Watchdog proposes rival bids for Heathrow's third runway to curb £33bn cost

Heathrow Airport Limited's current expansion plan calls for a new 2.2‑mile runway and a relocated stretch of the M25, with a total price tag of £33 billion. Critics argue the scheme would make the airport the most expensive in the world, pushing up charges for airlines and ultimately for passengers. The Civil Aviation Authority is reviewing four governance changes, including tighter spending controls and competitive tendering, to better serve consumer interests. In November the government said it favoured HAL's plan over a rival proposal from hotel chain the Arora Group, which had suggested a shorter, cheaper runway that would not require moving the M25.

The watchdog's proposal would allow an alternative developer to design, finance, build and operate a new terminal, earning revenue directly from airlines and competing head‑to‑head with Heathrow. This setup would mark a shift from the current model where Heathrow is the sole operator of any new infrastructure. Industry observers note that competition at Heathrow, once seen as unlikely, is now vigorous because the case for change has grown strong. Heathrow said it welcomed reforms that improve efficiency but cautioned against measures that could undermine its plans or slow economic growth.

If the CAA adopts competitive bidding, Heathrow could face pressure to justify its costs and potentially lower the overall price of the expansion. Airlines might benefit from lower access fees, while consumers could see slower ticket price growth. However, Heathrow warns that such changes could undermine its investment plans and delay the economic benefits the government expects from a larger airport. HAL's scheme would increase the airport's capacity to 756,000 flights and 150 million passengers per year if built as planned.