Publlished in The Times (available online here), Monday 10 February 2025.
By Heathrow Reimagined:
- Nigel Wicking, Chief Executive of Heathrow AOC
- Surinder Arora, Founder and Chairman of the Arora Group
- Luis Gallego, CEO of IAG (International Airlines Group)
- Shai Weiss, CEO of Virgin Atlantic
Heathrow expansion has re-entered the national debate, with aviation recognised for its crucial role in the government’s growth agenda. As Britain’s only hub airport, Heathrow should offer an exceptional experience for passengers but today it is the most expensive airport in the world, with a service that falls well short.
We believe that Heathrow can achieve much more for Britain. Record-breaking passenger numbers, an airport at near-full capacity and the prospect of a third runway all mask the fundamental problem with Heathrow.
For too long the regulatory model’s failure to constrain the monopoly has harmed consumers, led to squandered spending and diminished Heathrow’s hub status and competitiveness.
With the prospect of expansion, which would be paid for by passengers, it is now time for the regulator to take action.
This is why we have come together to submit our joint proposal to the Civil Aviation Authority (CAA) for an urgent and fundamental review of Heathrow.
This collective call is born out of the spiralling costs at the airport, which are being shouldered by customers and airlines alike.
Heathrow’s regulatory model actively encourages inefficient overspend and leads to the highest charges in the world, leaving passengers paying more for less.
This incentive to spend inefficiently has resulted in more than £15 billion of capital expenditure in the past two decades, which has led to charges doubling in real terms. This is far more than among its peers.
Heathrow’s price increases meant that in 2024 passengers and airlines paid £1.1 billion more than if its charges were in line with other big European airports. In return they get a declining experience and ageing infrastructure.
Heathrow is crucial to the government’s growth mission, supporting 133,000 jobs, delivering 76 per cent of Britain’s long-haul connectivity and processing 70 per cent of its air cargo by value. For Britain to remain competitive, Heathrow must be an efficient option for those connecting passengers.
With runway expansion plans being drawn up, the scale of investment means that passenger charges will rise again. It is now time for the CAA to investigate what has gone wrong before passengers and airlines get locked into higher charges for decades to come. It is more than 15 years since the last detailed review, undertaken by the Competition Commission. An airport that has been the most expensive of its peers for a decade but has failed to modernise at the same pace is a clear sign of a failure of the regulatory system.
Alternative international hubs have realised the opportunity to stimulate growth in more efficient ways. New terminals at Barcelona, Frankfurt, Madrid and Munich all cost half or less, when adjusting for terminal size, than the upgrades to Heathrow Terminals 2 and 5.
If Heathrow is to expand and build a third runway, it cannot continue to gold-plate its construction costs and spend inefficiently. As UK-based carriers and businesses, we of course support sustainable growth and expansion but only if it is affordable and offers value for money to UK plc. To achieve that there must be wholesale reform, which is necessary and achievable without delaying spades in the ground.
The time to act is now. The regulatory model is not fit for purpose. We are asking the regulator to undertake a fundamental review of Heathrow: the first step towards a reimagined Heathrow that delivers for consumers, the government’s growth agenda and the country.
ENDS
