Heathrow’s third runway wins UK parliament nod

Bloomberg

London Heathrow airport’s 16 billion-pound ($21 billion) expansion plan may have cleared its last major political hurdle, but the project has yet to convince British Airways, the hub’s biggest customer.
After UK lawmakers backed the construction of a third runway by 415 votes to 119, BA owner IAG SA responded by saying that the financing arrangements proposed by Heathrow are likely to increase user charges and effectively require present-day passengers to fund future flights.
“Parliament has approved Heathrow’s expansion without any idea of how much it will cost,” IAG CEO Willie Walsh said. “We have zero confidence in Heathrow management’s ability to deliver this project while keeping airport charges flat.”
Heathrow, which counts Chinese funds among its investors, said the vote backing the government’s national policy statement on airports, which enshrines the runway plan, was “momentous,” and will unlock billions of pounds in growth and create tens of thousands of jobs in the critical years after Britain leaves the EU.
CEO John Holland-Kaye said in an interview that the crowded airport has spent 18 months reducing the expense of the project, but won’t be pinned down to fixing the final cost before submitting its master plan at the end of next year. He said Walsh is “negotiating in public,” adding: “That’s his job.”
After decades of delays tied to concerns about extra aircraft noise, increased pollution, the demolition of homes and the impact on roads, construction should finally begin in 2021, he said. The new landing strip is expected to open in 2026, lifting annual capacity to 135 million travellers from 2017’s 78 million.
While Heathrow has pledged to keep charges close to today’s level, Walsh predicted “massive cost escalation” for the project in coming years, calling on the Civil Aviation Authority to stop Heathrow “rewarding its shareholders to the detriment of the UK.”
IAG has previously appealed to the Department for Transport to cap Heathrow’s charges, while lobbying the CAA to create competition within the airport by allowing terminals to be run by third parties. It argues that most US facilities are owned or leased by airlines.
While IAG, which controls 54 percent of Heathrow’s operating slots, would be a prime beneficiary of additional capacity, the limit on flights has inflated the worth of its existing
operation, bolstering fares on trans-Atlantic routes that are already among the world’s most profitable.
Heathrow says it has already shaved 2.5 billion pounds from the cost of expansion by switching to a sloping runway over London’s M25 orbital motorway to minimise tunneling work, and staggering the construction of terminal infrastructure as more flights are added.
Transport Secretary Chris Grayling told parliament that all five of London’s main airports will be full by the mid-2030s if the government fails to act. Heathrow has been close to capacity since the start of the decade, squeezing in more passengers only because its airlines are moving to bigger jets.
Enlarging Heathrow is “absolutely crucial to the UK as a whole,” Grayling said, with some businesses already switching to rival hubs Frankfurt, Amsterdam, Paris, which have made additional capacity provision.

Heathrow’s biggest investor plans to move HQ out of UK
Bloomberg

Heathrow airport’s biggest investor Ferrovial SA revealed plans to move its international holding company out of Britain — a day after the UK Parliament backed a $21 billion extension to the hub.
The Madrid-based builder, which led a 10 billion-pound takeover of the London airport’s owner in 2006, will domicile its non-Spanish assets in Amsterdam from next year as a legal safeguard against Brexit, a spokesman said.
The announcement came hours after lawmakers backed construction of a third runway at Heathrow in a vote on June 25, giving the green light to a project that’s been held up for decades.
Ferrovial, which has reduced its stake in the airport to 25 percent over recent years, said the timing of the announcement after parliament had signed off on the controversial growth plan was purely coincidental.
The group gets 20 percent of its revenue in the UK.