Transport Committee
Wednesday 14th October 2026
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09:22
Alex Mayer
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Alex Mayer
Order, order! Welcome to this morning's evidence session. This is the sixth and penultimate session of our scrutiny into the government's draft Heathrow expansion National Policy statement. I'd like to welcome my colleague Chris Hinchcliffe MP, joining us as a guest from the Environmental Audit Committee. We'll be hosting two panels today, hearing evidence, first from Heathrow. Heathrow West Limited . First. Who developed the some alternative expansion proposals and from Heathrow Airport Limited.
Secondly, could I ask our first panel of witnesses to introduce themselves? Surinder.
Secondly, could I ask our first panel of witnesses to introduce themselves? Surinder.
09:23
09:23
09:23
09:23
09:23
Speaker 1
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Speaker 1
Yes, chair, I think it is. And, you know, we've been talking about expanding Heathrow for more than three decades as a nation. I think we need it not just for expansion growth, but connectivity for businesses, for people. And if we don't do it, then other countries, other airports, such as whether it be Istanbul, Dubai and other airports, Charles de Gaulle and Schiphol will be left in the back of the queue. And we certainly as a nation don't want to do that.
So.
So.
09:23
Alex Mayer
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Alex Mayer
Yeah, okay. Just in terms of timing before January 2025 and Rachel Reeves Chancellor's statement, you met myself and other MPs with airlines concerned about the current operation of Heathrow for you as tenants. In effect, were you working on runway three at that point? So were you working on a runway three proposal at that point, or is this has your work only started since the government announcement?
09:24
09:24
Alex Mayer
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Alex Mayer
The answer is yes. You were. Okay. Sorry. You know, we've got we are on a time limit, I'm afraid. So thank you for that. So as promoters, you'll be required to provide an assessment of the project's economic impacts across the country. Is it clear to you what you'll need to provide to satisfy the economic growth test?
09:25
09:25
Speaker 2
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Speaker 2
Yeah, I think, I think that there's there's lots of areas that the economic benefits cover, whether it's jobs, whether it's growth, whether it's employment. So I think there's lots of different areas. I think what's. So it's clear that you have to demonstrate the benefits across the piece. I guess the issue is the relative importance of each of those areas that you need to demonstrate to. So from our perspective, more clarity on the relative merits of different types of benefits would be would be helpful.
09:25
09:25
09:26
09:26
Speaker 2
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Speaker 2
So so the, the, the benefits need to go across the national benefits, the local regional benefits. So you've got to cover all of those areas and how it impacts for, you know, whether it's the construction, the ongoing operation, the business, once it's up and running. So you've got to cover all of those benefits to, to the wider economy. So I think it's clear that we need to demonstrate that. So there's no issue with that. I guess the question is the relative benefits to the UK in total the regions and local.
So I think that that's where, you know, some more guidance would be helpful. But absence of that is up to ultimately the Secretary of State to decide which one is the the most important.
So I think that that's where, you know, some more guidance would be helpful. But absence of that is up to ultimately the Secretary of State to decide which one is the the most important.
09:26
09:26
09:26
Laurence Turner
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Laurence Turner
I'm interested, gentlemen, in in getting your perspective on a square that I'm finding difficult to circle within the national policy statement and the underlying assumptions behind it in terms of affordability and viability and, and how that balance is off against some of the environmental questions. And so as a starting question that I'm interested in, the the DFT central forecasts used in the appraisal to sort of come up with their carbon impacts of, of what an expansion would, would mean, assume that 74% of Heathrow's additional passenger increase through expansion would come from other airports .
As a commercial group yourselves. I wonder how you feel about that in terms of, you know, these other airports have got expansion or expanding themselves. They're approved to do that. They will inevitably want to fight for their share of the market. Do you feel that that is a realistic prospect for you to take 74% of your increase from other market share, rather than from additional demand that wouldn't otherwise be there?
As a commercial group yourselves. I wonder how you feel about that in terms of, you know, these other airports have got expansion or expanding themselves. They're approved to do that. They will inevitably want to fight for their share of the market. Do you feel that that is a realistic prospect for you to take 74% of your increase from other market share, rather than from additional demand that wouldn't otherwise be there?
09:28
Speaker 2
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Speaker 2
So I think the there's obviously quite a complex question, but I think the airlines are best placed to answer that type of question, because ultimately they fly the planes and they choose the routes they fly on. But I think the Heathrow is a hub airport. So it's the only hub airport in the UK. So I think what's important here is making sure you have improved domestic connectivity to and from Heathrow Airport, which then brings in the benefits for around the country to Heathrow and where you have local connectivity around the regions, direct flights to X, Y and Z, then that's great.
But because of the critical mass at Heathrow, there are certain flights that you can only go from from Heathrow, so it only warrants it at Heathrow Airport itself because of the hub impact. So I think you need that feeder traffic coming from the regions to feed the international traffic through Heathrow. And that's where the real benefit comes.
But because of the critical mass at Heathrow, there are certain flights that you can only go from from Heathrow, so it only warrants it at Heathrow Airport itself because of the hub impact. So I think you need that feeder traffic coming from the regions to feed the international traffic through Heathrow. And that's where the real benefit comes.
09:28
Speaker 1
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Speaker 1
And if anything actually Heathrow expansion would support the other regional airports. From connectivity point of view, do we want our passengers from Scotland or north of England or Wales actually going via Paris or Amsterdam, or do we want them coming through and connecting from Heathrow? So again, that all creates jobs and opportunities and expansion. Growth.
09:29
09:29
Laurence Turner
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Laurence Turner
So it sounds like it's not a concern from your perspective. That assumption of displacement overall from other airports, that the sort of second step on the affordability question is we had the climate change committee in front of us yesterday on this inquiry. They've made very clear recommendation to the government that no DC DCO should be granted until it is in, until the government has legislated for 100% of aviation costs, or in terms of environmental impacts, to be covered by the aviation industry.
And they're also very clear about the need to have contingency plans. If, for example, that displacement isn't where all of the growth comes from and there is additional travel instead resulting in more emissions, therefore, there would be higher costs on the aviation industry to offset that, they said that's down to, you know, the scheme promoters to decide whether that is a concern for viability. So given your written evidence about the importance of affordability, does that leave you with concerns? If you know in the future that you should be legislated for 100% of the costs, and it's possible that you have to bear additional costs in a contingency situation?
And they're also very clear about the need to have contingency plans. If, for example, that displacement isn't where all of the growth comes from and there is additional travel instead resulting in more emissions, therefore, there would be higher costs on the aviation industry to offset that, they said that's down to, you know, the scheme promoters to decide whether that is a concern for viability. So given your written evidence about the importance of affordability, does that leave you with concerns? If you know in the future that you should be legislated for 100% of the costs, and it's possible that you have to bear additional costs in a contingency situation?
09:30
Speaker 2
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Speaker 2
Yes. So in our submission, we said that affordability needs to be a pass or fail test. So if the scheme is not affordable, then it shouldn't proceed. Whether that's us or whether that's Heathrow Airport Limited. So we're quite clear that it should be pass or fail test and it shouldn't be overridden by anything else. So it should. Otherwise you don't bring the benefits to the UK economy and and more widely. So I think that as a as our start of a.
Ten but there is the balance, of course, between growth and the environment and impacts. And so it's how you balance those two out. And I think that's where, you know, the national policy is trying to tread that path between those two areas. And how do you balance the impacts to the environment, communities, local communities versus growth to jobs locally, more regionally and more generally for UK GDP? So I think the reality is you can put in more requests and requirements on the environmental side.
Ultimately that needs to be paid for and it should be paid for by in simple terms, by the travelling public. So the question is if you if you tip it too much, then actually the growth no longer becomes, in your words, viable. So it's that it's that balance between the two.
Ten but there is the balance, of course, between growth and the environment and impacts. And so it's how you balance those two out. And I think that's where, you know, the national policy is trying to tread that path between those two areas. And how do you balance the impacts to the environment, communities, local communities versus growth to jobs locally, more regionally and more generally for UK GDP? So I think the reality is you can put in more requests and requirements on the environmental side.
Ultimately that needs to be paid for and it should be paid for by in simple terms, by the travelling public. So the question is if you if you tip it too much, then actually the growth no longer becomes, in your words, viable. So it's that it's that balance between the two.
09:31
09:32
Speaker 2
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Speaker 2
Well, I think you have to run through all the numbers and see how you can actually make it work or not make it work. So I think, you know, climate is one of those issues. Surface access is another one. And obviously it's interrelated in terms of people coming to and from the airport by sustainable travel. So how do you get that modal shift over time? So for me, that's one of the biggest issues for people coming to and from the airport, but also the environmental impact that has as well.
So how do you how do you demonstrate surface access can, is can be sustainable in the long term when you grow the airport by a significant amount.
So how do you how do you demonstrate surface access can, is can be sustainable in the long term when you grow the airport by a significant amount.
09:32
Speaker 3
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Speaker 3
I think the final point would be, yes, it it needs to be assessed properly. It it is a concern because it needs to be properly assessed. As Carlton says, we haven't got the numbers yet to be able to do that properly. But because we're promoting a smaller, lower cost scheme, we're more confident that we can offset those costs because there's more headroom in there. So I think that's the key point about trying to promote a smaller scale, more sustainable solution to the ask.
But it's still a concern, but it does need to be taken into account in the whole cost benefit analysis of the scheme. When we get to that stage.
But it's still a concern, but it does need to be taken into account in the whole cost benefit analysis of the scheme. When we get to that stage.
09:33
Speaker 1
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Speaker 1
I think I would just add to what Carlton just said. At the end of the day, either scheme or any scheme has to be affordable. If it's not affordable, then people won't use the airport, the airlines won't come in and be able to afford to come into Heathrow. And, you know, the that's another point from Scott's side that asking being so much more efficient, less land, take less cost in billions.
And that's, again, something, you know, for the committee and the government to, you know, at the end of the day, we are here in a democratic system. We must do what the government decides. At the end of the day, we have to follow the rules and regulations, and we'll deliver if we can afford to do it, if we can afford to deliver it where it works for the airlines and the consumer, what we can't do is build something, and we are 3 or 4 times the price of Schiphol or Charles de Gaulle or other airports.
Then it will become a ghost town.
And that's, again, something, you know, for the committee and the government to, you know, at the end of the day, we are here in a democratic system. We must do what the government decides. At the end of the day, we have to follow the rules and regulations, and we'll deliver if we can afford to do it, if we can afford to deliver it where it works for the airlines and the consumer, what we can't do is build something, and we are 3 or 4 times the price of Schiphol or Charles de Gaulle or other airports.
Then it will become a ghost town.
09:34
Alex Mayer
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Alex Mayer
Obviously, you know, we've had the airlines in front of us, and I know you have close relationships with the airlines at Heathrow, taking into account your CapEx is is lower than the whole scheme. But the carbon cost, the surface access. You've mentioned noise mitigation costs, which we'll come on to are roughly the same. It is is the scheme viable in the context of the amount the the airlines are prepared to pay?
09:35
09:35
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09:35
Speaker 1
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Speaker 1
Yeah, we're a business. case stacks up. We wouldn't be. Absolutely. From our point of view, what we've come up with is we you know, a lot more work needs to be done. But so far what we've done, we've we are spending millions on you know, I've always said Surinder knows nothing. But what I have always done in life is bring the best team, best people around me.
