Heathrow regulator, the CAA, demands answers urgently on Heathrow’s 3rd runway plan
Regulator demands answers on Heathrow’s third runway plan
Plans for a third runway at Heathrow are at risk over concerns about the project’s costs and timescale, according to the aviation watchdog.
The Civil Aviation Authority (CAA) said that Heathrow had to address major doubts over the runway “decisively and urgently” to get the project on track. In a significant intervention, it has threatened enforcement action against Britain’s biggest airport to force it to provide clear evidence about how it would finance the £14 billion runway while avoiding pushing up costs for airlines and passengers.
The regulator also revealed that the project had been hit by a further delay, with a public consultation on detailed plans for the new runway now scheduled for June rather than in the first three months of next year.
In a letter to the Department for Transport, the CAA said that Heathrow must “provide assurance that its revised timetable is realistic” and would “ensure timely delivery” of the expansion. Airlines such as British Airways and Virgin Atlantic have repeatedly criticised the project, saying that it is too expensive. Heathrow is already the most expensive airport in the world, with fees adding more than £20 to each ticket, and it is feared that its owners will seek to recoup building costs through even higher airline charges.
Heathrow wants to build a two-mile runway northwest of the site. This would increase the number of flights from a maximum of 480,000 a year now to 740,000. Passenger numbers would rise from 80 million a year to 130 million.
Legislation to pave the way for the project was passed overwhelmingly by MPs last summer but major questions remain. Last year Heathrow cut £2.5 billion off the costs by pledging to build a smaller terminal and phase the project over several years. It insisted that the move would allow it to keep landing charges close to present levels, a key demand of Chris Grayling, the transport secretary.
However, the letter from Richard Moriarty, chief executive of the CAA, seen by The Times, raised concerns over the “lack of high quality and comprehensive information” about how it would keep costs down. It said that those fears had “not been adequately addressed, despite repeated requests”. Heathrow must “urgently” provide full details of costs to ensure that it can deliver the transport secretary’s “ambition to keep airport charges close to current levels while being commercially financeable”, it said.
The CAA was considering making a formal demand under the Civil Aviation Act 2012 for more detailed costings. “We will consider further regulatory action if [Heathrow] fails to delivery appropriate information,” Mr Moriarty said.
He added that Heathrow “must now demonstrate to stakeholders that its new timetable is realistic, achievable and allows sufficient time for high-quality engagement while ensuring timely delivery”.
It is the latest in a series of questions surrounding the scheme. Last month the High Court gave permission for five legal challenges to be brought against the government decision, with a hearing to take place in March. It is likely that more challenges will be brought when Heathrow publishes its planning application.
A Heathrow spokesman said: “We continue to engage with all stakeholders on our expansion plan and look forward to presenting a detailed preferred masterplan for further public consultation next year. We remain on track to submit a planning application in 2020 and the new runway to open in 2026.”
Heathrow says it will cut costs of 3rd runway by £2.5 bn – not adding a new terminal
Heathrow has said it has identified options which could reduce overall cost of its 3rd runway expansion plans by £2.5 billion, so the overall cost would be £14 billion. The reduced cost options, developed with input from airlines which want a lower overall cost, will be consulted on in January 2018. Savings would be by three things: (1). Repositioning new buildings over existing public transport and baggage infrastructure. This includes building additional capacity at both Terminals 2 and 5 rather than a dedicated terminal or satellite building between today’s northern runway and the new northwest runway. (2). Technological advancements which reduce the amount of terminal space required to process passengers “without compromising” the passenger experience. (3). More efficient phasing of capacity construction – incrementally increasing terminal capacity in blocks to better match growing demand. That means more planes would have to cross the northern runway, to get to the new runway. Heathrow will be launching a 10-week public planning consultation which will run from 17th January to 28th March 2018. The consultation will be in 2 parts – the first on infrastructure design options, and the second on the future design principles for airspace around Heathrow.
How Heathrow’s new runway would be funded, (higher landing costs, more costs to taxpayer) – all unclear
Heathrow’s plans for a 3rd runway, and associated building, are due to cost the airport at least £18 billion (not including unexpected over-runs and engineering problems etc). Heathrow now wants the right to make airlines and passengers contribute to any unexpected higher costs. The CAA controls the amount Heathrow can charge airlines. Heathrow has asked the CAA to factor in a huge array of risks from building the 3,500 metre runway across the M25 into the charges it is allowed to claw back from carriers. Heathrow keeps insisting its landing charges would remain close to current levels, aviation experts said there are few credible alternatives to charging users more. IAG believes the huge construction costs will lead to charges doubling to landing charges per passenger, from about £40 now to £80 for a return ticket. Heathrow is mainly owned by overseas investors. As well as higher than expected costs of construction, there are risks such as lack of interest from airlines in taking up the new landing slots; financial markets turning against the airport, leading to a downgrade of its credit rating; higher debt costs; and politics. There is real fear that if the Heathrow expansion project was allowed, the costs – many £ billion – might fall on the taxpayer – if the enterprise becomes a bit of a white elephant. The Airports Commission and DfT have said little about this massive risk to the public finances.
Shock £17bn taxpayer’s bill for Heathrow expansion revealed through Freedom of Information request by Greenpeace
Environmental and transport groups have used FoI to obtain details from Transport for London (TfL), of their estimates of the amount of money the UK taxpayer would be expected to pay, for Heathrow’s 3rd runway. This comes to a staggering £17 billion, to cover the costs of transport links needed to deal with a massive traffic surge from a 3rd Heathrow runway. TfL say the actual cost would be around £18.4 billion – which is 4 times as high as estimated by the Airports Commission. Heathrow’s John Holland-Kaye reiterated, to the Environmental Audit Committee (4.11.2015) that the airport would pay only about £1 billion. The government made it clear (Oct 2015) that it expects aviation expansion promoters to cover any surface access costs.The vast amount of money required throws into question both the financing and feasibility of a crucial part of the project. The documents, released to Greenpeace through FoI, contain the first detailed comparison of the contrasting estimates by the Airport Commission and TfL. They show the figures published in the Commission’s report failed to take into account the costs of key rail schemes, extra buses, additional operational spending and road traffic management. The Treasury needs to properly assess the real costs of expanding Heathrow and guarantee taxpayers won’t be left to pick up the bill.
No confirmation by government that taxpayer won’t have to fund surface access transport for Heathrow 3rd runway
Transport for London calculated the costs of upgrading and improving surface access, to deal with the extra passengers using a 3 runway Heathrow could be up to about £18 billion, over several years. Heathrow has only offered to pay a total of £1.1 billion. Stephen Hammond, a former transport minister, (2012 – 14) asked Chris Grayling about the costs, as did other MPs. The responses were evasive. Stephen Hammond believes the transport work is likely to cost the taxpayer (= us) at least £5-10 billion, and the government is misinforming the public by announcing that: “Expansion costs will be paid for by the private sector, not by the taxpayer.” Asked about the costs, Grayling replied that Heathrow …”will be held to a plan that: first, does not increase the current level of road transport to the airport; and, secondly, increases public transport access to the airport to 55% of those using it. Those will be obligations that it will have to fund. The Government’s financial advisers have said that that is viable and investible. There are question marks about what schemes are actually part of the surface access. Some of them we have to do anyway. For example, we are about to start improvements to the M4, which will benefit Heathrow and improve access, but they are not solely about Heathrow.” ie. no clarity at all, and sounds as if government realise Heathrow cannot even build the runway etc without raising landing charges, let alone all this work. So is not insisting on it …?
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.”