Heathrow expansion could be delivered by rival company - regulator

(Alliance News) - The possibility of Heathrow airport being expanded by a rival company has moved a step closer.

Regulator the Civil Aviation Authority announced that an alternative developer model is among four shortlisted options for how the west London airport could boost its capacity.

This would be consistent with the Heathrow West proposal by hotel tycoon Surinder Arora's company, Arora Group, to build, own and operate a third runway and new terminal at Heathrow.

The airport's owners – Heathrow Airport Ltd, HAL, – are keen to obtain permission to deliver the expansion project themselves, arguing that a single body maintaining control of all terminals would be more efficient.

An alternative developer would be in direct competition to HAL, which largely consists of overseas investors, led by private equity company Ardian and the sovereign wealth funds of Qatar and Saudi Arabia.

The implementation of this regulatory model would be dependent on amendments to the government's Airports National Policy Statement – which are set to be consulted on by July – and a developer obtaining planning permission.

Other shortlisted options include improving the existing framework for regulating the airport, such as more scrutiny of spending, and a model to support cost effective longer-term financing at the airport.

The final option would create new obligations on HAL to competitively tender elements of expansion – potentially resulting in a third party designing and building assets – while retaining overall responsibility for coordinating and financing the work.

A consultation on the shortlist will run until June 15.

Arora Group previously said it wanted to install a 2,800-metre new runway at Heathrow.

That would not require moving the M25 motorway, unlike the airport's own plan to build a full-length, 3,500-metre runway.

In November, Transport Secretary Heidi Alexander announced her preference for a full-length runway.

HAL's scheme is estimated to cost GBP33 billion, including GBP1.5 billion to move the M25, and is expected to be fully privately financed.

It would see Heathrow's capacity increase to 756,000 flights and 150 million passengers per year.

A Heathrow spokesperson said: "Heathrow's success as one of the world's top and most punctual airports is built on private investment and strong airline partnerships.

"We support reform that boosts efficiency, cuts red tape and keeps investment flowing, but not proposals which will undermine our efforts to improve the airport for consumers or delay the economic growth the country needs.

"We look forward to working with government and the regulator to turn these proposals into positive outcomes."

By Neil Lancefield, Press Association Transport Correspondent

Press Association: Finance

source: PA

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