And, you know, we haven't had a new runway built Heathrow in the southeast since the Second World War. We brought in people like Bechtel, who worked on more than 180 airports, Stantec, more than 200 airports around the world. So we've got the best team around us to deliver it. Okay.
And, you know, we haven't had a new runway built Heathrow in the southeast since the Second World War. We brought in people like Bechtel, who worked on more than 180 airports, Stantec, more than 200 airports around the world. So we've got the best team around us to deliver it. Okay.
09:35
09:35
Speaker 5
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Speaker 5
Yeah, just very quickly, Surinder. I mean the this question of, you know, the regional airports connecting to Heathrow. I mean, I don't think people go into Edinburgh Airport want to be choosing between whether or not they go via London or Paris or Frankfurt. They want to go direct to, you know, China, North America, etc.. I mean, so so when you talk about all these extra flights going from Edinburgh to London, that worries me because I want direct flights from Edinburgh to my destination, not not to go via Heathrow or Paris or Frankfurt.
09:36
Speaker 1
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Speaker 1
I Scott, I would love that. Except in life is never ideal for any of us. And if you turn around and said, actually, I'd like similar number of connectivity as Heathrow from Edinburgh or Glasgow, it just can't be done unless you're going to build 3 or 4 runways at Edinburgh or Glasgow. Otherwise you can't. It's. So it's really trying to get the best and it's actually the connectivity for not just the holidaymakers, but it's for the businesses.
And it's actually, you know, yes, there might be one airport that you might be able to fly to Edinburgh. Like now you have flight to Dubai and other places from Scotland, which is great. So that's something we should always cherish. But I think what we're trying to look at is UK plc and say, what's the best can we do? Instead of losing out to Schiphol, Charles de Gaulle or other places, Madrid and other places, we want to bring the business and jobs into into the UK.
And it's actually, you know, yes, there might be one airport that you might be able to fly to Edinburgh. Like now you have flight to Dubai and other places from Scotland, which is great. So that's something we should always cherish. But I think what we're trying to look at is UK plc and say, what's the best can we do? Instead of losing out to Schiphol, Charles de Gaulle or other places, Madrid and other places, we want to bring the business and jobs into into the UK.
09:37
Speaker 2
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Speaker 2
And I just add to that. I think the is the route viability that's the issue there. So so on on well-trodden path where there's lots of demand for those routes out of regional airports, then that works. I think for the more long haul flights, it makes it more difficult because you need the critical mass. And that's where Heathrow comes in. That's why Heathrow is the only hub in the UK, because you have to have that critical mass somewhere.
And at the moment it's Heathrow Airport.
And at the moment it's Heathrow Airport.
09:37
09:37
Speaker 5
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Speaker 5
Yeah. And, you know, and perhaps you might say that the reason Edinburgh has so many of these direct connections around the world is because those flights can't run from Heathrow just now. And, and so Edinburgh is benefiting from that. And to me, this benefit would be to have to go via London, to go to Washington or New York. I'm not I'm not trying to advertise for Edinburgh airports routes, by the way. Yeah.
You know, so that seems like a disbenefit to me. But I know it's a I know there's a balance. Back to the chair.
You know, so that seems like a disbenefit to me. But I know it's a I know there's a balance. Back to the chair.
09:38
Laurence Turner
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Laurence Turner
Well, I think I just really wanted to probe one last time for clarity on this point of, as I said, the KSI is very clear about needing the government need to have contingency measures in place which would, if they, if they needed to be brought into place, would apply additional costs to your industry, which would, of course affect the affordability and the viability of the scheme. And what what I haven't yet heard is a sort of direct answer as to whether you are confident at this stage that your scheme is not at risk.
If the government says, we're going to have a whole bunch of contingency measures, and hypothetically, here's the additional cost you will have to bear if we bring them in. I'm just a sort of clear answer as to whether, whether that's a risk you're willing to take on a commercial basis at this point.
If the government says, we're going to have a whole bunch of contingency measures, and hypothetically, here's the additional cost you will have to bear if we bring them in. I'm just a sort of clear answer as to whether, whether that's a risk you're willing to take on a commercial basis at this point.
09:39
Alex Mayer
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Alex Mayer
Or sorry, or are any of the mitigation measures in order to implement the four tests, not just not just carbon, but community mitigation, surface access and so on? Are they at risk if and won't happen if the government decides it goes ahead? Whatever. Is there a risk there set aside and then the airport grows. Whatever.
09:39
Speaker 2
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Speaker 2
The government has been clear, there's four tests that you can't obviate from, so you have to deliver on the four tests. We're suggesting there's a fifth test and affordability, because you need to balance out the other four tests with actually, can you make it work from a business case perspective? So the simple answer is that the more requirements you put on to the scheme and the more that costs, then the more you jeopardize the viability of that scheme. So and surface access is a, is a is a good example of that.
So if the airport pays for absolutely everything on surface access, then that makes the viability of the project challenging. So the more requirements you put on there, the more difficult it is. But I think these issues will only come to get proper debate once we've gone through all the work and looked at all the different things that the national policy has asked for during examination, which won't be until 2028, when it's properly examined in 2028.
Then you will get to the point which is, is this affordable or not? But clearly we we won't move forward if a scheme is not affordable because it just doesn't work commercially.
So if the airport pays for absolutely everything on surface access, then that makes the viability of the project challenging. So the more requirements you put on there, the more difficult it is. But I think these issues will only come to get proper debate once we've gone through all the work and looked at all the different things that the national policy has asked for during examination, which won't be until 2028, when it's properly examined in 2028.
Then you will get to the point which is, is this affordable or not? But clearly we we won't move forward if a scheme is not affordable because it just doesn't work commercially.
09:40
09:40
Jacob Collier
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Jacob Collier
09:41
Speaker 1
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Speaker 1
Well, one of the things that has been a huge plus in our organisation from the day we started is listen to your customer. We don't go out there and dictate and say, well, this is the length of the runway we're going to do. We're going to go over the M25, we're going to do this. We've always sat down with the customer, which is the airlines to us, and said, what works for you? What do you want? And one of the things they and us, everyone is saying is the affordability.
We need to make sure whatever scheme it is, it's affordable, deliverable, and it's for real rather than we keep talking about it for decades. So, you know, we've spent a lot of time and effort. Hence we came up with the proposal of the doing the runway in two stages. And plus we can do it in a lot quicker, five years quicker than the scheme. Because if you start building and you're not going to deliver at least until early 2040, then the billions that go in and we worked out that the actual just the cost of the money for those 11 years is more than 10 billion.
Now, that's not even spoken about. And I think all these things at the end of the day, although people say, oh, it's no cost to the taxpayer, the actual payer is the taxpayer. People who use the airport, they are taxpayers, most of them are, and they're paying for it. So from that perspective, we need to make sure that whatever we do. Hence, we come up with a scheme that meets the government timescale.
It's affordable, it's deliverable, and it's something that, you know, one of the questions I was asked in a meeting a few weeks ago, well, you're two for scheme can only take narrow bodied aircrafts, but currently 60% of the business mix at Heathrow is narrow bodied aircraft. We don't want to ban narrow bodied aircraft. We want the connectivity, regional and other airports around Europe. We want the connectivity. So 40% business mix today is wide bodied aircraft.
And as the aircrafts are getting more efficient and even from environmental point of view, noise point of view, if you just look at the numbers, what the noise levels have gone down over the past decade. And you know, when we worked on the scheme pre-COVID, at that time, our customers, the airline said the optimum size was three two. And yet 4 or 5 years later, they come up and said, actually, the optimum size today is two eight.
So what will happen in one, two, three decades? Obviously God knows, if I knew that, I wouldn't be sitting here. But I think it's something that we feel that we have a scheme that works for the consumer, something that is real, deliverable and in the government timescale.
We need to make sure whatever scheme it is, it's affordable, deliverable, and it's for real rather than we keep talking about it for decades. So, you know, we've spent a lot of time and effort. Hence we came up with the proposal of the doing the runway in two stages. And plus we can do it in a lot quicker, five years quicker than the scheme. Because if you start building and you're not going to deliver at least until early 2040, then the billions that go in and we worked out that the actual just the cost of the money for those 11 years is more than 10 billion.
Now, that's not even spoken about. And I think all these things at the end of the day, although people say, oh, it's no cost to the taxpayer, the actual payer is the taxpayer. People who use the airport, they are taxpayers, most of them are, and they're paying for it. So from that perspective, we need to make sure that whatever we do. Hence, we come up with a scheme that meets the government timescale.
It's affordable, it's deliverable, and it's something that, you know, one of the questions I was asked in a meeting a few weeks ago, well, you're two for scheme can only take narrow bodied aircrafts, but currently 60% of the business mix at Heathrow is narrow bodied aircraft. We don't want to ban narrow bodied aircraft. We want the connectivity, regional and other airports around Europe. We want the connectivity. So 40% business mix today is wide bodied aircraft.
And as the aircrafts are getting more efficient and even from environmental point of view, noise point of view, if you just look at the numbers, what the noise levels have gone down over the past decade. And you know, when we worked on the scheme pre-COVID, at that time, our customers, the airline said the optimum size was three two. And yet 4 or 5 years later, they come up and said, actually, the optimum size today is two eight.
So what will happen in one, two, three decades? Obviously God knows, if I knew that, I wouldn't be sitting here. But I think it's something that we feel that we have a scheme that works for the consumer, something that is real, deliverable and in the government timescale.
09:44
09:44
Speaker 2
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Speaker 2
Well, well, I think I think there needs to be clear tests around the second part, phase two extending from two 4 to 3 five. We do not think that is viable today. But once it becomes viable and that's something that should be delivered in due course. But today it's not viable in our view. So from a two fold perspective, there are clearly lots of risks around the two fold affordability. And we've covered on a few of them already, which is, you know, what's the climate requirements, what's the local community? What's the compensation? What surface access, what are all those costs that come with building the third runway? How do you manage all of that and can you make the scheme? Can you make the scheme viable? So I think there's significant risks in the affordability case, which is why ours and the airlines are calling for affordability measures to be enshrined and be a pass or fail test.
09:45
Speaker 1
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Speaker 1
And you make a very good point. Well, what happens if you can't afford it after the phase one for an infrastructure project in a nation , country capital like Heathrow, there's a queue of investors who would love to invest in a project like this. So it goes back to that million dollar question. It need to be affordable. And if it's affordable, there's no issue on funding. And you cannot check that with any lender, any of the big.
If
If
09:46
09:46
Alex Mayer
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Alex Mayer
So it's just two points I want to pick up on. One is your phase one and then phase two. If. If phase one is built and up and running, and then it it's decided that there is demand for a longer runway, how would you you wouldn't be able to keep runway the three open while you're building the extension. How would that work?
09:47
09:47
09:47
09:48
09:48
09:48
09:48
Speaker 2
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Speaker 2
So back to today. So the OLS obviously goes off. So it goes up as you go from the runway. So what we've done is we've built the Resa which the safety zone at the end of the runway. We've pre-built that as part of phase one. So you wouldn't build that if you weren't ever going to extend it. So in our two four runway, you've got an additional 300m effectively runway grade concrete, which can be then extended later.
That is the critical area that you can't work on. So we pre-build that part of the two four scheme.
