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Heathrow delays third runway construction by three years.

0.0 / 20 December /
Heathrow delays third runway construction by three years.

Heathrow has taken the decision to push back the completion of the third runway from 2026 to “early 2028 or late 2029”.

It comes as the aviation watchdog published its determination on early construction costs and timings for the expansion programme.

In its determination the CAA ruled that Heathrow’s timeline should be adjusted to allow for the Planning Inspectorate to rule on its development consent order (DCO) application.

It said that cost increases to early construction work had increased the risk that the project would incur “significant” sunk costs. It comes after pre-construction costs in relation to HAL’s planning application rose to £2.9bn in July.

The CAA report states: “In order to deliver capacity expansion in a timely way, HAL will need to incur significant planning costs (which we call “Category B costs”) and certain early construction costs (which we call “early Category C costs”).

“HAL had said that in order to retain a target of 2026 for the opening of the new runway, it would need to bring forward the timing of certain spending and total early costs would need to be about £2.9bn (in 2014 prices). This includes spending of over £500M on Category B costs and £2.4 billion (in 2014 prices) on early Category C costs, before it obtains a DCO.

“Given the increases in its estimates of these costs, and the potentially greater consequences of this spending for airlines and passengers if a DCO were not to be granted, we asked HAL to consider a range of options for this spending and for the target date for runway opening.

“In assessing these scenarios, it is important to bear in mind that while there are advantages for consumers in spending that promotes early delivery there is also a risk that these costs could become sunk if HAL’s DCO application were not to be successful.”

A Heathrow spokesperson added: “The CAA’s announcement is an important milestone in expanding Heathrow and connecting all of Britain to global growth.

“It increases certainty for our local communities and the job creation increased trade and lower airfares that expansion delivers.

“We will now review the detail to ensure it will unlock the initial £1.5 – 2 billion of private investment over the next two years at no cost to the taxpayer. Whilst this is a step forward, the CAA has delayed the project timetable by at least 12 months.

“We now expect to complete the third runway between early 2028 and late 2029.”

The CAA has introduced a series of measures in recent weeks to ensure Heathrow’s expansion is delivered in an efficient manner.

As revealed by New Civil Engineer this month, the CAA has brought in an idependent assessor to determine whether Heathrow’s terminals could be operated by different companies.

The CAA has also revealed that Heathrow Airport Ltd (HAL) will be fined if its expansion costs rise above what has been agreed with the aviation regulator.

CAA group director of consumers & markets Paul Smith said: “We believe that more runway capacity at Heathrow will benefit air passengers and cargo owners. Its timely delivery is required to prevent future consumers experiencing higher airfares, reduced choice and lower service quality. The sooner a new runway comes into operation, the sooner these benefits can be realised.

“However, we have also been clear that timeliness is not the only factor that is important to consumers. Passengers cannot be expected to bear the risk of Heathrow Airport Limited spending too much in the early phases of development, should planning permission not be granted.

“Our consultation reflects this balance. It will allow Heathrow’s operator to work towards delivering the new runway within an achievable timetable, and will reduce the risk of future airport passengers having to meet any undue financial burden if the project does not get planning approval.”

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