The Civil Aviation Authority (CAA) has permitted Heathrow Airport Limited (HAL) to recover £320 million spent on developing its third runway proposal since the start of 2024, a decision that will lead to higher fares for passengers over the next two to three decades.
Cost recovery and passenger impact
The regulator announced that HAL can recoup the costs through increased airline charges, which airlines typically pass on to passengers in ticket prices. The recovery period is estimated at 20-25 years. The CAA stated that the decision will increase the maximum airport charge per passenger by approximately 15 pence in 2028, rising to an estimated 30 pence in subsequent years.
Heathrow West, a rival expansion scheme led by property billionaire Surinder Arora, has also been granted permission to recover £4.1 million spent on its plan in 2025 up to November 25, when the government designated HAL's proposal as its preferred option.
Airline concerns and regulatory safeguards
British Airways, Heathrow's largest airline, warned in a CAA document that early cost recovery by HAL creates a risk that expansion will be "unaffordable for consumers and inconsistent with a credible benefits case." Airlines have repeatedly criticized Heathrow for having the highest charges of any airport globally.
The recoverable costs include planning and design expenses necessary to develop a credible expansion proposal, such as preparing materials for a future development consent order (DCO) application. DCOs are required for major infrastructure projects to proceed.
Tim Johnson, the CAA's director of consumers and markets, said: "Our decision strikes a balance between supporting the delivery of benefits to consumers through timely progress on Heathrow expansion, whilst also protecting them from undue increases in costs. The costs Heathrow can recover are capped, independently scrutinised and subject to efficiency reviews, helping ensure that passengers only pay for efficient costs that are justified."
Government stance and political context
A separate process will determine arrangements for costs incurred from 2027 onward. Last month, the government launched a consultation on its Heathrow expansion national policy statement, outlining conditions required for project approval. Former chancellor Rachel Reeves expressed determination to get "spades in the ground" for the third runway in the current Parliament and to have it built by 2035.
Prime Minister Andy Burnham, who dismissed Reeves, has previously voiced concerns about Heathrow expansion, stating that the plans divert infrastructure investment "away from the North and traps it in London." Over 23 million passengers are expected to pass through Heathrow this summer.
