CAA proposes Heathrow be allowed to recoup £320m in expansion costs

The aviation regulator intends to allow Heathrow to recover up to £320 million in early costs related to its £33 billion third runway expansion plans.

The Civil Aviation Authority said the draft decision, which is now subject to statutory consultation, would enable the London hub to recoup costs incurred during 2025 and 2026.

The CAA said: “This would allow Heathrow Airport Limited to have the resources necessary to continue its work on expanding the airport. 

“Early costs include planning and design costs which are needed to develop a credible expansion scheme at Heathrow, including preparation of material to support a future Development Consent Order application.”

The decision would also allow rival scheme Heathrow West to recover up to £4.3 million of early costs it had incurred up to November 25, 2025, when the government announced the airport’s proposals as its preferred scheme to expand capacity. 

“This is consistent with the regulator’s statutory duty to, where appropriate, promote competition in the provision of airport operation services,” the CAA noted.

The regulator added: “As well as the cost cap, the regulator’s proposals outline strong consumer protections including the appointment of an independent technical expert to provide ongoing monitoring and assurance; requirements for the transparent reporting of costs; reopener mechanisms should there be a future change of circumstances, and a further efficiency review of these costs.”   

The CAA aims to publish a final decision on early costs recovery and a statutory notice on the necessary modifications to Heathrow’s licence in the summer “following consideration of responses to this consultation”.

Responses to the CAA consultation are due ​by May 18, with a final decision expected in July, according to the regulator.

Heathrow last week warned of an “uncertain” few months ahead as capacity constraints limit its ability to support a shift in global aviation demand resulting from the Iran war, saying its growth “remains slower than Eu competitors as runway slots are full”.