Runway costs will be greater than airports have estimated, says commission

Cost of a new runway for the south east has been underestimated by all three options still up for assessment the latest report from the Airports Commission has said.

Jackie Whitelaw
11 November 2014

Twitter FacebookLinkedIn

Print

Topics 

Airports

Its latest consultation reports review in detail costs and impacts of a new runway at Gatwick, the Heathrow Hub extended runway option and a new north west runway at Heathrow.

The commission found that:

• a new runway at Gatwick would be cheaper though possibly trebling the number of people affected by noise;
• the Heathrow options would be more costly but the GDP benefits would be significantly greater than Gatwick with major local impacts though at 5km distance “bundled quality of life” impacts would be broadly neutral.

Gatwick

Construction is estimated by the commission to cost £9.3bn, higher than Gatwick’s own estimate of £7.4bn.  Supporting infrastructure can be built in phases in line increase in passenger demand spreading the cost and with the potential that the final phase of construction may not be required, reducing the overall investment by £2bn.

In terms of financing Gatwick Airport Ltd may have to raise additional equity of up to c. £3.7 billion and additional debt of up to c. £14.3 billion. This level of finance is not unprecedented for infrastructure projects and airports. In addition it concluded:

• Passenger aero charges would need to be £15-£18 (currently £9)
• Surface access costs are put at £787M.
• Passenger numbers would more than double from 45M to 95M.
• GDP benefits would be £42-£127bn.

Heathrow Hub (dual operation runway extension)

Construction is estimated to cost £13.5bn compared to Heathrow Hub’s estimate of  £10.1bn.

Heathrow Airport Ltd would have to raise additional equity of £5.1bn and up to £24.9bn of debt putting it at the highest end of the range for financing ,infrastructure projects in the UK, a level described by the commission as “challenging”. In addition it concluded:

• Passenger aero charges could be £27-£28 (currently £20)
• Surface access costs of of £2.1bn to £6.3bn depending on scenario though cheaper surface access option of a Western Rail Access would have “transformative catalytic benefits for locations on the Great Western Main Line”.
• Passenger numbers would reach 126-142M (currently c72M)
• GDP benefits would be £101-£214bn

Heathrow new North West runway

Construction is estimated to cost £18.6bn compared to Heathrow Airport’s estimate of £14.8bn.

Heathrow Airport Ltd would have to raise additional equity of £8.4bn and debt of £29.9bn, putting the airport at the highest end of the range of financing for infrastructure projects. Inaddition is concluded:

• Passenger aero charges of £29 (currently £20).
• Surface access costs of £800M.
• Passenger numbers of 132-149M (currently c72M)
• GDP benefits of £112-£211bn.

You can read the consultation summary here.

You can find all the documents here.