That is the critical area that you can't work on. So we pre-build that part of the two four scheme.
09:49
09:49
09:50
Alex Mayer
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Alex Mayer
I just want to pick up. Going back to this issue about regional airports, how how do you think that we have effectively an open market, a free market for slots at Heathrow? There's a declining number of flights from regional airports. And the affordability, as you keep saying, is a major issue, apart from protected routes, of which there's very, very few like Belfast and I think Aberdeen, which are funded by the taxpayer, everything else.
All other flights are funded by the landing charge, is paid for by the airlines and therefore their passengers. How do you think you can realistically protect those regional flights, which work for lower price points, against the inevitable growth in long haul flights in and out of Heathrow?
All other flights are funded by the landing charge, is paid for by the airlines and therefore their passengers. How do you think you can realistically protect those regional flights, which work for lower price points, against the inevitable growth in long haul flights in and out of Heathrow?
09:52
09:52
Alex Mayer
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Alex Mayer
that would. So assuming there's no taxpayer funding, which has been a condition for this airport, therefore, the airlines would have to cross-subsidise within themselves the the those routes that aren't going to achieve the how much per head. I mean, obviously for the whole scheme, they they say 65. I know for your scheme they say less per head. But you're saying that there is a. They would have to manage the cross-subsidy within themselves.
09:53
Speaker 1
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Speaker 1
Yeah. It's something that we will not be able to dictate or manage or direct at the end of the day. At the end of the day, the airlines have their own business models and they need to make sure it works for them. What we are doing is creating the extra capacity, and we hopefully are going to be able to create. And also the short runway again is playing another major part that's creating extra slots for narrow bodied aircraft, which is what is used.
09:54
Speaker 2
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Speaker 2
think indeed, his own analysis, when you look at the additional expansion that comes from the two 60,000 movements, actually a small proportion of those are actually long haul flights. So at the moment the airport is 60/40. So the the DFT is saying less than 20% of overall increase in movements are going to be effectively long haul wide body planes. So so to get a better connectivity, the most important thing is to get your cost down.
The reason passengers are using Schiphol is because it's cheaper. That's the simple fact of the matter. So what you need to get to is Heathrow being a competitive airport. Reduce the costs, reduce the cost of expansion. That will then lead to better connectivity. And
The reason passengers are using Schiphol is because it's cheaper. That's the simple fact of the matter. So what you need to get to is Heathrow being a competitive airport. Reduce the costs, reduce the cost of expansion. That will then lead to better connectivity. And
09:55
09:55
Speaker 5
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Speaker 5
I will try to be quick. The Jacob talked about or you talked about investment in response to Jacob's question. So a criticism of the whole scheme is that the money comes from overseas and all the growth money is going to go back overseas again. What is the situation for your scheme in terms of where the investment is coming from?
09:56
Speaker 1
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Speaker 1
Well, I'm I'm proud. I've been here 54 years and I intend to be here, you know, for the rest of my working life always. I think it's a great place to do business. And we as a company are investing over 2.5 billion in the next three years on projects within the UK. So we don't really see an issue at all.
09:57
Speaker 5
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Speaker 5
Okay. It's a great story about the power of immigration actually. So thank you for mentioning that background. The so what's amazing about you guys is it's a challenge to the status quo, isn't it? You've turned the tables upside down, but I know you're more than just challenging the status quo. You actually want to do something. So how concerned are you about the MPs itself that it might just be tailored around the current operator , rather than supporting what you'd the challenge that you're providing here?
09:58
Speaker 1
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Speaker 1
Well, we've worked through, like I say, we've been on this project since the Davies Commission report and nothing's been easy for us because we are having to you know, it's the David and Goliath story. You know, I always talk about I give the example to my team that we're on the Grand National, we're jumping high fences. And the other party is actually a royal escort running on a flat. So we have to keep fighting and keep putting our case forward.
You're
You're
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Speaker 1
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Speaker 1
Yeah. Look, there's always issues of concerns that people have, whether within the government or the regulator or DFT, and we have to prove ourselves which which is what we're doing because I feel that we have. The one thing is always done in his working life is I know nothing about bring the best team around me and having the team around me. And if you look at all our projects, even our lenders such as NatWest, Santander and some of the other lenders wrote to the government last year and saying, all the projects that we have delivered over the past 25 years on time, on budget, and that's the one thing that I've always challenged my team on, that I want to, when I, you know, want to deliver value for money.
And the thing is that Heathrow and you can't totally blame them. It's the regulatory model which is broken through Heathrow reimagine. We're saying.
And the thing is that Heathrow and you can't totally blame them. It's the regulatory model which is broken through Heathrow reimagine. We're saying.
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Speaker 5
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Speaker 5
When I speak to my constituents about how there's these two rival bids for expanding Heathrow, they can't believe it. They can't believe it that this is happening. And particularly given the airlines support your guys support you guys. But but my constituents are not right in thinking, well, really, this is Howl's Airport that they should it should be them that's investing in it. Not not the outsiders.
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Speaker 2
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Speaker 2
So how are they going the existing airport? And, you know, we're obviously founder members of Heathrow. Imagine looking to change the regulatory model at Heathrow because we're the most Heathrow is the most expensive airport in the world. So we've got to where we've got to. But I guess if you take a step back and say, look how looking and proposing to spend £49 billion, and that is not subject to competition, which is just, you know.
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Speaker 2
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Speaker 2
On expansion, because the third runway and expansion and people conflate the two. But on expansion, they're looking to spend 49 billion. So so that's the third runway, 33 billion plus 15 for expanding in the central areas. That's 49 billion. So that's a public reference number. So they're looking to spend £49 billion, which is a lot of money. And for that not to be subject to competition in our view and the user's view is, is the wrong approach.
And in fact, one of the fundamental duties is to promote competition. So, so I think look, to answer your question is, is the disadvantage to potential other promoters. We think so, yes. So one of the aspects is modernisation of the airport. So the national policy statement requires modernisation of the airport. And actually the only party that can do that at the moment subject to regulatory change is Heathrow Airport Limited as owner.
And we think that's that's flawed. So we've put that into the DFT and the DFT have agreed that that's not the intention. So we would like that to be clarified that because otherwise the only party that can do expansion and modernization is the incumbent. So we think that that's an issue. I think there's other elements around system. So there's there's focus on what's the capability of a new runway. That's not how international airports are managed.
They're run as a system. So if you've got three, four, five, six runways, you run those as a system. What can the system deliver? Not what can one individual runway run. So from our perspective, the system needs to be looked at, whether that's wide body aircraft, whether that's the number of movements, whether that's the access to and from versus surface access. It needs to be looked at as a system rather than the runway itself.
And in fact, one of the fundamental duties is to promote competition. So, so I think look, to answer your question is, is the disadvantage to potential other promoters. We think so, yes. So one of the aspects is modernisation of the airport. So the national policy statement requires modernisation of the airport. And actually the only party that can do that at the moment subject to regulatory change is Heathrow Airport Limited as owner.
And we think that's that's flawed. So we've put that into the DFT and the DFT have agreed that that's not the intention. So we would like that to be clarified that because otherwise the only party that can do expansion and modernization is the incumbent. So we think that that's an issue. I think there's other elements around system. So there's there's focus on what's the capability of a new runway. That's not how international airports are managed.
They're run as a system. So if you've got three, four, five, six runways, you run those as a system. What can the system deliver? Not what can one individual runway run. So from our perspective, the system needs to be looked at, whether that's wide body aircraft, whether that's the number of movements, whether that's the access to and from versus surface access. It needs to be looked at as a system rather than the runway itself.
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Speaker 2
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Speaker 2
Well, no, but it's so for us, I think it comes back to the conversation we sort of started off with, which is there's lots of requirements and there's lots of objectives and benefits that set out in the NPS, but there's no relative marking of of what their relative importance are. So you've got you've got the four tests. And then we think the fifth test affordability, but you've got those those key tests. And then you have lots of other criteria, but there's no real guidance as to the relative importance of one versus another.
And they're not all mutually exclusive. So how will the Secretary of State ultimately decide on which scheme they move forward with? We think there should be more clarity in the NPS to give that clarity. So promoters, when they're looking at what's more important to the nation, we can then focus on those areas. What we're going to be caught out is later down the line saying, oh, this is really important than that. And we focus on the other thing.
And they're not all mutually exclusive. So how will the Secretary of State ultimately decide on which scheme they move forward with? We think there should be more clarity in the NPS to give that clarity. So promoters, when they're looking at what's more important to the nation, we can then focus on those areas. What we're going to be caught out is later down the line saying, oh, this is really important than that. And we focus on the other thing.
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Speaker 5
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Speaker 5
So so looking at just performance then rather than the length of the runway. So, so so the objective, the expected benefits are greater freight capacity, operational resilience and domestic connectivity. So how does your proposal differ from that. If you throw in terms of your ability to deliver those benefits. Because those are the benefits we'll feel as individuals as in the country, isn't it?
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Speaker 1
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Speaker 1
Because then you end up with no resilience. So, so look, we are we're working with the airlines and our. consultants with the likes of Naco and an ASL. modeling how many movements we can do and what impact that has for respite and noise. And so we're trying to find a sweet spot because clearly the more you more movements you have, the less respite you have and the more noise there is. So the question for us is, where's the sweet spot where we can deliver enough growth to make it viable?
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Speaker 4
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Speaker 4
as well. So on three on three is additional point on that. In the expansion appraisal report from government, they're only forecasting up to. 217,000 additional air transport movements by 2055. So that's a hell of a long way into the future. There's a lot of uncertainty in there. So looking to deliver to a capacity of. 260,000 goes way beyond . Their own
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Speaker 5
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Speaker 5
Which is. regularly breached because of the need to bring planes in later. And what an ops director has told. MPs is that they wouldn't mind the second runway, the third runway, just to. provide some. resilience so they wouldn't need to breach the respite period. So respite periods and. headroom in the current in in the . Permitted
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Speaker 1
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Speaker 1
You'll have the same resilience issues you have today as you will in the future. So you just have three runways versus two runways. So what our scheme is actually doing is saying, well, we phase that increase over time. So you get better resilience in the next ten, 20 years. But when you go back to three five and you go to. 150 million passengers and. 260,000 .
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Jacob Collier
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Jacob Collier
Okay. All right. Thank you. Jacob, did you have anything to add on that question? Well, it's just the point about resilience because your scheme can't take widebody aircraft. And we know with air freight, most of it to Heathrow comes in the hold. But do you not see that as a as a potential issue around resilience that we've heard is such a key part of why the airport wants the expansion?
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Speaker 6
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Speaker 6
But at the moment we've. simplistically ignored that and said we just do narrowbody. You know, if I may say that if current two extra long runways are only carrying. 40% widebody today, there's not an issue. So when we had the meeting with the chancellor, the CEO, chairman of British Airways. Virgin all said, actually this works for us. The two full scheme .
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Speaker 1
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Speaker 1
characterization of your position? I think look, we our scheme doesn't rely on rail infrastructure coming in, but actually we think it's a it's a good idea. So if we can facilitate that and deliver it, then we think it's worthwhile doing. I think there is a there's a challenge. On timing in getting rail passenger rail open in time for.
