UK government approves third Heathrow runway

The UK government has announced its support for a third runway at London’s Heathrow Airport, putting an end to years of lobbying and debates over how to increase airline capacity in the country’s congested south-east.

The news, described by Transport Secretary Chris Grayling as “truly momentous” in its ability to bolster the UK’s international connections, also gives a boost to the hub’s owners. These comprise Spain’s Ferrovial, Qatar Investment Authority, Canada’s CDPQ, Singapore’s GIC, US-based Alinda Capital Partners, China Investment Corporation and the UK’s Universities Superannuation Scheme.

The proposal, priced at £16.5 billion ($20.1 billion; €18.5 billion), was endorsed last year by the Airports Commission, which deemed it superior to rival schemes, including a second runway at Gatwick Airport and the more modest expansion of Heathrow’s northern runway. Yet suspected foot-dragging by the UK’s previous government over the move’s political ramifications had clouded the prospects for a near-term decision on the matter.

While the business community largely cheered the outcome, many also underlined the long road ahead for the project to properly take off, with residents, local MPs and environmentalists critical of the scheme.

“The decision should be seen as principally the end of the beginning and there are still many hurdles to be overcome before we see real lift-off for the scheme and spades in the ground in West London,” said Mark Elsey, a partner a law firm Ashurst.

The plan will now move forward as a draft national policy statement, with a parliamentary vote set to take place in about a year. A planning enquiry and a judicial review will likely ensue, following which building could start in 2020-21, with a view to having the facility operational by 2026.

Other challenges will include raising financing for the hefty project and overcoming big physical obstacles, such as re-routing or tunnelling London’s M25 motorway.

Airlines, which by and large welcomed the long-awaited decision, also expressed a note of caution. “We’re pleased that a decision has finally been made but the cost of this project will make or break it. The government’s directive to cap customer charges at today’s level is fundamental,” said Willie Walsh, chief executive of British Airways parent company International Consolidated Airlines Group.