Airlines consider taking over building of Heathrow third runway

Carriers including British Airways owner International Airlines Group are reportedly considering taking over building the planned third runway at Heathrow due to fears over spiralling costs.

The Sunday Times said it had seen a document submitted to the Civil Aviation Authority by Iata and the Heathrow Airline Operators Committee proposing the formation of a special-purpose company, known as a buildco, to deliver the project.

“The airline community is interested in the idea of establishing a separate company (a ‘Buildco’) which would be responsible for the actual construction and delivery of the [third runway] expansion programme,” the document said.

“[Heathrow], the airlines and any interested third parties would effectively buy a stake in the buildco.”

A separate document submitted by IAG also says a special-purpose company should be considered as an option.

It says that it could be sold to the airport or a third party once the works are completed. Heathrow hopes the third runway will be built by 2025.

The airlines believe a buildco would ensure greater transparency and help to keep costs down.

Heathrow estimates that the bill for building the third runway will be about £14 billion, but there are fears the projected cost of the runway and related transport links could be overshot dramatically.

The government’s Airports Commission put infrastructure costs for the scheme at about £4 billion, while Transport for London has said they could exceed £15 billion.

IAG chief executive Willie Walsh told a parliamentary inquiry in February he had “zero” confidence that Heathrow’s operating company would deliver the project on time and on budget. He said it would be foolish to sign a “blank cheque”.

Heathrow said it was open to ideas, including the proposed buildco.

“We are willing to work with anyone who shares our values and who is committed to delivering on the promises we have made, a spokesman told the newspaper.

“As part of the robust regulatory process at Heathrow, airlines must approve every pound of our capital investment.”

Hotel tycoon Surinder Arora has also devised a plan to build the runway, winning interest from BA and Virgin Atlantic.

MPs are due to vote in the next few weeks on the expansion plans, which were backed by the government in October 2016.

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