A BETTER HUB FOR BRITAIN… OR IS IT JUST FOR THE AIRLINES? 3 key claims by Heathrow Reimagined meet a reality check

You would think that we have had this debate for long enough now. The first discussions regarding a third runway at Heathrow began in the 1980s, with formal proposals appearing in the 1990s. Fast forward to today, and with many trials and tribulations in the rear-view for Heathrow Airport, it seems that progress is finally at hand.

Heathrow is the busiest two-runway airport in the world. The airport has already stretched its existing infrastructure to its absolute limits and cannot grow any further without physical expansion.

Expanding the airport is a once-in-a-generation infrastructure project that would deliver nationwide benefits, boosting the UK economy by £17 billion a year through increased tourism, trade, and jobs in every nation and region of the UK.

Despite this seal of approval, you would think that Heathrow could just get on with the job, and fast, but progress has not been straightforward.

Airlines say they support expansion in principle – after all, it offers them more room to grow in an immensely lucrative market. Heathrow passengers generate significant revenue for airlines – with BA’s recent financial results showing that based on operating profit, they make £48 per passenger. This is why carriers fight fiercely for slots and why Heathrow remains such an attractive operating base for them.

However, the inconvenient truth is that incumbent airlines at Heathrow actually benefit from the scarcity of Heathrow capacity.

The lack of capacity prevents new airlines from accessing and operating at the airport and thus limits competitive pressure for incumbent airlines. This allows them to charge higher air fares and sustain higher yields than would be possible in a more contestable market. Expansion, on the other hand, would introduce competition, unlock new routes, and reduce fares for passengers.

The way airport take-off and landing slots are regulated also ensures that existing capacity remains the preserve of incumbent airlines, since the so-called ‘grandfather right’ gives them indefinite usage rights over their slots as long as they keep using them. This not only effectively closes the market to the benefit of the incumbents but also boosts their market valuation. The value of Heathrow slots for incumbents – regularly traded for tens of millions of pounds, with some transactions exceeding $70 million per slot pair – reflects the extraordinary scarcity value they can extract from constrained capacity at no benefit to the airport. The benefits are far-reaching, as illustrated by an airline recently using its Heathrow slots as collateral for a $745 million loan.

Ultimately, while a capacity-limited Heathrow is a bonanza for incumbent airlines, the fact is that both consumers and the UK’s competitiveness end up paying the price of these scarcity rents.

The bottom line is, airlines benefit from prolonging the debate over Heathrow expansion by throwing shade on Heathrow’s plans and picking them apart with more and more ludicrous arguments – it is no wonder, as it plays out directly into their pockets.

But it’s essential that the conversation around Heathrow expansion is grounded in fact. Misinformation and selective use of data do a disservice to the UK economy and to the many stakeholders who stand to benefit from expansion – from passengers to airlines and the wider aviation industry. With so much misleading commentary circulating, it’s worth taking a closer look at some of the recurring false arguments and how speculation has been allowed to outrun reality.

1. Heathrow is the world’s most expensive airport

Reality check: Operating the busiest two-runway airport in the world next to a major capital and financial centre is expensive, but airlines are cashing in on this cost more than they care to admit.

London is one of the most expensive cities in the world as far as labour, infrastructure and construction costs are concerned. But this is not harming airlines – on the contrary. The economic and financial value of operating from Heathrow far outweighs the cost for airlines, as they can set higher air fares and pass the cost of Heathrow charges onto passengers. These two facts should not be considered in isolation.

For the passenger, airport charges are a small share of the overall ticket price – typically between 5% and 10% – yet airlines consistently present them as the primary cost driver. Competition with other airports impacts the menu of airport prices, while competition between airlines impacts the price of air fares. One important way to serve passengers is to allow capacity expansion and entry of new airlines. In fact, Heathrow’s charge is not only comparable to other European airports at 9% of the average fare, but it has come down by 17% in real terms over the past decade.