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Speaker 1
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Speaker 1
But parking. That aside, what we're looking to do is build a southern rail. Head to the south of the airport for construction purposes. So bring all the construction materials by by rail rather than by road. And then with. It's the same route you'd use for southern rail. So you can then repurpose that and use that. And we will design it such that you can do that, which then you can link in southern rail into effectively our new terminal six.
And we're building a box under terminal six to facilitate that. So the box terminal six we're building can facilitate both Western and southern rail, but we are working with various stakeholders, including Network Rail and the Southern Rail guys, as to how do you make that work. And it comes back to the affordability point, who pays for it? And our belief is that users should pay this infrastructure will be benefiting both airport users and non-airport users.
So how do you balance the cost between the two? Because ultimately, if you put everything onto the airport and non-airport users are benefiting from . That,
And we're building a box under terminal six to facilitate that. So the box terminal six we're building can facilitate both Western and southern rail, but we are working with various stakeholders, including Network Rail and the Southern Rail guys, as to how do you make that work. And it comes back to the affordability point, who pays for it? And our belief is that users should pay this infrastructure will be benefiting both airport users and non-airport users.
So how do you balance the cost between the two? Because ultimately, if you put everything onto the airport and non-airport users are benefiting from . That,
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Speaker 1
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Speaker 1
your mode of targets within the policy statement? So we think I would say we think there's risk of those opening by 2035. So just being candid. So from how you meet the modal shift. So the modal shift comes in over time. So it's not. So when you open the runway, it won't be that the runway is immediately full and having. 200,000 movements on it, it will build over time.
So how do you build in your surface access improvements, your modal shift now? Because you can start working on that today before you open in 2035. So that's a combination of active travel, whether that's coach, whether that's increasing bus tube, additional trains. So there's much talk about the Elizabeth line. Can you expand Elizabeth line with Heathrow Express because Heathrow Express is currently underutilized. So how do you manage all those things over the next eight. years to start improving that modal shift before you even open the runway? And so, no, the the rail schemes, when they come in,
So how do you build in your surface access improvements, your modal shift now? Because you can start working on that today before you open in 2035. So that's a combination of active travel, whether that's coach, whether that's increasing bus tube, additional trains. So there's much talk about the Elizabeth line. Can you expand Elizabeth line with Heathrow Express because Heathrow Express is currently underutilized. So how do you manage all those things over the next eight. years to start improving that modal shift before you even open the runway? And so, no, the the rail schemes, when they come in,
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Daniel Francis
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Daniel Francis
Hopefully sooner rather than later, will then even further improve that. Obviously, you know, like I think your constituents, my constituents, Elizabeth line from the other side of London, but that did have a, you know, an impact, but, you know, a marginal impact percentage terms wise, really, you know, it's still the majority of people are travelling to Heathrow via road. So, you know, the question really is when at what timescale do you think you would need to deliver those two extra .
Railways.
Railways.
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Speaker 1
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Speaker 1
And, and who do you think should be funding that? So as I say, our scheme doesn't rely on rail coming in. So that that's the critical thing. So whilst we don't rely on it, we would like to explore those forward to actually get those in. So we don't rely on it in terms of who fund it. It comes back to my point around user pays. So if the airport is using it to deliver their targets, then actually it's right that the airport should should fund that.
However, if it's non airport users using the surface access and training staff, then I, you know, the question is should the airline stroke consumers of the airport pay for that? So that's the debate that needs to happen. between the various parties, you know, and DFT sort of look over . All of
However, if it's non airport users using the surface access and training staff, then I, you know, the question is should the airline stroke consumers of the airport pay for that? So that's the debate that needs to happen. between the various parties, you know, and DFT sort of look over . All of
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Speaker 4
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Speaker 4
shift targets that are in the MPs. Scott. Yeah, just Carlton said there are a whole series of other things that can be done and will be done before any heavy rail links go in, and we are projecting forwards beyond 2055. So looking at those passenger growth numbers and the forecasting growth, again, as Carlton said, you're chipping away year on year. It may only be two one, two, 3% a year of shift. But if you can do that and work towards it, the other things we've got to do is design a scheme that is entirely focused on public transport access, not just heavy rail.
Heavy rail is a key part, but wider public transport access. connectivity of buses and coaches is is poor there. We need to be able to improve that by having two access points. We need to be able to run through bus and coach services. We need to put a lot more bus priority in and bus lanes in to improve the. resilience and the. reliability and therefore the affordability of those services.
So by by investing in all those areas earlier, as Carlton has said, those are the things that will make a difference before you open. And then there's, there's a lot of potential changes in, in mobility trends. There's a trend. towards electric vehicles.
Heavy rail is a key part, but wider public transport access. connectivity of buses and coaches is is poor there. We need to be able to improve that by having two access points. We need to be able to run through bus and coach services. We need to put a lot more bus priority in and bus lanes in to improve the. resilience and the. reliability and therefore the affordability of those services.
So by by investing in all those areas earlier, as Carlton has said, those are the things that will make a difference before you open. And then there's, there's a lot of potential changes in, in mobility trends. There's a trend. towards electric vehicles.
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Speaker 5
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Speaker 5
process of doing all the detailed modelling. So we don't have the exact numbers yet. Okay. Can I just go back to who pays. So I accept the point that the airport user funds their proportion and the non airport user rail passenger pays for their element. But say you get through the end of this process and are the.
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Speaker 5
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Speaker 5
choose Car and we're south east London. So it's the detail. But yeah, it goes back to the point that Heidi Alexander made about not making sure the M25 and the M4 doesn't grind to a halt because of the lack of split. Not from our side of Heathrow, but from the western side of Heathrow, where there is no rail access, which has been a long standing issue. Okay,
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Speaker 4
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Speaker 4
I think the the fundamental point about our scheme is it's a smaller scheme, it's a smaller footprint. It will have a lower carbon footprint to build. It will have a lower whole life carbon footprint. So the things we're in direct control of, and we'll be doing a lot to reduce the carbon footprint of the construction and the operation of the scheme itself. So that doesn't mean it won't have an impact, but it means it will be a lower impact because it's designing the appropriate.
infrastructure to the scale of growth and user demand needed. So that's that's the first step in reducing carbon impact is to design the appropriate scheme in the first place. The wider point is more about the bigger carbon footprint obviously comes from the air travel itself. And that that relies on lots of partners working together.
infrastructure to the scale of growth and user demand needed. So that's that's the first step in reducing carbon impact is to design the appropriate scheme in the first place. The wider point is more about the bigger carbon footprint obviously comes from the air travel itself. And that that relies on lots of partners working together.
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Speaker 4
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Speaker 4
To continue to invest in in sustainable aviation fuels and to bring in two new technologies and innovations to achieve that target. So it can't be achieved by us as a. promoter delivering the scheme itself. It relies on others continuing to invest in those measures that they're already investing in to get to their net zero.
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Speaker 2
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Speaker 2
nature crisis, it does seem a bit and sack production. Yeah, exactly. I mean, and then you're going it's not just yourself, other promoters in the same position. You're going to be generating all these additional emissions. But you're saying, well, these other people are going to have to invent technologies to deal with the problem . That
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Speaker 4
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Speaker 4
system. Yeah. Let's try and keep it to to Hemp's. Yeah. I mean, in terms of hemp's, obviously we we can't alone deliver that net zero 2050. What we can do is make the design of the airport and the operation of the airport as efficient as possible to reduce the whole life carbon footprint of the. infrastructure and how that infrastructure is operated. It's, it's . It
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Speaker 5
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Speaker 5
involves a lot more parties to deliver that net zero, 2050. And Heathrow is already an outlier in the wrong way in terms of electric vehicle and, and machinery usage on the apron. because it's got. inadequate grid power. Is that have you have you identified that? Certainly lots of developers in West London have.
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Speaker 7
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Speaker 7
Well, I suppose this this does bring back to to the question. So I'll maybe heroically try one more time. So let's say there's a scenario in which the two main ways that aviation sector has to offset its. emissions are safs and direct removals. And as we've just heard from other members of the committee, those are both. risky technologies. They're not as developed as we would like them to be at this point, to have confidence in them.
Let's say the the direct. removals doesn't accelerate at the speed we need, so we need to that that then means the government says, well, to the aviation sector, you're going to have to invest more in Safs now to get yourself where you need to be for our.
Let's say the the direct. removals doesn't accelerate at the speed we need, so we need to that that then means the government says, well, to the aviation sector, you're going to have to invest more in Safs now to get yourself where you need to be for our.
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Speaker 7
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Speaker 7
That then presumably makes it more. expensive to fly, which may. reduce the. demand for the additional capacity that you're proposing to invest in, which then comes back to whether you will make the return that you would hope to make on a commercial investment. And that's the point that I'm, I keep coming back to is how you feel . As
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Speaker 1
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Speaker 1
we then determine whether actually it works or not in the future, because it's all very well producing a piece of infrastructure. But as you say, if the airlines themselves can't use it because it's not viable and you can't do the do the routes and you can't get to meet the standards that you need to meet by.
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Speaker 6
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Speaker 6
otherwise it threatens and undermines the scheme viability. Well, Chris, also what we don't want to do is sit here and just give you a lot of waffle or just a lot of chat and say, we're going to do there are so many things that are outside our control when it comes to. Like Scott said, when it comes to.
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Speaker 4
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Speaker 4
It's an ideal. And we're just trying to get some numbers on it very quickly. Come back to the energy point. We're also proposing, as part of a scheme to build a new energy centre with very extensive ground source heat pump network and PVS on roofs wherever it's practicable. Also, obviously the buildings will be more efficient, so we'll have lower energy consumption. And within that strategy is to have enough recharging capacity for those electric vehicles to be used airside that you refer to.
So as as far as the bit we . Can.
So as as far as the bit we . Can.
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Alex Mayer
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Alex Mayer
No. Well, I was just going to do that bullet point about rain. Yeah. Go on. To what extent have you future proofed when thinking about the design in terms of the length of the runway and the fact that obviously climate change is happening? We're having much more strange weather in the UK. including periods of really heavy rainfall. And that heavy rainfall obviously affects stopping .
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Speaker 1
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Speaker 1
mitigation scheme for people living quite close to the airport. Yeah. So I think with so for noise, you have to look it's looking holistically as a system and where all the noise goes. So we have to model out in terms of talking about the aircraft modelling and use of the third runway, we have to model that and what noise impact that has. So the the requirement of no more noise across the entire. airport where cognisant of that.
And that comes to another point around, you know, we don't manufacture engines for aircraft, so we have no control over that. But in terms of how we compensate the.
And that comes to another point around, you know, we don't manufacture engines for aircraft, so we have no control over that. But in terms of how we compensate the.
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Speaker 5
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Speaker 5
Making, you know, improvements to, to local communities. Okay. And obviously, with your runway. starting further east than he has one, it. impacts the, the landing and the close take. Proximity of takeoff affects far more. residents than and therefore would be a bigger insulation scheme than the the northwestern one. It was the original.
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Speaker 1
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Speaker 1
west location for for third runway back then. Yeah, I think the reality is the the the noise curve moving where we're talking about here is less than half a DB. And the human ear can't detect anything less than two decibels. So I think the reality is yes. Are runways. 195m starts to the east, as you as you rightly say. But in terms of impact of noise, residents aren't going to notice the difference between the .
