The Civil Aviation Authority (CAA) has proposed changes that could end Heathrow Airport's decades-long monopoly over building and operating new infrastructure. Under the new 'alternative developer model,' rival companies would be allowed to bid for and manage major projects, including the construction of the highly anticipated third runway and a new terminal.
Competition to Drive Down Costs
The aviation watchdog's review of Heathrow's regulatory framework aims to introduce competition, which supporters argue will help keep passenger charges low. This model is already in use at other major hub airports such as Los Angeles International Airport (LAX) and New York's John F. Kennedy International Airport (JFK). The CAA also plans to force Heathrow to put all design, construction, and outsourcing contracts up for tender and extend the terms of some investment repayments.
Airlines Welcome the Shake-Up
Airlines have long criticized Heathrow's regulatory model, which has resulted in the airport being ranked as the most expensive hub airport globally for several consecutive years. Virgin Atlantic and British Airways-owner IAG have led a lobbying campaign called 'Heathrow Reimagined,' accusing the airport of gold-plating upgrades and passing costs onto carriers. Hotel tycoon Surinder Arora, whose previous bid for a shorter third runway was rejected, has expressed support for the CAA's consultation. He stated that competition at Heathrow is now 'very much alive and kicking.'
Next Steps
The consultation is open until June 15, after which Parliament is expected to vote on a policy document this summer that would green-light the third runway. The transport secretary would then approve a final proposal. Heathrow Airport Limited (HAL) could still win the bidding process under the new model. A Heathrow spokesman said the airport supports reform that boosts efficiency but warned against proposals that could delay economic growth.
