Heathrow passengers face decades of higher fares after the regulator overrode airline objections to allow the airport to charge for planning work to build its proposed third runway.
The Civil Aviation Authority (CAA) said it had permitted Heathrow Airport Limited (HAL) to recover early costs of up to £320m spent on developing its expansion plan since 2025.
The money spent on planning will be recouped through higher charges to airlines, which are typically passed on to passengers in air fares, for about between 20 and 25 years.
The CAA said that it would also allow a rival expansion scheme, Heathrow West, led by the property billionaire Surinder Arora, to claim back the £4.1m it spent on its plan in 2025 before the government announced that HAL’s proposal was its preferred option. Arora’s refund, which the CAA said was needed to promote competition, will be paid out from Heathrow’s additional charges.
Current charges are about £26.22 a passenger. 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.
The move will fuel airline fears that construction of a third runway, which HAL estimates will cost about £33bn, will pile on charges and drive up fares.
British Airways, the largest airline at Heathrow, said early cost recovery 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 CAA’s director of consumers and markets, Tim Johnson, 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.
The £33bn cost of Heathrow’s planned third runway scheme includes additional terminal space and a £1.5bn project to divert the M25, the London orbital motorway. The runway would increase Heathrow’s capacity by about 50% to allow 756,000 flights and 150 million passengers a year.
A spokesperson for the airport said the expansion scheme would give passengers more choice while providing a “real economic boost to every region and nation of the country”.
“We have been clear from the start that unlocking the private investment that will deliver these benefits requires a supportive regulatory framework,” they said. “We are carefully considering the CAA proposals and will make investment decisions accordingly.”
The government launched a consultation last month on its Heathrow expansion national policy statement, setting out the conditions needed if the project was 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”.
A study by the New Economics Foundation based on official Department for Transport passenger number projections found that Heathrow’s third runway could divert thousands of jobs that would have accrued in Birmingham and the Midlands to the south instead.