Landing of
Landing of
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Speaker 1
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Speaker 1
Carlton, I'll start with saying that the biggest issue for air quality is, is surface access and cars. So that's, that's the biggest issue in terms of for us to focus on. So I think, you know, part of the surface access strategy is not only how do you get more people onto active travel and to public transport, how do you make the vehicles, frankly, cleaner? So the modelling we're doing is, is, is taking where we are today, modelling in the fact that uptake and EVs.
So so we're modelling all of the different parties coming in by different means. And how what levers can we pull to.
So so we're modelling all of the different parties coming in by different means. And how what levers can we pull to.
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Steff Aquarone
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Steff Aquarone
People to and how they travel to and from the airport? Well, that's admirable, I'm sure could apply to a number of different transport scenarios, but that doesn't rely upon airport expansion. Should we really be giving away the headroom of those gains to further airport expansion? Can't we just let the local. populations breathe cleaner air?
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Speaker 1
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Speaker 1
Phil about airport expansion in general and and the link to economic growth. And I think, as Carlton has said before, there is a there's always that. sustainability challenge of economy. environment and society and how you balance the three and and, you know, we're still in that conundrum of what's the . Right
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Speaker 2
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Speaker 2
Defined in the NPS? Look, we understand what the air quality tests are, so we understand them and we have to demonstrate we can meet them so we understand the size of the task. I think for you know, it's not for us to to pass judgment whether there should be, you know, better or worse, because that's more of a strategic debate for, frankly, the local .
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Alex Mayer
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Alex Mayer
of the judgment and the assessment of the DCO. Can I just pick you up on the point you made , Carlton saying that the majority of Heathrow air quality emission problems are from motor vehicles. That has historically been the case. It's gradually getting better due to changes in motor vehicles. However, we've had a lot of. evidence of the damaging. impact of aircraft. related ultrafine particles.
And have you done any work, and do you have any suggestions on the hemp's , on how you should be. monitored and whether or not there should be some kind of standards or .
And have you done any work, and do you have any suggestions on the hemp's , on how you should be. monitored and whether or not there should be some kind of standards or .
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Speaker 1
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Speaker 1
and and required compliance? And how would that work? I think it needs again, we have targets. We have the net zero. 2050 target. I think, you know that we're in the middle of designing and reviewing things like World Health. Organization guidelines . And, and other authorities are reviewing how they may want those standards to change. At the moment, we're working to what's in hemp, which is the current standard.
So if that does change, we . Will
So if that does change, we . Will
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Speaker 2
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Speaker 2
runway is going to have significant impact, there's no question about that. So a two four runway versus a three five runway has less impact. So there's less disruption. So I guess it's everything is relative. So so whilst we we have less disruption, there is no you can't deny there is disruption. So we're spending an awful lot of time trying to sort of look at green.
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Speaker 5
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Speaker 5
forget the connectivity. We don't need this. We don't need cars. I'm not saying no flights. No, no, I'm just saying as we you know, the population grows or, you know, the world changes technology, everything we all know. And I think it's just trying to get the best balance in life. If we it's a bit like, you know, if we don't have food, I'm going to starve to death.
If I have too much food, I'm going to be sick. So
If I have too much food, I'm going to be sick. So
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Speaker 1
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Speaker 1
it's just trying to get the right balance in life. And I think that what we. I mean, and on that point, we we are in the middle of undertaking a detailed biodiversity assessment against the baseline and the net gain requirements. So as Surinder says, that's something that's part of our scope in detail. Plus, as Carlton says, we are able, because it's a smaller scheme to use the areas around the site to offset some of that, introduce new green spaces, enhancing ecologically through new planting and landscaping.
We are proposing an open, sustainable drainage system where we will combine that with ecological enhancement and and more open water. So so whilst there is harm , without question, we're looking to offset that and more through our .
We are proposing an open, sustainable drainage system where we will combine that with ecological enhancement and and more open water. So so whilst there is harm , without question, we're looking to offset that and more through our .
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Speaker 2
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Speaker 2
not working, whose. responsibility is it to fix that? Well, it's a great question. I think to me, that's partly a big part of what examination is about. So when you put forward your scheme and you know, we're partway through, we're not submitting for another year. So, so once as and Hal have put forward our proposals for how we're going to deliver expansion and meet the requirements of the MPs at that point, that is where it should be examined and tested to see the relative benefits and disbenefits of what we're putting forward and how it can be improved.
So I think that that's the time for the debate as to the, you know, the relative merits and the pros and cons of of . Said
So I think that that's the time for the debate as to the, you know, the relative merits and the pros and cons of of . Said
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Laurence Turner
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Laurence Turner
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Speaker 2
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Speaker 2
The biodiversity scheme is not delivered. Yes. Look, I think the point for me is around the planning to make sure when you're doing that, you're giving it the best chance of success. So when T5 was built, they created a very nice. biodiversity site to the west of the airport. So that has done extremely well, for instance. So I'm not saying that the past is an indicator of the future, but, you know, it's looking at, you know, giving the best possible chance of success.
And then it's who has the responsibility for managing that site going forward. And so that's, that's a critical point. So when the developer hands it over as the person .
And then it's who has the responsibility for managing that site going forward. And so that's, that's a critical point. So when the developer hands it over as the person .
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Speaker 5
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Speaker 5
how your proposal. differences or differentiates? At the moment? I think is the way I've always run my company. On the basis of that surprise and delight. Like Carlton mentioned, we will at least deliver what Heathrow promised, but hopefully we will want to do better. And that again is in consultation with our local residents, with the neighborhood people who are going to be. impacted and see the best we can.
So .
So .
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Speaker 2
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Speaker 2
do you think? So? So the obviously the national policy requirements for promoters to meet, if we can deliver better than that, then that comes into examination and saying, actually, which scheme is better? So if we can deliver a better or less impact to the community versus the whole scheme, and that's something that is resonates with locals . And
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Speaker 2
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Speaker 2
the hemp, but leave the flexibility in the actual application process. It comes back to that point I was talking about before around the relative assessment of different criteria. So if, for instance, community compensation is is a higher test versus something else, then actually we can go well as a promoter go, well, actually, we need to make sure that we do better on that. And therefore we, we sort of deliver a better outcome than, than Hal does.
And then hopefully sector state will choose us. So if this is where if you open it up to competition, you give clearer guidelines, what's important or not, then the nation can decide. Well, actually, I think the climate, I think diversity sites and I think noise and. community things is more important than X, Y and Z. And you can then rate them. But there's always we come back to the fundamental, there's always a cost of all of that because clearly you can put all these stuff on.
But ultimately then does it jeopardise the business case of, of the airport? And that's the the bit that we can't decide. Ultimately that's up to the CAA DFT . To.
And then hopefully sector state will choose us. So if this is where if you open it up to competition, you give clearer guidelines, what's important or not, then the nation can decide. Well, actually, I think the climate, I think diversity sites and I think noise and. community things is more important than X, Y and Z. And you can then rate them. But there's always we come back to the fundamental, there's always a cost of all of that because clearly you can put all these stuff on.
But ultimately then does it jeopardise the business case of, of the airport? And that's the the bit that we can't decide. Ultimately that's up to the CAA DFT . To.
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Alex Mayer
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Alex Mayer
examine the pros and cons and whether actually this can work or not. Thank you. Okay. Right. Thank you very much. That brings us to the end of our first panel. Thank you for the evidence and the time you spent preparing for today and for coming today. If there's anything you didn't have a chance to cover or want to provide us with more details, please, please do feel free to send them.
I'm going to suspend the meeting for a few minutes while our next witnesses take their places. The sitting. The.
I'm going to suspend the meeting for a few minutes while our next witnesses take their places. The sitting. The.
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Scott Arthur
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Scott Arthur
Demonstrated in the Heathrow expansion? NPS? Well, first of all, thank you very much for inviting us. And it's an honour to be here. And we're looking forward to discussing with what we think is an absolutely critical infrastructure project for the UK. And the reason we do that is that why are we doing this in the first place is because it brings huge investment, private investment into the into the UK.
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Scott Arthur
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Scott Arthur
Innovation and trade way beyond what is possible today and way beyond what would be. possible with a two runway Heathrow. And there are no. alternatives to that development. We work with other airports in a very complementary way, but they cannot replace the hop function that Heathrow has. We think the NPS, or should we call it the what do we call it today? Just the national policy statement goes a very long way to describing that in the right way.
We have some areas that we might like to see improvements to, but . Other than that, we support
We have some areas that we might like to see improvements to, but . Other than that, we support
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Scott Arthur
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Scott Arthur
Satisfy that economic growth test? We are already doing that. We have commissioned independent consultants and universities to look at the impact that a third runway would have across the country. We can already say that we are looking at billions of pounds annually in additional GDP. That could be £17 billion. We're looking at. 108,000 jobs that will be there in 20 years time.
That would not be there if you didn't have a third runway. We're looking at 5000 apprenticeships. We are looking at additional trade. Currently, Heathrow represents. £300 billion of trade annually, which is which makes us by far the biggest port by value in the country. Without Heathrow expanding, that will pretty much stand still because we do not have additional cargo slots as we speak. Whereas if we expand Heathrow, that could grow to, for example, £450 billion.
So lots of trade, which is obviously important for everyone in the country. It's Cornish tea, it's steel from Wales that doesn't get transported by air. Sorry, but it's important in the project and it's Scottish Scottish whisky. All of this . Will see
That would not be there if you didn't have a third runway. We're looking at 5000 apprenticeships. We are looking at additional trade. Currently, Heathrow represents. £300 billion of trade annually, which is which makes us by far the biggest port by value in the country. Without Heathrow expanding, that will pretty much stand still because we do not have additional cargo slots as we speak. Whereas if we expand Heathrow, that could grow to, for example, £450 billion.
So lots of trade, which is obviously important for everyone in the country. It's Cornish tea, it's steel from Wales that doesn't get transported by air. Sorry, but it's important in the project and it's Scottish Scottish whisky. All of this . Will see
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Alex Mayer
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Alex Mayer
And yet, with the inevitable. increasing cost per slot and which will be passed to passengers, nobody's yet provided the evidence that those regional flights will be viable in the open market that exists outside those very few tax funded routes like Belfast. How? I mean, I think that's part of your case as as part of your case as well, you know.
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Scott Arthur
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Scott Arthur
How how does that stack up? I think that's a very good question. And it is a central part of being a hot already today. Our charge structure is structured in a way of prices to. Airlines are structured in a way whereby long haul is more expensive than short haul, and short haul international is more expensive than domestic. So in that way we. incentivize domestic transport.
I'm sure that's not been designated yet, but I'm sure as we move forward, we would find a way of continuing that and also growing that because as a hub, we are depending on feed from not only international airports but also local airports. So so it's in the interest of both airlines and the .
I'm sure that's not been designated yet, but I'm sure as we move forward, we would find a way of continuing that and also growing that because as a hub, we are depending on feed from not only international airports but also local airports. So so it's in the interest of both airlines and the .
