrades, including the tunnel. The Commission said Heathrow should pay for these, as part of the cost of building its runway. The cost and complexity of somehow putting the runway over the busiest, widest section of motorway in the UK are considerable. IAG, as by far the largest airline at Heathrow, does not want to be charged for this work, which would mean putting up the price of its air tickets. IAG says there is no detailed risk and cost analysis of the airport’s plans on what to do with the M25, though a bridge is cheaper than a tunnel. Willie Walsh said: “Airlines were never consulted on the runway length and they can operate perfectly well from a slightly shorter runway that doesn’t cross the M25.” He wants Heathrow to build a shorter runway of 3,200m rather than 3,500m that does not require going over the M25. But that would mean the motorway directly at the end of the runway, in the worse danger zone. IAG says: “We will not pay for a runway that threatens both costs and delays spiralling out of control and where critical elements of the project could be undeliverable.”
M25 could de-rail Heathrow expansion, says IAG
by Phil Davies (Travel Weekly)
Heathrow’s expansion could be stymied by the cost and complexity of plans to bridge the M25 motorway to build a third runway, the government is being warned by the airport’s largest operator.
British Airways owner International Airlines Group estimates bridging the M25, close to the M4 junction, would cost £2 billion-£3 billion on top of Heathrow’s already “over-inflated” £17 billion bill for the third runway.
All costs will be paid for by airlines’ customers, IAG warns in its submission to the government’s consultation on its Airports National Policy Statement, which closes tomorrow (Thursday).
IAG also claims that there is no detailed risk and cost analysis of Heathrow’s plans to build over one of Europe’s busiest motorways.
IAG chief executive Willie Walsh said: “Airlines were never consulted on the runway length and they can operate perfectly well from a slightly shorter runway that doesn’t cross the M25.”
The airport needs to focus on a shorter runway of 3,200m rather than 3,500m that does not breach the M25 and is delivered to a business case that keeps current charges the same or lower than today’s, according to IAG.
While the airline group says that Heathrow is the best option for expansion, it also welcomes credible schemes from promoters other than Heathrow.
IAG says this would ensure customers get the very best scheme, built at an affordable price, which delivers a competitive new Heathrow for the UK economy post-Brexit.
Walsh said: “Bridging the M25 means years of disruption on a motorway already plagued by delays and congestion. As well as increased costs, this will have a huge impact not only on motorists but on local communities around Heathrow.
“The airport has yet to produce a business plan that assesses the financial implications and risks of bridging the M25.
“We will not pay for a runway that threatens both costs and delays spiralling out of control and where critical elements of the project could be undeliverable.
“Britain needs cost-effective airport infrastructure that benefits the country rather than Heathrow’s shareholders.
“It is already the world’s most expensive hub airport and customer charges must not increase to pay for the new runway.
“We urge the government to benchmark Heathrow’s costs against other similar global schemes.”
IAG boss Willie Walsh warns that the “costs and complexity” of bridging the M25 could throw Heathrow expansion off track
By Rebecca Smith (City AM)
Wednesday 24 May 2017
British Airways owner IAG has hit out again at prospective M25 plans for Heathrow expansion, warning that bridging the major motorway will derail the third runway plans.
In its submission to the government’s consultation on its national policy statement, which closes tomorrow, IAG warns of the scheme’s cost and complexity, estimating that bridging the M25 will cost £2-3bn on top of the airport’s £17bn bill for the third runway.
IAG said there is no detailed risk and cost analysis of Heathrow’s plans to build over one of Europe’s busiest motorways.
Willie Walsh, IAG’s chief executive, said: “The airport has yet to produce a business plan that assesses the financial implications and risks of bridging the M25. We will not pay for a runway that threatens both costs and delays spiralling out of control and where critical elements of the project could be undeliverable.”
In a headache for the airline giant, it said all costs will be paid for by carriers’ customers.
IAG wants the focus on a shorter runway that does not breach the M25. A shorter runway had been floated amid Heathrow’s earlier proposals for expansion, but was considered more of a trouble in terms of noise concerns.
Walsh said: “Bridging the M25 means years of disruption on a motorway already plagued by delays and congestion. As well as increased costs, this will have a huge impact not only on motorists but on local communities around Heathrow.”
Britain needs cost-effective airport infrastructure that benefits the country rather than Heathrow’s shareholders.
While IAG has backed Heathrow for expansion over the other alternatives, such as a second Gatwick runway, Walsh urged the government to benchmark Heathrow costs against “other similar global schemes”.
A Heathrow spokesperson said: “Like all major infrastructure projects, we have to balance several factors in order to deliver the increase in airport expansion that Britain needs: risk, constructability, passenger experience, quality, affordability and time.
“In each of these areas we have engaged expert advisers and consulted our airlines to ensure we get the right balance and the best outcome for our passengers, our local communities and the country as a whole.”
The airport has not yet decided how the runway will cross the M25, with a proposal to construct a 650 metre tunnel for the motorway vying with the option of putting the runway on a slope above the road.
Transport secretary Chris Grayling said the latter would be “cheaper and quicker” than any movement of the M25 in October last year.
Highways England has also said a tunnel would cause a national shortage of contractors, delay road building schemes across Britain and cause huge frustration for drivers.
Heathrow boss rules out footing the £5 billion bill for road and rail works – wants taxpayer to pay
The Airports Commission left the matter of who would pay for the approximately £5 billion needed to tunnel a section of the M25, and other surface access improvements, vague. The assumption has been made that the taxpayer would have to fund this, though the Airports Commission suggested that Heathrow would be able to find the funding from its investors for this. Now the CEO of Heathrow has dismissed the suggestion that the airport foots the £5 billion bill for road and rail work if a 3rd runway is built. Huge motorway engineering would be needed, to have the runway going over the motorway. John Holland-Kaye has ruled out paying for the surface access work. Though the government funds road and rail improvements under normal circumstances, tunnelling the M25 and dealing with hugely increased road traffic using an airport 50% larger than at present are not normal circumstances. Especially in times of huge economic savings being necessary in public finances. The Commission’s final report said it considered the runway was commercially viable “without a requirement for direct government support. This remains the case even in a situation where the airport is required to fund 100% of the surface access costs.” This would be by Heathrow “raising both debt and equity finance. This finance is then serviced through subsequent revenues and refinancing by the airport operator.”
Times reports that Heathrow plans to offer to cut costs and build runway scheme faster
The Times reports that it has learned how Heathrow is planning to cut up to £3 billion (out of about £17.6 billion) from its plans for a 3rd runway, in order to persuade Theresa May and the Cabinet that the runway could be delivered – and delivered a year earlier. Revised plans include potentially scrapping plans to tunnel the M25 under the 3rd runway, not building a transit system to carry passengers around the airport (using buses instead) and smaller terminal buildings. The aim is not only to get the runway working by 2024 but also -with reduced costs – keeping charges for passengers a bit lower. The Airports Commission estimated the cost per passenger would need to rise from £20 now to £29. Airlines like British Airways are not prepared to pay such high costs, and especially not before the runway opens. BA’s Willie Walsh has described Heathrow’s runway plans as “gold-plated”. The Times expects that Heathrow will announce its new “cheaper, faster” plans by the end of September. There is no mention of the “Heathrow Hub” option of extending the northern runway – a slightly cheaper scheme than the airport’s preferred new north west runway. There is no clarity on quite what Heathrow plans for the M25, if they cannot afford to tunnel all 14 lanes (at least £ 5 billion). Lord Deighton said it might be “diverted” or have “some form of bridge.”