The expansion will include a new runway to ease capacity constraints and could benefit the UK economy by as much as 61 billion British pounds and create as many as 77,000 jobs over the next 14 years, the Department for Transport said in a statement.
The United Kingdom has approved the 16 billion British pound (U.S. $20 billion) expansion at London Heathrow Airport, the Department for Transport said in a statement.
The expansion, which has become quite a controversial issue in the UK over the past few years, will include a new runway to ease capacity restraints at the busy airport. Still the number one airport in Europe by passenger volume, Heathrow has been losing market share to competitors like Frankfurt Airport in Germany and Paris Charles de Gaulle Airport in France, as well as fast-growing hubs in Dubai and Istanbul.
The construction of the new runway – the first to be built in southeast England since World War II – could benefit the U.K. economy by as much as 61 billion British pounds and create as many as 77,000 extra jobs over the next 14 years, according to the government.
The expansion is also expected to help increase cargo trade with growing markets in Asia and South America in and out of Heathrow, which already handles more freight by value than all other UK airports combined, accounting for 31 percent of the the country’s non-EU trade.
The Department for Transport noted that the bill for expansion costs will be paid by the private sector, not taxpayers.
“It will be for the Civil Aviation Authority (CAA), as the independent industry regulator, to work with Heathrow Airport Ltd and airlines operating at the airport, on the detailed design and costs to ensure the scheme remains affordable,” the department said. “The government expects the industry to work together to drive down costs to benefit passengers. The aim should be to deliver a plan for expansion that keeps landing charges close to current levels.
“This new runway will deliver major economic and strategic benefits to the UK, but it must be delivered without hitting passengers in the pocket,” it added. “The Airports Commission was clear that this is achievable as is the CAA.”
Under the deal, members of the local community most affected by the expansion will receive a mitigation package worth up to 2.6 billion pounds. The mitigation package includes a 125 percent markup for homes subject to compulsory purchase (plus stamp duty, legal fees and moving costs); over 700 million pounds for noise insulation for homes near the airport; 40 million pounds to insulate and ventilate schools and other community buildings; and as much as 450 million pounds could be available to local authorities through business rate retention.
A Community Compensation Fund could make a further 750 million pounds available to local communities, but the department said the actual amount will be determined during the planning process.
Prime Minister Theresa May said the government will allow for public comment on the decision before final plans are submitted to Parliament at the end of 2017. Foreign Secretary Boris Johnson, a prominent critic of the choice to expand Heathrow rather than the country’s second largest airport in Gatwick, has reportedly said he will continue to oppose the expansion.
“The step that government is taking today is truly momentous,” Transport Secretary Chris Grayling said of the announcement. “I am proud that after years of discussion and delay, this government is taking decisive action to secure the UK’s place in the global aviation market – securing jobs and business opportunities for the next decade and beyond.
“A new runway at Heathrow will improve connectivity in the UK itself and crucially boost our connections with the rest of the world, supporting exports, trade and job opportunities. This isn’t just a great deal for business, it’s a great deal for passengers who will also benefit from access to more airlines, destinations and flights.
“This is an important issue for the whole country. That is why the government’s preferred scheme will be subject to full and fair public consultation,” he added. “Of course it is also hugely important for those living near the airport. That is why we have made clear that expansion will only be allowed to proceed on the basis of a world class package of compensation and mitigation worth up to £2.6 billion, including community support, insulation, and respite from noise – balancing the benefits and the impacts of expansion.
Robert Keen, director general of the British International Freight Association (BIFA), a trade association representing UK freight forwarding and logistics providers, said his group was cautiously optimistic about the decision.
“Today’s news appears to be the beginning of the end of years of procrastination over the expansion of UK aviation capacity,” he said in a statement. “If that is the case, it is long overdue good news for our 1,500 member companies who have been dismayed over the ongoing delay on such a huge issue.
Because of the public consultation prior to a final decision, however, uncertainties about the plan remain, according to Keen.
“Whilst the UK Transport Secretary, Chris Grayling has hinted at an expedited planning procedure, with no reopening of high level arguments, the inevitable legal challenges and the convoluted parliamentary and planning processes that are also likely lead me to doubt that any expansion will be completed by the time that UK aviation capacity is predicted to run out in 2025,” he said.
“I hope I am proved wrong, but I won’t be booking a ticket for the opening ceremony just yet.”
UK green lights $20b expansion at London Heathrow