Even though passengers pay a fee to use the airport, passengers do not see that fee because it is collected by the airline when the passenger buys the flight ticket and then remitted to the airport. This means airlines are effectively bundling the customer-choice of passengers and then using that to leverage the airport. At the margins, airlines can and do shift their capacity. In fact, a 2023 study found that 55% of all routes had a change in capacity of more than 10% from one year to the next.

So, if airlines do not truly represent passengers’ interests, and airlines are benefiting from limited capacity at Heathrow, while the airport charges are heavily regulated, it becomes clear that critic’s views are less about passengers – and more about preserving the very scarcity that is so beneficial to incumbent airlines. In that debate, airlines represent their shareholders first – and where capacity constraints limit competition, their incentives do not align with passengers’ interest in lower fares and greater choice.

2. Passenger experience continues to decline

Reality check: Operational performance is a key driver of passenger experience – and by that measure, Heathrow has improved significantly.

Heathrow’s critics quote Skytrax ranking to back up their claim that Heathrow’s passenger experience is declining. They will be happy to know Heathrow has just been voted best airport in the world for shopping by Skytrax, and overall are rated 16th globally.

In 2025, over 4.2 million more passengers flew on time compared with 2024 and baggage and security performance continued to strengthen. 97.3% of passengers waited less than five minutes for security and baggage load rates were close to 99% resulting in smoother, more reliable journeys for passengers.

And passengers vote with their feet. 2025 was Heathrow’s busiest year to date, welcoming over 84.5 million passengers, securing its position as Europe’s busiest hub airport. Further incremental growth is forecast for 2026, with the airport on track for an uplift to 85 million passengers. Demand continues to outpace the limits of the airport’s current infrastructure reinforcing the need for expansion.

Sustained growth in passenger numbers – despite capacity constraints – indicates strong underlying demand for Heathrow as a hub.

3. Heathrow’s regulatory model needs fundamental reform

Reality check: Regulation already caps returns and protects airlines.

Arguably no other airport in the world is as tightly regulated as Heathrow. An independent, well-resourced, and expert regulator – the Civil Aviation Authority (CAA) – scrutinises Heathrow’s asset base, operating costs, and financing costs, and determines what the airport can earn and what it can charge. This regulatory system operates under a “single till” model, where all Heathrow’s commercial revenues from retail and parking are used to subsidise the charges paid by airlines for the use of the airport.

The CAA applies this framework because it deems that Heathrow holds significant market power – but also because it considers that the benefits of regulation outweigh the costs. And it is worth noting that the airlines’ own trade association, IATA, has long supported this model and sees it as best practice for airport regulation.

And yet, the critics are telling us that it doesn’t work. They want more.

In reality, the issue is not ineffective regulation. What’s really happening is airlines trying to push for lower user charges based on extreme and mostly biased assumptions.

Finding the “right” price for an asset like Heathrow is inherently challenging. It is not just any airport, but a vastly complex hub which happens to be a critical national infrastructure with significant operating and capital intensity. The existing regulatory system is designed precisely to manage all of that.

LET’S LET HEATHROW GET ON WITH THE JOB

Airlines argue that expansion will drive up charges and place additional financial burden on themselves and consumers. This concern deserves to be examined – but it does not hold when viewed against the realities of Heathrow’s regulatory framework and the economics of constrained capacity. In a regulated system where returns are capped, higher investment does not translate into unchecked pricing power. Yet, constrained capacity undeniably enables higher air fares.

Studies have shown that a 10% increase in connectivity boosts GDP per capita to the tune of 0.5%, underlining the economic cost of continuing this debate. The UK and its citizens will benefit from expanding Heathrow, so let’s just let the airport get on with the job. Airlines will find a way to back up their margins – as they always do.

The real question is whether the UK wants to prioritise its long-term competitiveness and global positioning – or preserve a system that essentially benefits a small number of incumbent airlines. The answer should be obvious.