Background
The planned new third runway at Heathrow is set to cost around £18 billion. This will be funded by airlines using Heathrow who are concerned about having to fund a spiralling bill. The airport’s regulator, the Civil Aviation Authority, has imposed a new condition on Heathrow’s licence to ensure that expansion costs are reasonable.
Who wanted the condition?
The airlines wanted the condition. They are concerned that there is little economic incentive for Heathrow to keep its costs down – as it can recoup all of its costs from airlines.
Who didn’t want the condition?
Heathrow didn’t want the condition. It argued the condition was unnecessary and that it might deter investment in the airport’s expansion.
What does the condition say?
The condition is reproduced below:
B3 Promoting economy and efficiency
B3.1 The Licensee shall conduct its business and its activities that relate to the provision of airport operation services at the Airport so as to secure the economical and efficient:
(a) operation and maintenance; and
(a) timely and appropriate enhancement and development of the Airport.
B3.2 In complying with Condition B3.1, the Licensee shall seek to secure that the reasonable demands of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services provided by the Licensee at the Airport are met. In so doing, the Licensee shall carry out appropriate consultation with users, airlines and other relevant stakeholders, including providing timely and accurate information to them, so that they can assist the Licensee to identify reasonable demands for airport operation services.
B.3.3 In complying with its obligations under this condition, the Licensee shall take into account all relevant circumstances, including the need for it to finance its provision of airport operation services at the Airport.
Have any other conditions changed?
The conditions that limit the amount the airport can charge airlines has extended. This was a 5 year condition ending in December 2019 but is now a 7 year condition ending in 2021?
Will the third runway happen anyway?
Boris Jonson pledged to stop the runway in the past and Labour have said they will stop it. Let’s see.
How can Pager Power help?
Pager Power can help with technical assessments of developments in the vicinity of Heathrow and other airports. For more information please contact us on 01787 319001.
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