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Alex Mayer
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Alex Mayer
Airport to, to have those connections coming from, from domestic airports. So in your meetings you've had with the. airlines who will effectively end up having to pay whatever the costs are for runway three. So they'll have to pay even more for long haul flights under that modelling and. slightly less of an increase, but still a big increase for the regional flights, a sort of cross subsidy among the airlines. But that's among those airlines that.
probably like BA, obviously fly both from regional airports and and long haul. But a lot of the regional airports depend on. smaller local airlines. And, you know, I think you've said and others have said and they'll be able to get into Heathrow. But, you know,
probably like BA, obviously fly both from regional airports and and long haul. But a lot of the regional airports depend on. smaller local airlines. And, you know, I think you've said and others have said and they'll be able to get into Heathrow. But, you know,
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Scott Arthur
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Scott Arthur
How does that work in an airline market? My experience also having worked in Copenhagen, which is a hobby airport, in exactly the same situation, that worked really well. And this is again, these are decisions that are to be taken, but there's no one saying that there would necessarily be an increase on the domestic part. I think that's all about the market and how that would work out. What I think is more critical is that today, that market is suffering from simply not having enough slots at Heathrow, meaning you can fly to more destinations in the UK from Amsterdam then you can from Heathrow.
So we have in fact outsourced our hub. That would obviously be the first thing we would look to Insource, if you like, whether that is served by BA or whether that is served by a dedicated . Domestic
So we have in fact outsourced our hub. That would obviously be the first thing we would look to Insource, if you like, whether that is served by BA or whether that is served by a dedicated . Domestic
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Speaker 8
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Speaker 8
same opportunity. I think Scott wants to come on on this very point, really about the freight question, actually. So of course, when you think about freight by value, a lot of that is gold, which is just going back and forward for reasons I quite, quite fathom. But the increase in freight going through the expanded airport, where is that coming from? Is that about . Is that
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Speaker 8
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Speaker 8
things that are being made and being exported, or is that what you said? There's going to be a significant increase in freight going through the airport, right? So is that new things that are being manufactured just because the airport exists, or is that freight that's quite happily going by sea just now, you know, lower carbon, more efficient, etc.. So
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Scott Arthur
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Scott Arthur
where does that freight coming from? It's not Cornish tea. I would think that that comes from the. exporters of the commodities that are currently going by, by air wishing to export more. I mean, I would assume the the salmon growers want to export more salmon. The exporters want to export more tea. There is a national industrial strategy that. encourages light.
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Alex Mayer
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Alex Mayer
And not done by ourselves, but done by consultants and universities. Okay. Some of the modelling by the DFT showed for the economic modelling showed not net economic growth by runway three to to the UK, but. displacement from other. regions to west London, which is has a much higher GVA per head, etcetera, etcetera. Does that slightly. weaken the case that a third runway .
Brings
Brings
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Scott Arthur
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Scott Arthur
net economic growth to the whole of the UK? I think it's important to note that the DFT modelling is based on a on a certain model that they have to use, so to speak. That model omits the number of elements that are really important to get the full picture of the economic impact, one being the fact that this is a private investment. It's not taxpayer money. The model doesn't really count for that.
So we're already almost. £66 billion in adverse when we look at that model, because in fact, it's taken US taxpayer money as a negative in the model that's not there.
So we're already almost. £66 billion in adverse when we look at that model, because in fact, it's taken US taxpayer money as a negative in the model that's not there.
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Scott Arthur
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Scott Arthur
Private money that otherwise would not be invested in the UK. That's not taken care of, accounted for in the model. The other thing that's not accounted for model is trade, which is clearly a huge part of the reason for expanding Heathrow in the first place. And the last one is an assumption that. That Heathrow competes with regional airports and take business away. That is not the case. Heathrow is. complementary to regional airports.
That's also why Birmingham and and Edinburgh and Glasgow airports are supporting a third runway, because they are critically dependent on that huge artery of of both trade and passenger transport to connect to the Heathrow is connected to. 230 30 airports around the world, destinations around the world. No regional airport will ever be able to get to that point. So we work with the regional airports and we are complementary to them and.
That's also why Birmingham and and Edinburgh and Glasgow airports are supporting a third runway, because they are critically dependent on that huge artery of of both trade and passenger transport to connect to the Heathrow is connected to. 230 30 airports around the world, destinations around the world. No regional airport will ever be able to get to that point. So we work with the regional airports and we are complementary to them and.
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Scott Arthur
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Scott Arthur
that. I'm just trying to pin down your statement this morning, but I think the statement is quite clear that there is no other project like Heathrow. There's nothing of the size of Heathrow, and there is nothing of the size of Heathrow that has the. countrywide UK wide positive consequences. 60% of the economic benefit of a runway at Heathrow will be felt throughout the entire country.
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Scott Arthur
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Scott Arthur
have raised that. What's your view about affordability? I think first of all, we have a close dialogue with our airlines, and we entirely agree that a third round, the expansion of Heathrow. And I think it's important to note that the expansion of Heathrow is not just about a runway, it is about renewing the entire airport and getting an airport that this country actually deserves. But that aside, this should, of course be done as economically. efficiently as it possibly can.
We actually have no interest in spending . More
We actually have no interest in spending . More
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Scott Arthur
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Scott Arthur
pretty safe bet for your investors. That's I think it's a different discussion. But but but different discussion. Okay, fine. But but just to say that that our interest is to be as attractive as we possibly can to our airlines, and we have a very detailed discussion with them that so we fully agree with them that .
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Speaker 7
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Speaker 7
Affordability is important. I think maybe you want to talk to that the way that is implemented. Yeah, absolutely. And to reiterate Thomas's point, we are in absolute agreement with the airlines on affordability. The business case is great for the country. It's great for airlines, it's great for consumers and passengers. And it's it's good for Heathrow. So if we don't get affordability right, then we all lose. And so it is a very.
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Speaker 7
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Speaker 7
To your point, though, around the place in the MPs, as I said, we are absolutely aligned on the. criticality of. affordability with within the project. But we must remember that this is a project that spans 20 years of a full rework of our master plan, and therefore we actually believe that affordability should be checked at regular touch points throughout the life of the.
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Speaker 8
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Speaker 8
way through. Okay. Yeah. Go on. From a public's perspective, this is an. incredibly important issue. And, and the really easy way to. demonstrate this to the public is by saying that none of the airlines support your proposals because of the affordability question. And you say that you agree with the airlines on affordability. Do they agree with you on what affordability actually means?
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Speaker 7
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Speaker 7
Because you've heard me, you've heard what they've said. Yeah. So as I've said, we are in alignment on the need for this whole scheme to be affordable so that everybody gets the benefits they need. And we have jointly written to say that. So we are in alignment on that point. What we are doing on an ongoing basis is working on the . Cost of the
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Scott Arthur
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Scott Arthur
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Alex Mayer
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Alex Mayer
And that's at current costs. But on top of that, I don't know. Does that. include noise. mitigation at similar levels to. Gatwick's DCO? Does it. include the passenger element of surface passenger and staff element of surface access by rail, which we discussed at the previous session. And does it. include the carbon costs that the airlines will have to pay, plus the cost of staff, etc., that we discussed in our session yesterday with the Climate Change Committee? Because that will surely bring the per.
passenger level whether or not you agree with the airline saying, I think they said. £65 a head last time. Whether or not you agree that that is a reasonable. calculation per passenger for the CapEx, but you've got those other costs as well. Is with all those added on, what reassurance can you provide at this stage that your your project is. deliverable without without even further. increases in service charges that would actually undermine the whole.
passenger level whether or not you agree with the airline saying, I think they said. £65 a head last time. Whether or not you agree that that is a reasonable. calculation per passenger for the CapEx, but you've got those other costs as well. Is with all those added on, what reassurance can you provide at this stage that your your project is. deliverable without without even further. increases in service charges that would actually undermine the whole.
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Scott Arthur
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Scott Arthur
They pay, they do, and they pay. They have to recoup that. They pay a ticket price. And ticket prices are not necessarily related to airport charges. I can give you an example. Over the past ten years, the airport charges at Heathrow has come down by 14% in real terms, whereas the ticket prices have gone up by 30%. So. So there is no sort of scientifically proven link between the two.
And there's been various studies on that. It's just to say that that now the amount of money we are talking about compared to the ticket prices out of Heathrow is relatively small in either case that you bring up and and I've heard the 65 number, I don't know where it comes from. It's not part of any calculation that I've seen in that we do. We have said that as as the calculation looks now, and we're trying to to reduce .
That,
And there's been various studies on that. It's just to say that that now the amount of money we are talking about compared to the ticket prices out of Heathrow is relatively small in either case that you bring up and and I've heard the 65 number, I don't know where it comes from. It's not part of any calculation that I've seen in that we do. We have said that as as the calculation looks now, and we're trying to to reduce .
That,
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Speaker 7
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Speaker 7
What about those other elements that I mentioned? So so to pick up on the one. So the. 33 billion is the the privately financed cost that we attribute to, as you say, the expansion elements of the airport, not the rejuvenation of the current airport. You asked about mitigation costs. That includes all of the mitigation costs that we believe are necessary to comply with the the policy statement as set out at the moment you.
referenced Gatwick. Obviously, we need to Heathrow operates in a different environment to Gatwick, so the . noise policy would be appropriate for Heathrow, for example. We operate. We don't operate through the night, whereas Gatwick does. So we address noise mitigations in different ways. And so the noise policy that would be appropriate for Heathrow is what we have set our budgets to be in line with. You talk about surface access, all the elements of the surface access elements that we need to .
Expand the
referenced Gatwick. Obviously, we need to Heathrow operates in a different environment to Gatwick, so the . noise policy would be appropriate for Heathrow, for example. We operate. We don't operate through the night, whereas Gatwick does. So we address noise mitigations in different ways. And so the noise policy that would be appropriate for Heathrow is what we have set our budgets to be in line with. You talk about surface access, all the elements of the surface access elements that we need to .
Expand the
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Speaker 7
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Speaker 7
New bus. interchanges and the like. So on, on, on rail specifically, we do have a sum of money in and what we would what in fact, the CAA policy directs us to do and is included in our plans is to look at the. To fund the cost that is. proportionate to the benefits that any rail scheme would deliver to Heathrow passengers. So we'd only be asking our airlines and our passengers to pay for those elements that they gain benefit for.
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Scott Arthur
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Scott Arthur
elements? No. Okay. It'd be useful to see them. Okay. Would the numbers in perspective. Okay. Airport users at Heathrow already spent already pays. £30 of of airport passenger duty. We are talking about. £15 for a new runway. So so that amount compared to what's already been paid at APD, which was supposed to offset some . Of the
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Alex Mayer
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Alex Mayer
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Scott Arthur
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Scott Arthur
Potential to increase efficiency and control costs? I think that the. competition of Heathrow is in Amsterdam and in Munich and Frankfurt and not least Istanbul, which is expanding very fast. That's where our competition as a country is. And I think that's where our focus should be. I think any airport, and I think you will look at that also the the model in any airport I know in the world is that you have one operator that ensures safety.
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Alex Mayer
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Alex Mayer
entity running it. And I think that is how we should move forward. Okay. And on the role of the CAA, you've. argued that the role of the CAA as an economic. regulator should be kept. separate from the planning process requirements. So what are your views on the CAA role in assuring the affordability of expansion? And there what appears to me to be a very tight hold on what you can and can't spend money on, like even now.
And what's your . Preferred
And what's your . Preferred
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Scott Arthur
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Scott Arthur
approach is based on a regulatory model that is the same as we have today. So you have what's called a regulatory asset base that you put, that you put your investments on and you get a return on. It's important to note that we have a system today where every single pound that we spend on. investments are. pre-approved in the regulatory process by the CAA, and each individual project as they come along are then improved, both in gate one and gate three out of ten gates by the airlines.
