Heathrow Airport, operated by Heathrow Airport Limited (HAL), is Britain's main international airport. It is the second-most expensive major airport in the world for passengers, with landing fees of £26 per person (compared with £13 at Gatwick). The airport is highly congested, with over twice as many flights per runway as competitors like Amsterdam Schiphol, which has six runways. It has less than half the space of its main European rivals.
Efforts to build a third runway have repeatedly failed, beaten back by opposition from west Londoners on noise and air-quality grounds. Rachel Reeves, the chancellor, championed the project as a growth measure in 2024. The government wants to grant planning approval by 2029, with the runway operational by 2035, though legal challenges are considered inevitable.
HAL estimates the airport's expansion and modernisation will cost £49bn in 2024 prices—enough to build about 40 hospitals, making it one of the costliest airport expansions ever. That is nearly twice the price of Dubai's plan to build four more runways at its new hub. International Airlines Group, which owns British Airways and operates 60% of Heathrow's flights, backs the runway only if it costs £30bn or less, warning that the current plan could double landing fees.
The runway must be built over one of the busiest parts of the M25, London's ring road, which carries more than 200,000 vehicles a day. Land acquisition was estimated in 2014 to cost at least £4bn. Paperwork costs associated with planning applications alone are on track to exceed £1bn. Over £700m was previously earmarked for noise insulation in neighbouring homes. The plan includes £1.3bn for two car parks and £27bn for new and revamped terminal buildings.
As a privately owned company with considerable market power, HAL is regulated by the Civil Aviation Authority (CAA), which determines how much the airport can charge. HAL is allowed to earn a regulated return on its investment—so the more it spends, the higher its profits. Surinder Arora, a billionaire owner of surrounding hotels, has pitched himself as an alternative developer. Robert Jenrick, Reform UK's would-be chancellor, has promised emergency legislation to give Heathrow full planning consent.
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