Heathrow set for take-off?

On 25 October 2016 the UK Government announced its support for a third runway at London’s Heathrow Airport (R3). By virtue of Heathrow Airport’s position as one of the world’s busiest airports for international traffic, this is a significant announcement for the aviation industry.

The announcement provides a much-needed sense of direction in the debate about future runway capacity in London and the South East of England but it represents just the beginning of a long process. It is estimated that it will be at least 10 years before R3 is open and during that time, there will be opportunities for objections and challenges and scope to influence the way in which R3 is delivered.

In the following we walk through the process and the anticipated timeline that may deliver the new runway at Heathrow Airport.

The UK Government's first step following their announcement will be to put in place an Airports National Policy Statement (NPS) during 2017. This will:

• confirm the need for a new runway;
• the timeframe within which it should be provided; and
• that London’s Heathrow Airport is considered the most suitable location.

There will be opportunities for individuals and entities to register objections to the NPS or otherwise influence its content during the consultation phase in the first half of 2017. Once it is formally adopted or “designated” as a National Policy Statement by Government, later in the year, opponents to R3 can start to challenge the NPS in the Courts.

After the NPS is designated, this will formally establish the need for the new runway and its location for the purposes of the consenting process. However, the NPS is likely to contain within it issues that require to be considered carefully before consent can be given. This leaves open the possibility that after formal examination of these issues, the R3 proposal may be deemed unacceptable. In addition, whilst the NPS will clearly identify Heathrow Airport as the preferred location for a new runway, the NPS is very unlikely to exclude other sites (such as London’s second largest airport, Gatwick) completely so it is conceivable that the Government could yet grant consent for a new runway in another location.

Current indications are that Heathrow Airport Limited (HAL), the owner and operator of Heathrow Airport, will prepare and consult on its application for a development consent order (DCO) between 2017 and 2020. HAL expects to submit the application in March 2020 and secure a DCO by September 2021. Objectors and interested parties will be able to make representations on the R3 proposal during the examination of the DCO application. If the application is successful, opponents will have the opportunity to challenge the DCO legally.

As the process to realise R3 moves forward, both Government and HAL will work to put in place frameworks to ensure that the following 11 measures will be delivered as part of R3. The measures were identified as part of the Airport Commission's recommendation in favour of R3 and were considered necessary in order to ensure a better and more collaborative relationship between HAL and its local communities:

1. Ban on scheduled night flights
2. A restricted "noise envelope" for R3
3. Predictable periods of noise respite
4. Enhanced compensation for those who will lose their homes
5. A £1 billion community compensation scheme
6. Community engagement board
7. Independent noise authority
8. Training opportunities and apprenticeships
9. A shift in transport mode share away from the private car
10. Acceptable air quality performance
11. Rule out a 4th runway

In parallel with the consenting process the UK’s Civil Aviation Authority (CAA) is expected to initiate a new regulatory settlement structure for Heathrow which builds in the development, implementation and operation of R3 and to put this in place before March 2020. This will set a price cap on the aeronautical charge per passenger which is levied on airlines, taking into account projected revenue and expenditure (including operating expenditure, capital expenditure, cost of capital, passenger forecasts, commercial revenue etc.). HAL's position is that all of its planning and development costs should be recoverable through the new regulatory structure.

In addition, over a similar timescale, and by March 2020, it is anticipated that the CAA will take forward a plan for airspace changes to facilitate more efficient aircraft flow, reduce environmental impacts and optimise the capacity of the R3 proposal.

Finally, procurement and construction of R3 are expected to take place over the period 2021 to 2026 so that R3 is open and available for use by the public in 2026.

Given the potential for delays to occur at various stages of the process and the likely opposition to a third runway at Heathrow, a 10 year period for delivery of R3 is in fact quite a challenging timescale. With that in mind, and despite R3 being favoured by the UK Government, it would not be at all surprising if Gatwick Airport decided to press ahead with its own runway proposal. If there is delay to R3, Gatwick Airport may be able to demonstrate that it can meet the need for additional runway capacity identified in the NPS within the timescale identified by Government and potentially that a second runway at Gatwick need not prejudice the eventual delivery of R3. Anyone interested in the expansion of Gatwick still therefore needs to watch that space too.