Literally every single pound. We cannot spend a pound without being approved by the airlines. Now, do we think that going forward, there should be very clear. transparency and cost control also on the third runway? Absolutely. And we have suggested to that end that we set up a joint assurance board, which would. include independent experts, airlines and.
Literally every single pound. We cannot spend a pound without being approved by the airlines. Now, do we think that going forward, there should be very clear. transparency and cost control also on the third runway? Absolutely. And we have suggested to that end that we set up a joint assurance board, which would. include independent experts, airlines and.
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Scott Arthur
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Scott Arthur
To make sure that the project is delivered as efficiently as possible. So we we are fully open to that because if you look at it, that is what's already happening today. There's nothing, you know, we don't count. We can't invest anything. Now, I would then personally like to see an efficiency improvement of that process because it's not necessarily.
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Alex Mayer
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Alex Mayer
the actual requirements under previous permissions, we'd agree on that. Okay. Well, yeah, I can't believe there's no flexibility at all. But anyway, that's for another day. So you've argued that the draft NPS that should. clarify that mitigation measures should be proportionate and deliverable, and should maintain the overall. viability and affordability of the scheme? How should this be assessed? Is there a risk that measures to protect the.
community and the.
community and the.
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Speaker 7
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Speaker 7
That we're very clear on what those tests are, that we can demonstrate our mitigations and our proposals to satisfy all those tests. enabling a route through to the the scheme being consented and us going on to deliver the benefits. So as you as you rightly say, we we talk about ensuring that there proportionate and. deliverable that enables us to ensure that we are able to satisfy those tests through the.
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Speaker 7
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Speaker 7
And that there is the balance between the benefits that a scheme of this size will enable throughout the whole country to be weighed up against the. mitigation that that we will need to put in place, because there are some, you know, some some difficult elements of this for the local community. And we want to make sure that we are providing the right mitigation measures for them. And so we think the NPS does that today.
What we would just ask is that the more clarity we can get through all of those tests to make sure that we're submitting the right .
What we would just ask is that the more clarity we can get through all of those tests to make sure that we're submitting the right .
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Scott Arthur
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Scott Arthur
examination process is what we're asking for. And I think it's important that we talk about the local community. And as you know, we work a lot with the local community. Two aspects on that. When I meet with people at the local community, what they speak about the most is the 20 years uncertainty on this and the need for them to move on. We are now talking about mental health support because people have been in uncertainty for so long, and I think we owe it to the people around the airport to take a decision so that we can actually say we are doing this or we are doing this, and these are the conditions on which you can move on with your life.
I think that has been an.
I think that has been an.
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Scott Arthur
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Scott Arthur
you like, aspect of this whole project. And I find it, I find it really, really hard for the people in the community and I can understand them. The other point I wanted to make is that this is one of the reasons that the scheme that we are proposing, for the reasons is being proposed, was that the airport commissions found that the North West scheme, the runway that that we wish to build, is the one that in the round, if you like, compromises or at least satisfies best both the needs for the airport, but also the needs for the local community, the minimum, the minimum.
minimization of noise over London, the least houses have to be taken down and so on. That whole scheme had all of that as parameters, and that's why the scheme is there. It's not just because it's a good runway for the airport, it is because it's at . The same
minimization of noise over London, the least houses have to be taken down and so on. That whole scheme had all of that as parameters, and that's why the scheme is there. It's not just because it's a good runway for the airport, it is because it's at . The same
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Alex Mayer
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Alex Mayer
Sound like a night time ban. It sounds like a nighttime ban some of the time. So it's the ban on specific runway. So sometimes there'll be no. So on some of the a bit like at the moment, really some some of the, you know, one or more of the 1 or 2 of the runways, there'll be no arrivals before seven and the existing arrivals will . Be,
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Alex Mayer
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Alex Mayer
times might be slightly staggered depending on the flight schedules, because at the moment there are 16 flights from. 415 to 6 free for all six till seven. Although you try and alternate that and then then then you've got the actual daytime. alternation from seven until three and three till 11. Yeah. Sorry technical stuff.
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Speaker 7
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Speaker 7
Would be delivered by. 2035 being one of them and. 2039 being another one of them. So we always indicated that range. And at that point in time, we always said that. 2035 was a great ambition to have one that we would really like to achieve, because I want to leave the committee in, no doubt. We want to deliver a runway and all its associated infrastructure as soon as we possibly can.
And so that was an ambition that we also wanted to achieve. Probably two things have materialised over the course of the last couple of years. One is that through that process, we always outlined that there were things that needed to be achieved in order to achieve that earliest runway date. Some of those are around planning permission reform. Some of those are around the ensuring that we have a.
regulated model that allows our investors to commit.
And so that was an ambition that we also wanted to achieve. Probably two things have materialised over the course of the last couple of years. One is that through that process, we always outlined that there were things that needed to be achieved in order to achieve that earliest runway date. Some of those are around planning permission reform. Some of those are around the ensuring that we have a.
regulated model that allows our investors to commit.
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Speaker 7
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Speaker 7
A few other things. What I would say is we absolutely. recognise that government has worked at lightning speed on a number of things on this programme to accelerate its delivery, but as in often in projects, not all. opportunities that you. identify have come to fruition and therefore some of those things haven't been able to be achieved and that has affected the end date. The second fact as well is that we are obviously, as we've already.
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Speaker 7
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Speaker 7
Because we would need to start purchasing a lot of that land before we actually have consent for the scheme. So in, you know, in discussing that with them, that's a concern to them. It's also something we've been talking to the CAA about. Actually, we believe we would be better investing that money after the consent when we know we have permission to deliver the project, which means some of those activities have moved pre consent to post DCO consent, and that has affected the end date as well.
That has improved the affordability of the scheme, I should add, because it smooths out the cost. But I want to leave the committee in no doubt. We absolutely want to deliver as soon as possible. We will always continue to look . For
That has improved the affordability of the scheme, I should add, because it smooths out the cost. But I want to leave the committee in no doubt. We absolutely want to deliver as soon as possible. We will always continue to look . For
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Speaker 7
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Speaker 7
a new range that extends further into the future? So as I said at the moment our plans are 2039. That is the date by which we have done all our. assessments and all our modelling on to submit our DCO application. So it's really important through that examination. process that we can demonstrate the deliverability of the scheme. We can demonstrate how we plan to achieve that. And all our. mitigations that we are.
proposing are based on that date, plus all the other dates for the rest of the delivery of the infrastructure.
proposing are based on that date, plus all the other dates for the rest of the delivery of the infrastructure.
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Speaker 7
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Speaker 7
I don't know. 2042 or something to give you a little bit more leeway. So just to be clear, I don't want to say with all projects, you would have a range of dates and you would have a range of costs that sit around it. I suppose what I'm trying to articulate is for the DCA process to be robust, we have to formulate our plans around one deliverable schedule, and we would, of course, have scenarios should we be able to come earlier or later.
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Speaker 7
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Speaker 7
Yes it has because the terminal five X, which is the first terminal new terminal to be built after the runway, would also move by the same amount of time as in the original plan, simply because, as I mentioned, you'd need to buy all the land to deliver both the runway and the terminal. If we're not doing that now,
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Speaker 7
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Speaker 7
When the runway is ready and when the terminals are ready. So we have I mean, we have that is sort of built into the plan, how those. capacity elements would be delivered. And as I said, as we go through the examination process, we have to take time slices of when those increases, capacity will come and be able to demonstrate our mitigations accordingly. And so . Those would
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Scott Arthur
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Scott Arthur
Date set was set by the previous government. We had a credible path to deliver that, but as Helen said, there were consequences to that. I think the the 39 deadline is more robust, if you like, given the the conditions that we're working under and investors are prepared for that. But investors are looking for is before we get to a DCO, in fact, is what is the regulation around? What is the actual business case that we can present to investors? And currently we are in fact lacking that because we do not know the outcome of the NPS.
That's fine. That's the process we're in. But also we do not know the outcome of the CAA. deliberations on the long term regulatory model. And . That in
That's fine. That's the process we're in. But also we do not know the outcome of the CAA. deliberations on the long term regulatory model. And . That in
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Alex Mayer
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Alex Mayer
That impacts on your plans for the central terminal area and the timing of that work . And whether if I get this right, you you have to build runway three goes ahead. You need to build the terminal to the west of terminal five first. Whereas if you weren't going to do the third runway because it didn't get approval or you didn't want you didn't, you know, it didn't stack up for you, then you'd want to go back to what you've been working on on H8 and .
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Speaker 7
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Speaker 7
Building a brand new terminal covering the CTA. So, so kind of is my answer. Let me explain. So first of all, the first phase of the capacity uplift is actually to upgrade terminal five, which is what we are hoping to do in H8 in our next regulated period. So aside from a third runway or not, that is the next uplift and refurbishment that we plan to do. Our phasing plan, as you rightly say, comes to delivers an integrated airport in phases over time, which means, and as you say, the first terminal that would come online is actually t5 X, which is west of the current T5.
But actually we plan to start working on the eastern side and the new terminal development in the eastern side at the same time. So it's not that we start work first. We progress both at the same time. It's just the eastern development is more complicated to deliver, so it takes longer. Okay, so we actually have a plan that enables us to move forward with that, whether we have approval for a third runway or not.
But what you rightly point out is some of the latter phases of that master plan would get would get changed. Because at the moment, as the first terminals come online is T5 X, then it would go to the CTA works, and then we would go back to the expansion and do T5 x north as the final phase. That integrated plan needs to be delivered as one integrated plan, because it allows us to match the capacity releases to the passenger demand that we see, but we have safeguarded to ensure that we .
Can
But actually we plan to start working on the eastern side and the new terminal development in the eastern side at the same time. So it's not that we start work first. We progress both at the same time. It's just the eastern development is more complicated to deliver, so it takes longer. Okay, so we actually have a plan that enables us to move forward with that, whether we have approval for a third runway or not.
But what you rightly point out is some of the latter phases of that master plan would get would get changed. Because at the moment, as the first terminals come online is T5 X, then it would go to the CTA works, and then we would go back to the expansion and do T5 x north as the final phase. That integrated plan needs to be delivered as one integrated plan, because it allows us to match the capacity releases to the passenger demand that we see, but we have safeguarded to ensure that we .
Can
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Steff Aquarone
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Steff Aquarone
realise I'm moving off the NPS. Steph, anything left on 17. Yeah. So I mean things take longer. They quite often cost more than expected even in well-run projects. And I wondered, first of all, would you welcome clearer milestones and perhaps even independent oversight in the hemp's in order to prepare for your case? You're obviously making an assumption, as you've . Described,
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Scott Arthur
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Scott Arthur
Helen, to what the programme plan looks like. But I think if you start with the latter, independent oversight, as I said earlier, is already there. The airlines do that. We have proactively suggested that for the third runway, we set up a joint assurance board, which we feel might be a more efficient process than the one we have today. Also, because you get more independent scrutiny scrutiny than maybe just airport and airlines. And the reason I say that is, of course, in that process, airlines and airports might have or airport might have different motivations.
