Latest News Tue, Mar 22, 2016 5:10 PM
Heathrow has announced £3 billion of investment in Heathrow airport in addition to the £11bn that has been invested since 2003.
The announcement forms part of the airport’s business plan for ‘Q6’ – the regulatory period which covers 2014-2019 – and it represents one of the largest private-sector investments in UK infrastructure.
The plans include the completion of Terminal 2 and the early works on extending the building; the development of a new integrated baggage system; and the construction of new taxiways and stands which will allow Heathrow to accommodate more of the most modern aircraft.
Heathrow is the UK’s only hub airport, accounting for 78% of all long-haul flights from the UK. Every five years the Civil Aviation Authority (CAA) scrutinises the airport’s capital expenditure plans, operating costs and commercial revenues to set the maximum amount the airport is permitted to charge airlines over the coming period. The publication of the airport’s business plan for 2014-2019 serves as an input to the CAA’s decision.
Like much UK infrastructure Heathrow historically suffered from out-dated facilities and decades of under-investment. Since 2003, Heathrow has invested £11 billion in the airport – one of the UK’s largest private sector investments. Investment includes the construction of Terminal 5, a new Terminal 2 due to open in 2014, new baggage tunnels, and the refurbishment of Terminals 3 & 4.
Operational performance has improved and passengers say they notice the difference. The proportion of passengers rating their journey as ‘very good’ or ‘excellent’ has increased from 48% in 2007 to 72% today. The airport has moved from the bottom to the top quartile of EU airports for passenger satisfaction, and in 2012 Terminal 5 was voted the world’s best airport terminal.
Heathrow has announced a further £3 billion of investment focussed on better customer service; increased airport resilience and reliability, and improved environmental performance. The plans include ten priority areas for Q6:
Colin Matthews, Chief Executive of Heathrow said: “Heathrow is the UK’s only hub airport and a strategically important national infrastructure asset. Heathrow faces stiff competition from other European hubs and we must continue to improve the service we offers passengers and airlines.
"We have invested billions of pounds in new facilities such as Terminal 5 in recent years and passengers say they have noticed the difference. Our plan for a further £3 billion of private-sector investment will further improve the airport for passengers. The plan represents good value for money for airlines and passengers and comes at no cost to taxpayers.”
Heathrow’s business plan also needs to deliver a fair return to shareholders to encourage future investment in the UK. Over the Q5 regulatory period passenger numbers have fallen 10% below the level anticipated by the CAA, resulting in Heathrow receiving around £650 million less than the allowed return from aeronautical charges. Heathrow cannot recover this cost now or in future. Correcting the passenger forecast for Q6 inevitably results in increased prices.
The CAA will now develop and consult on its own proposals for Q6 before coming to a final decision on airport charges in January 2014.
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