Photographer: Matthew Lloyd/Bloomberg

Heathrow Seeks Cheaper Third-Runway Plan With Phased Expansion

  • London hub proposes gradual growth of its existing terminals
  • Move would shave ‘several billion’ from construction costs

London’s Heathrow airport could scrap plans for new terminal buildings serving its 16 billion-pound ($21 billion) third runway in favor of a phased expansion of existing infrastructure adding “5 million passengers at a time,” according to Chief Executive Officer John Holland-Kaye.

The proposal would see incremental growth at Terminals 5 and 2, currently used by British Airways and Star Alliance carriers respectively, saving “several billion pounds” by doing away with new tunnels, passenger transportation and baggage systems, Holland-Kaye said in an interview Thursday.

“It also means we can add capacity in smaller chunks, rather than building a whole new terminal for 20 or 30 million passengers in one go,” he said. That way demand from airlines can be better matched to supply, he added.

Heathrow plans to fund a third runway from the private sector while keep landing charges close to current levels. Willie Walsh, CEO of IAG SA, whose BA arm operates more than 50 percent of flights at Heathrow, says the current fees are already too high, while U.K. Transport Secretary Chris Grayling has said keeping them flat will be a condition for the project’s final approval.

Holland-Kaye said he’s developing a series of options for delivering the third runway, which got the green light from Prime Minister Theresa May’s government in October, and will publish them toward the end of this year for public consultation. A plan to span the M25 motorway with a sloping runway, rather divert the road into a tunnel, is also under consideration, though BA says a shorter strip should be built, saving 3 billion pounds.

Heathrow, Europe’s busiest hub, posted a 4 percent gain in sales and passenger numbers for the first half, as well as a 9 percent jump in cargo volumes, with exports and foreign visits spurred by the pound’s slide since last year’s vote to quit the European Union. Pretax profit rose 36 percent to 102 million pounds.

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