The owner of London’s Heathrow airport will delay construction on its third runway program to reduce preparatory construction costs, which would be lost should the $18.2-billion project fail to take off. The decision follows the Civil Aviation Authority’s determination that the company should reduce its financial risk on the project by around $1 billion to safeguard passenger interests.
“We now expect to complete the third runway between early 2028 and late 2029,” according to owner Heathrow Airport Ltd. The company aims to raise up to $2.6 billion of private investment for the project over the next two years “at no cost to the taxpayer.”
Aiming to secure necessary approvals by 2021 and open the runway in 2026, HAL had planned to spend around $650 million on permitting procedures and another $3.1 billion on preparatory work, including construction, both at 2014 prices. However, the latter investment would be lost in case of project failure, with the cost ultimately being met by passengers through increased air fares, according to CAA.
HAL’s plan was anyway independently viewed as optimistic, even with the relatively high early construction investment, notes CAA. Additionally, HAL has so far failed to secure support for its preferred plan from airlines using the airport.