Spreading out

Heathrow cuts costs to fuel plans for expansion

HEATHROW has moved to slash £2.5bn in costs from its expansion plan as the airport seeks to secure support for its scheme from airlines and fight off rival proposals.

The airport claimed it could now complete its expansion project for £14bn after deciding to build a smaller new terminal over existing transport and baggage infrastructure. Initially, the airport had proposed building a terminal close to the new north-west runway, but this would have brought with it the added cost of underground passageways, as well as baggage handling systems, to link it to the rest of the airport.

With pressure on it from airlines, which want to keep airport charges at current levels, and rival lower-cost schemes, Heathrow has redrawn its plans to include a smaller new terminal. This would be placed over existing infrastructure, such as baggage handling facilities, and would share the existing tube station, which will also have a link to Crossrail.

Heathrow will also look to expand terminals two and five to enable it to deal with the 130m passengers the airport needs to be able to accommodate by 2035. But it is suggesting only doing these things – a new terminal or extensions – one at a time to also help it manage costs.

These proposed amendments will be up for discussion during its 10-week consultation, which begins on Jan 17 and runs until March 28.

The proposal to phase the construction of the expansion comes after a recent transport select committee hearing in which Jock Lowe, the director of the rival Heathrow Hub scheme, said the construction of his plans could be done in stages to match passenger demand as it grew. Of Heathrow’s latest proposed changes, Mr Lowe said that building a “bargain basement terminal” still meant the scheme remained “expensive”.

He claimed the proposed third runway was “simply in the wrong place” and that his plan, which would involve extending the existing northern runway, had been costed at a maximum £9.7bn – more than £4bn cheaper than even Heathrow’s updated proposal.

“This just goes to show how expensive and complex Heathrow’s third runway is,” Mr Lowe said.

“It is simply in the wrong place. It requires the demolition of the three villages, and critical infrastructure like British Airways’ headquarters and the Home Office immigration facilities, before any concrete is laid. It is also right up against the M25/M4 junction, and will require months, if not years, of delays and hundreds of millions of pounds of extra cost to cross the motorway.” Mr Lowe’s plan is also less expensive than the one offered by Arora Group, which would amount to approximately £12.4bn.

This scheme would involve a third runway but Arora believes the company and US partner Bechtel could deliver their project more efficiently.

Emma Gilthorpe, Heathrow’s executive director for expansion, said she thought the airport was now “increasingly confident” it could meet the challenge set by the Government to deliver an expanded facility with passenger charges close to current levels.