Heathrow outlines £10bn ‘transformation’ to serve an extra 10m passengers a year

Heathrow has insisted a proposed increase in charges to airlines of £33.26 per passenger as part of a £10 billion upgrade plan would remain below 2014 levels in real terms.

 

The 17% increase between 2027 and 2031 from an average of £28.46 is outlined as part of a bid by the London hub to improve service levels and boost reliability.

 

Faced with a backlash from airlines, Heathrow insisted that its landing charges which are passed onto passengers had dropped 23% over the past decade.

 

British Airways owner International Airlines Group reportedly described the proposed hike in charges as excessive and amounted to a 25% price increase based on previously published numbers for 2024.

 

A Virgin Atlantic spokesperson said: “We totally agree that Heathrow needs to do better and dramatically improve the customer experience if is to become the airport that UK consumers deserve.

 

“However, only Heathrow with its monopoly power as the UK’s only hub airport, would think that this £10 billion investment plan represents value for money and that’s before any third runway expansion costs are factored into the equation. 

 

"Heathrow says that its shareholders will contribute £2 billion equity but it is ultimately consumers and airlines that pay the bill, with Heathrow’s proposal to increase passenger charges by 28% in 2027 compared to today.

 

"Heathrow is already the most expensive airport in the world and this proposal demonstrates Heathrow’s inability to invest capital wisely and efficiently.

 

"Therefore, we continue to call on the CAA (Civil Aviation Authority) to undertake an urgent fundamental review of Heathrow’s economic regulatory model, which is simply not fit for purpose.”

 

However, a Heathrow spokesperson said: "We set our charges to incentivise airlines to use cleaner and quieter aircraft when they operate here, reducing the impact of our operations - the research quoted by critics fails to consider this."

 

Outlining the five=year plan, the airport said: “This major infrastructure programme marks Heathrow’s most significant transformation in over a decade – including creating new space within existing terminals equivalent in size to 10 football pitches. 

 

"From smoother journeys to new lounges, shops and restaurants, the changes will make Heathrow a more enjoyable, resilient and efficient hub for millions of passengers each year.”

 

The £10 biilion private investment scheme was outlined as the airport reported a “slight dip” in June traffic to 7.3 million “amid global events”.

 

But Heathrow said: “Overall, demand continues to grow and passengers have enjoyed swift service in security and reliable flights ahead of another record breaking summer.”

 

The scheme “is the next plank in our strategy to climb back up the international rankings and be an extraordinary airport, fit for the future”.

 

Once complete, Heathrow will be able to serve 10 million more passengers a year, a 12% increase in capacity that supports airlines’ growth plans. 

 

But the plan overlooks 64-year-old Terminal 3, the oldest at Heathrow and used by Virgin Atlantic.

 

Heathrow said: “Our plan will deliver on what our customers say matters most to them. It will enable us to better serve our passengers, improve operational resilience and unlock growth for both airlines and UK businesses – with a boost to the UK supply chain in this Parliament. 

 

"It is a 100% privately financed investment in the UK’s hub airport that will make Heathrow more sustainable and prepared for a digital future. It can be delivered affordably with stretching efficiency savings of over £800 million and an airport charge that remains lower than it was a decade ago in real terms.  

 

“Over the past 12 months, we have been working closely with airline partners – including hosting over 120 hours of joint planning – and heard from more than 2 million passengers to understand what matters most, resulting in a customer-led investment plan which will span from 2027 – 2031.”

  

The aim is to see:   

• 99% of bags travelling with passengers 
• 80% of flights departing on-time 
• 95% of passengers waiting less than five minutes at security 
• A “step-change” in service with more choice for passengers requiring additional support  

“Behind the scenes, we are planning the redevelopment of the central terminal area and will seek planning permission to demolish the old Terminal 1, extend Terminal 2 and build a new southern road tunnel to improve access,” the airport noted.

  

Chief executive Thomas Woldbye said:  “We’re making good progress on our strategy to become an extraordinary airport - having become Europe’s most punctual major airport so far this year. 

 

“But our customers want us to improve our international rankings further, as do we. 

 

“To compete with global hubs, we must invest. Our five-year plan boosts operational resilience, delivers the better service passengers expect and unlocks the growth capacity airlines want with stretching efficiency targets and a like-for-like lower airport charge than a decade ago. 

 

“With Heathrow’s UK-based supply chain, this private investment will create jobs and drive national growth during this Parliament. We are ready to deliver the more efficient, sustainable Heathrow that will keep Britain connected to the world.” 

 

The CAA will review and evaluate the plan. 

 

Meanwhile, Heathrow has until July 31 to submit separate proposals for a third runway to the Department for Transport. These will be evaluated prior to work beginning on a formal planning application.