Heathrow set to announce multibillion-pound investment – as it prepares proposal for third runway | Money News

Heathrow is set to announce a multibillion-pound expansion plan to create extra capacity at the airport – as it prepares its proposal for a third runway.

The UK’s biggest airport has announced a “once-in-a-generation investment” beginning this year to improve existing buildings and boost passenger numbers.

The development is separate from a new runway – which the government recently announced support for – and will be funded by Heathrow shareholders with airlines and customers charged for the expanded services.

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As part of the investment, the capacity of terminals two and five will be increased and the layout of the airfield will be reconfigured in a bid to improve punctuality and to increase the number of aircraft stands.

In a speech on Wednesday, chief executive Thomas Woldbye is expected to say: “This privately-funded programme will upgrade existing infrastructure while laying the groundwork for a third runway, boosting UK investment and economic growth, with tangible benefits felt this year.”

Heathrow was last month criticised by Europe’s largest airline Ryanair for being “incredibly operationally inefficient”. Because of this, Ryanair chief executive Michael O’Leary said the airline had no interest in and would “never” fly from the airport, even if it were free.

Proposals for a third runway will be submitted to the government “by summer”, the airport said, after Chancellor Rachel Reeves backed the expansion as part of her aim of growing the economy.

The support is seen as controversial as many senior Labour politicians such as London mayor Sadiq Khan and cabinet members including Energy Secretary Ed Miliband have long opposed a third runway on environmental and health grounds.

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It’s unclear how the additional carbon emissions from the extra flights would be compatible with the state’s legally binding 2050 emissions reduction targets.

A third runway?

Doubt has been cast over whether a runway could even be built during Labour’s time in power. The process would have to be planned and approved before construction could begin.

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Rivers and the M25 road would have to be diverted and hundreds of homes would need to be demolished as part of construction.

Ryanair’s Mr O’Leary said the chance of it being built was “slim” but it could be 2050 even if it does get built.

A question over the third runway’s ability to boost the economy was raised by left-leaning thinktank the New Economics Foundation (NEF)

According to its analysis, growth in the number of business travellers – who may grow commercial links – has ceased and instead, passenger growth has been driven by wealthy British residents rather than foreign tourists entering the country.

The air travel industry is also one of the poorest job creators in the economy per pound of revenue, the NEF said, while the environmental downsides of more flights are “significant”.

Steel pact

As part of interim, pre-third runway expansion Heathrow signed a charter to maximise opportunities for the use of British steel, a move welcomed by steel bosses, unions and the government.

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