The hotelier behind Heathrow's growth plans

Heathrow Airport. Photo credit: Heathrow Airports Limited

As the looming Brexit risks isolating the UK from mainland Europe—with an increase in visas likely and the number of overseas visitors falling—the country needs to hold onto its global connections. To that end, Europe's busiest airport needs to grow—and some major hoteliers are pushing for Heathrow to expand its capacity. Late last month, Britain’s parliament approved plans for a third runway at Heathrow Airport, and the strategy now faces a public consultation ahead of a possible opening in 2026.

Increased Connections

Transport Secretary Chris Grayling said Heathrow was “full” and a new runway was needed to secure “a clear path to our future as a global nation in the post-Brexit world.”

Carolyn Fairbairn, director-general of the Confederation of British Industry, welcomed the decision. “The race for global competitiveness is well underway and the UK must now be quick off the mark,” she said. “Work on the new runway should start as soon as possible. The prize is tens of thousands of jobs and billions of pounds of growth for the British economy.

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“As the UK forges a new path to trade, we must also make the best use of existing runways in regions across the country. A truly global Britain will need increased connections and routes from the whole of the UK, now and for the future.”

If Heathrow is granted development consent following a planned public consultation, construction would begin in 2021 ahead of the third runway opening in 2026. 

“All I can say is, ‘Finally!’” said Philip Camble, director of Whitebridge Hospitality. “Even without Brexit, we need a new runway at Heathrow—and with Brexit, even more so if we are to fulfill the Brexiteers’ vision of a new global business and touristic powerhouse that has shunned its immediate neighbor and wants to embrace long haul markets.” For the moment, Camble noted, the UK does not have an “Asiatunnel” or “Ameristar” train service to the rest of the world. 

“In fact, if London is to grow and fulfill its true potential, the debate over Heathrow or Gatwick or even Stansted is moot,” Camble said. “We need new runways at all three. Airport capacity around London is running on near enough full and we need to respond to a market need, whereby the world wants to come to the UK and needs to be able to gain easy access.” As such, more runways are required.

Arora's Support

In June, hotelier Surinder Arora, chairman & founder of the Arora Group (which includes nine hotels, three of which at Heathrow), launched a legal battle to support his proposal for a new terminal and runway at Heathrow Airport that he claimed could save up to £6.7 billion when compared to the airport’s own plans.

Responding to the vote in favor of the runway, Arora approved of the government's backing of the plan. “While Mr. Grayling’s comments indicate that Heathrow Airport Limited [is] ‘currently the only credible promoter’ of the expansion project ‘in entirety’, we’re pleased to see the Airports NPS specifically avoids identifying any statutory undertaker as the appropriate person/s to carry out the preferred scheme, and in particular that the NPS reiterates the option for different components (such as the terminal) to be dealt with by different parties. 

“As such, the Arora Group remains committed to the expansion of Heathrow and will engage constructively with all relevant bodies to support the delivery of an expanded, world-class hub airport.”

Virgin Atlantic and IAG have both backed the plan, with the latter describing it as “fresh-thinking.” Willie Walsh, chairman of British Airways’ parent group IAG, described the plan as a “welcome alternative to the airport’s own costly scheme.”

Savings would come from changing the terminal design and taxi-way system while still maintaining the same levels of runway and terminal capacity, scrapping the expansion of Terminal 2, not building the passenger transit system for airside passengers which the group said airlines believed was not a necessity for their customers and reducing the site area by 23 percent.

An additional option would be to shorten the runway from the proposed 3.5 kilometers to 3.2 kilometers and moved to avoid the M25, saving a further £1.5 billion.

More Runway Growth

Other airports are looking to move on Heathrow’s hub status, most notably Istanbul New Airport, which will replace Ataturk Airport when it opens in October this year. The capacity of INA will be expanded to cater to up to 200 million people once all four phases are completed and will have a total of six runways and three terminals, with plans to be the region’s leading hub.

According to the International Passenger Survey, the UK welcomed 3.2 million overseas visits in October, down by 6 percent compared to October 2016. This included a 13 percent drop in business travelers. The fall has been attributed to factors including the lure of a weak pound falling, with the suspicion amongst some than the UK is falling in relevance as it leaves the EU. 

As Camble says, if the UK wants to stay connected, it needs to take dramatic action. 

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.