Foster’s estuary airport plan funding depends largely on Heathrow landing charges, and closing Heathrow

The FT writes that, needing some £50 million (or more) Lord Foster and his team have devised a funding model they claim would avoid any significant increase in the landing charges currently paid by airlines at Heathrow – which the airlines are deeply against. However, this funding model would hinge on the support of the government and regulators, plus the co-operation of Ferrovial/BAA.  Foster thinks £33 billion is needed for the airport, and they could get £10 billion from closing and redeveloping Heathrow. Then they could get  £4bn from the development of land around the new estuary airport for facilities needed to support it.  And £8bn from the landing charges levied on airlines using Heathrow between 2018 and 2028. A further £11bn would be raised through landing charges levied at the new airport during the decade after its opening, which is earmarked for 2028. Most of the money would come from Heathrow landing charges, and this problem could be overcome by giving the Ferrovial-led consortium the opportunity to take a controlling equity stake in the estuary airport.


New funding plan eyed for estuary airport

By Rose Jacobs and Andrew Parker

Full article in the FT at

A few extracts:

Among the many objections to an estuary airport, the £20bn-plus price tag looms large, with industry insiders concerned that airlines would face a trebling of landing charges at the site as its owners tried to recoup their investment. That, in turn, could result in higher air fares and undermine the airport’s competitive appeal.


Lord Foster’s team has identified a means of raising £33bn to pay for the estuary airport – principally money secured through landing charges and the closure and redevelopment of Heathrow.

However, this funding model would hinge on the support of the government and regulators, plus the co-operation of the consortium that owns Heathrow, led by Spain’s Ferrovial.


Lord Foster’s team said the new estuary airport would cost £20bn to build, and a further £3bn would be needed for a rail link connecting the site to the high speed line between the Channel tunnel and St Pancras station, taking the total bill to £23bn.


Huw Thomas, a partner at Lord Foster’s firm, said potential foreign investors in an estuary airport saw it as a “phenomenal opportunity”, but added that they had also told him: “The government’s useless; come back and talk to us again when you know that politicians are capable of making a decision.”

Chocks away for Heathrow by the Sea

Marie Woolf and Mark Hookham (Evening Standard)
8 July 2012

The Thames Hub airport on the Isle of Grain would cost up to £50 billion (Foster+Partners)

TRANSPORT officials are to be ordered to draw up a business case for a new four-runway “hub” airport. The news will delight supporters of the proposed Thames estuary airport, which is backed by The Sunday Times and Boris Johnson, the mayor of London.

The government has decided that to compete with rapidly expanding rivals on the Continent, replacing Heathrow as Britain’s largest airport has become “a case of when, not if”.

Sources close to Justine Greening, the transport secretary, say she is determined to find a “long-term solution” to Britain’s airport crisis.

A Whitehall source said: “The question is when we need a new hub airport, rather than if . . . We need to be looking at long-term solutions.”

Officials in the Department for Transport’s aviation policy unit are on standby to examine both short and long-term strategies to increase the number of flights using Britain’s airports.

Short-term solutions could include building another runway at either Birmingham, Stansted or Gatwick.

However, it is the government’s increasing willingness to countenance a new hub airport that will cheer proponents of the plans to build in the Thames estuary.

As a first step, the department will begin shortly to seek evidence on how best to keep Britain’s airports competitive, with options including a new hub airport or an expansion of Heathrow by adding a third runway.

Greening is said to be “open-minded” and keen to find a long-term strategy that will serve Britain for decades rather than a short-term “piecemeal approach”.

However, George Osborne, the chancellor, favours the expansion of Heathrow before the 2015 general election, including the option of allowing both its current runways to be used for takeoff and landing at the same time.

Such a move would permit an estimated 60,000 extra flights a year. The Liberal Democrats are opposed to a third runway and have secured an agreement that the coalition will not promise one in this parliament.

However, business leaders and airline bosses, who argue the economy is being damaged by a shortage of capacity, are lobbying hard for swift action.

Last month, Willie Walsh, whose International Airlines Group includes British Airways, said a new hub airport should replace Heathrow. “I think we need to build a third runway at Heathrow, then we need to plan and build a new hub airport,” he said. “I’m open to where it should be built. It should be in the best place possible.”

He urged the government to make a decision before the next election, adding: “You need a decision with cross-party support in this parliament.”

Business leaders and the mayor of London say an airport with more services to emerging markets in China, India and Brazil is urgently required. They point out that there are no direct flights from London to 12 cities in mainland China, and that both Frankfurt and Paris’s Charles de Gaulle airports have many more direct flights to Beijing and Shanghai than Heathrow.

The mayor’s aviation policy chief, Daniel Moylan, said: “Heathrow is running at nigh on full capacity, and figures released by BAA [the airport’s owner] have shown that if we do not address that situation then the damage to the UK economy would stand at more than £100 billion over the next 20 years. That is why we must act now and invest in a modern 24-hour four-runway hub airport if we are to remain competitive with rivals.”

Despite the pressure on the government to decide its airport strategy, there is unlikely to be any decision until close to the next election at the earliest. In part, this is because of the need for the government to examine responses to its consultation and to settle on the best business case for a hub airport. Johnson, a strong advocate of the estuary airport plan, has already called for a second runway to be built at Stansted, Essex, as a short-term measure.

In one scheme, the estuary airport would be built on a man-made island northeast of Whitstable. The costs are estimated at between £40 billion and £70 billion and the airport would be linked to terminals in Kent and Essex by tunnels or bridges.

An alternative plan, drawn up by Lord Foster of Thames Bank, would see the construction of a four-runway airport on the Isle of Grain, part of the Hoo peninsula in north Kent. The airport would be the biggest in the world and capable of handling 150m passengers a year. Heathrow handles 69m passengers annually.