Heathrow passengers face higher fares as airport can recover early expansion plan costs

CAA says airport can recoup £320m through higher airline charges, which are usually passed on to travellers

Heathrow passengers face decades of higher fares after the airport was given permission to recover early costs from developing its expansion plan.

The Civil Aviation Authority (CAA) announced it had permitted Heathrow Airport Limited (HAL) to recoup £320m spent on its proposal to build a third runway since the start of last year.

It will recover the money through higher airline charges, which are typically passed on to passengers in air fares, for about 20-25 years.

Heathrow West, a rival expansion scheme led by the property billionaire Surinder Arora, has been given the go-ahead to recoup £4.1m it spent on its plan in 2025 up to 25 November, when the government announced that HAL’s proposal was its preferred option .

The CAA said its decision would increase the maximum airport charge per passenger by about 15p in 2028, rising to an estimated 30p in subsequent years.

British Airways, the largest airline at Heathrow, warned that early cost recovery by HAL would create a risk that expansion would be “unaffordable for consumers and inconsistent with a credible benefits case”, according to a CAA document.

Airlines have repeatedly complained that Heathrow has the highest charges of any airport in the world.

The money that can be recovered includes for the planning and design costs necessary to develop a credible expansion proposal, including preparing material to support a future development consent order (DCO) application. DCOs grant permission for big infrastructure projects to go ahead.

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 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.”

A separate process will be conducted to decide arrangements for costs incurred from 2027.

Last month the government launched a consultation on its Heathrow expansion national policy statement, setting out the conditions needed if the project is to be given the green light.

The then chancellor, Rachel Reeves, said she was determined to get “spades in the ground” for the third runway during the current parliament, and for it to be built by 2035.

Andy Burnham has previously expressed concerns over Heathrow expansion, stating the plans divert infrastructure investment “away from the north and traps it in London”.