Whereas if you've got some independent views in there, you might get a better view. And we have already suggested that, that we put literally a joint assurance board in place to do just that. So, so to your to your latter question, yes,
Whereas if you've got some independent views in there, you might get a better view. And we have already suggested that, that we put literally a joint assurance board in place to do just that. So, so to your to your latter question, yes,
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Speaker 7
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Speaker 7
Clear milestones will be in the in the DCO. Absolutely. As I said, we would need to look at those milestones in order to demonstrate the mitigations that we would have. I would say that our our schedules today all have clear milestones in them. The schedule that we have underpinning this has already been. independently assured, as has our cost plan. And actually I would look to our current delivery.
We've delivered terminal five on time on budget. We've delivered terminal two on budget. Over the past ten years. I've delivered over 1000 projects at Heathrow. So. So we have the experience to know how these things need to happen and our schedules and everything would provide . All that
We've delivered terminal five on time on budget. We've delivered terminal two on budget. Over the past ten years. I've delivered over 1000 projects at Heathrow. So. So we have the experience to know how these things need to happen and our schedules and everything would provide . All that
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Scott Arthur
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Scott Arthur
What are the biggest delivery risks? As you see at the moment, I think the risks and the abilities to deliver them are pretty well described and we know what to do. I would say despite the size of this project, there's no new technology needed. I'm moving. A highway has been done before. Germany does it all the time. The Netherlands has a . Amsterdam. Schiphol has several motorways running over their their their taxiways.
So so it's not new technology. It's it's complicated and needs to be planned well, but can be done. And I think we should not. We should remember that out of the.
So so it's not new technology. It's it's complicated and needs to be planned well, but can be done. And I think we should not. We should remember that out of the.
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Scott Arthur
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Scott Arthur
About two thirds of that is just so. So comparing complexity with the size of the of the of the pie, like the money, two thirds of that is in fact acquiring the land, which is no new technology, not complicated. It takes time and has a process. But but that that's well described. The other third of that is actually preparing the land, which again, is not complicated. It takes time, is well described. We know how to do it, and it's going to take a period of time.
And then we're left with the remaining third, which is the parts that you're talking about building the runway, installing it , and all that we know how to do. And then we're left with a few other things. But in the,
And then we're left with the remaining third, which is the parts that you're talking about building the runway, installing it , and all that we know how to do. And then we're left with a few other things. But in the,
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Speaker 7
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Speaker 7
In the, in the scale of things, these are not major. Alan, if you want to expand a little bit, the only thing I would would add to that is that if you look at the terminal five project that we did deliver on time, on budget, we. There were significant M25 works that were needed for that project as well. We had to move rivers for that project. We had to change the boundary of the airport and everything that comes with it.
So we have experience of doing all those things as well. Yes, it is complicated. Yes, it is a a big scheme, but we have the right capability and expertise to do so. And I would say this . Is a
So we have experience of doing all those things as well. Yes, it is complicated. Yes, it is a a big scheme, but we have the right capability and expertise to do so. And I would say this . Is a
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Steff Aquarone
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Steff Aquarone
wonderful opportunity for UK engineering to solve all these problems. Excellent. Hear, hear. On that third. Third. Thomas, what the. potential associated costs say with those works, are there any things that are not included in that. 27 billion or third, third of that 27 billion? And what's your view on the government's interest or the tender that's been put out by the DFT to assess potential government exposure .
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Speaker 7
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Speaker 7
So, as I've said before, the cost plan that we have accounts for all the. activity that we believe we need to ensure the expansion can be successful. It has been. independently assured as well and and has been reviewed thoroughly over over the past years. As with all major projects, we of course would have a risk register covering risk, which also has allowance in that cost plan as well. So we're following all industry standard practices.
The the estimates that were put into that have all followed industry standard processes to . Get them
The the estimates that were put into that have all followed industry standard processes to . Get them
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Scott Arthur
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Scott Arthur
So so we believe that that is a robust estimate. And we of course base ourselves on on experience. We have delivered, what, 900 projects in the past ten years. And this is all done on all all these all being reviewed. So we look at the risk necessary to go in. And you can say some people have said, why is it 33 billion? It's a big amount. And that is exactly why.
Because we have those risks. contingencies in there. We have all this built in to make . Sure that
Because we have those risks. contingencies in there. We have all this built in to make . Sure that
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Alex Mayer
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Alex Mayer
You've already commissioned your own assurance. You've said already. So this is part of our standard project. Let me be specific. Public sector. projects to immigration removal centres. Although lakeside waste energy to waste waste to energy station is is private, but it uses public sector contracts. You've got in Hillingdon, you've got. schools and other. community facilities owned by the local authority or used by the local authority.
You may have some council housing and I assume you've factored in the.
You may have some council housing and I assume you've factored in the.
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Speaker 8
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Speaker 8
Time, Scott, realising the benefits. Thank you. Helen. I'm really impressed with your grasp of detail on this, I have to say. But the invoking terminal five means 20 years old now, isn't it? Do you think that's still relevant as a project delivered on time and on budget? And I'm pretty sure I can . Remember
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Speaker 7
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Speaker 7
when it opened that it didn't go exactly smoothly, does it? So, I mean, terminal five is very close to my heart. It was my first. I was a project manager on terminal five at the time, and actually it was a, a world leading terminal development that was delivered. It is 20 years old now, and we have learnt a lot along the way. Part of our core is making sure we learn lessons.
I would say that the . Terminal two
I would say that the . Terminal two
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Speaker 7
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Speaker 7
delivering those benefits? I mean, I'll start maybe you can pick up on that. I think I think the thing about the benefits is you have to remember, it's not only the, the, the. quantity and how they're delivered, it's also the timescales in which they are delivered. So obviously, one thing we're very keen on is not to the biggest risk probably at the moment is whether there's any delay to those being delivered through the process, which we want to try and remove as much as possible.
Hence our request that the the NPS is as clear in its requirements as it can be. I think in terms of. And Thomas, maybe you'll pick up on a bit further. You know, we have the evidence that that shows that the demand for Heathrow is out there. Coming back to your earlier point around freight, you know, I give you an example through Covid, when obviously we weren't able to fly as much passenger traffic, our cargo demand went up.
significantly because we were able to accommodate more cargo. And actually, since the passenger is now demands come back and we've reached.
Hence our request that the the NPS is as clear in its requirements as it can be. I think in terms of. And Thomas, maybe you'll pick up on a bit further. You know, we have the evidence that that shows that the demand for Heathrow is out there. Coming back to your earlier point around freight, you know, I give you an example through Covid, when obviously we weren't able to fly as much passenger traffic, our cargo demand went up.
significantly because we were able to accommodate more cargo. And actually, since the passenger is now demands come back and we've reached.
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Scott Arthur
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Scott Arthur
more cargo capacity. Yeah, yeah. And when I think about the risks and that's why I hesitate a second, I'm not concerned that this project will deliver the benefits that I outlined and that others have described. My concern is about the delay and others getting involved in it. That's a bit when you look at ages two and other things, we would like to deliver this based on a straight line, a clear project plan that is supported by all the stakeholders and delivered on time.
I think the big risk is actually delay. I'm not too concerned about the trade benefits or the tourism benefits or the economic benefits.
I think the big risk is actually delay. I'm not too concerned about the trade benefits or the tourism benefits or the economic benefits.
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Speaker 7
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Speaker 7
and how much you banking on spending on surface access. So as I mentioned earlier, we have a comprehensive surface access package. We would need to, as I've said, the. The MPs will ask us to ensure that we have appropriate surface access to meet the major targets that are. explicitly stated in there. And so we will need to have that surface access package in place to. demonstrate how we will meet all those commitments.
Surface access covers a multitude of things. As I've said, we have an upgrade to the passenger interchange we call it, which is the central bus station in the CTA, along with a new passenger interchange on the western side of Heathrow in Terminal five. It also includes upgrades to a lot of roads. So we talk about the M25. Obviously in moving it, we also plan to increase the capacity and make it safer at the same time, which is a benefit to to the public.
We also will be including lots of green. infrastructure around cycle routes and walking routes as well, as well as obviously we've got the Elizabeth line and the underground lines coming into Heathrow, which will also provide more mechanisms for people to use . Public
Surface access covers a multitude of things. As I've said, we have an upgrade to the passenger interchange we call it, which is the central bus station in the CTA, along with a new passenger interchange on the western side of Heathrow in Terminal five. It also includes upgrades to a lot of roads. So we talk about the M25. Obviously in moving it, we also plan to increase the capacity and make it safer at the same time, which is a benefit to to the public.
We also will be including lots of green. infrastructure around cycle routes and walking routes as well, as well as obviously we've got the Elizabeth line and the underground lines coming into Heathrow, which will also provide more mechanisms for people to use . Public
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Speaker 7
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Speaker 7
Is provided within our cost plan that we have access for. And as I mentioned. including some elements of the rail. infrastructure to enable that rail to be received at Heathrow. But as we've talked about, the. policy aligns to us as a policy alliance that we we fund the amount appropriate to the benefits we receive at the airport.
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Speaker 7
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Speaker 7
Therefore, about them picking up some costs as well. So I think there are various. alternatives that you can have for rail schemes not withstanding, obviously, the current conversation about Great British Rail, but you know, this could be a very attractive project to another promoter. We would obviously work hand in hand with . Them to
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Daniel Francis
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Daniel Francis
Successful as an integrated scheme. I don't quite understand. You'll remember chair as London MP? Yes, of course, Elizabeth Line ended up being a cost partially on the, you know, on the London Council, taxpayer relief for sewer etcetera. So are you having a are you having conversations about how that may end up working? You know,
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Speaker 7
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Speaker 7
Your take some of the cost, but where where are the rest costs to be picked up? So we have been. discussing rail, both with potential other promoters. We've been having. conversations with the DFT about what that could look like, and we have ideas about that. I think as as the promoter of our scheme, what we will need to demonstrate is how we can meet the targets that we are that are stated in the M.P.s, and we will need to show that we have the infrastructure available to deliver that.
And but we are very happy to work in partnership with others to explore . What
And but we are very happy to work in partnership with others to explore . What
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Speaker 7
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Speaker 7
A lot has moved on since since that policy was written, there were certain rail. infrastructures that I think were also due to be delivered that now aren't. So we are effectively saying, let's make sure that we understand what we're trying to achieve, the outcome we're trying to achieve, which is that proportion of traffic that we want, that proportion of passengers, sorry, that we want to be using and colleagues to be using public.
transport and hold us to account over that. We will have to ensure that the plans that we have in place can meet those . Outcomes
transport and hold us to account over that. We will have to ensure that the plans that we have in place can meet those . Outcomes
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Alex Mayer
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Alex Mayer
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Alex Mayer
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Speaker 7
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Speaker 7
I think, again, I would come back to all we're trying to do is make sure that the tests by which we would have to ensure that we're mitigating against are, are, are very clear to us so that when we're putting our. examination in that we can go through that examination process. Sorry, when we put our submission in, we can make sure that as we go through the examination process that that is that is robust. And so that is just around the way that it is measured today, making sure that we understand what those targets are over what time frame, also making sure that the, the controls that we have available to us are, are within Heathrow's.
control and that we can have that we . Can
control and that we can have that we . Can
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Speaker 7
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Speaker 7
And that all needs to be taken within the in the round. So the four tests together , come look across all of the elements. So air quality, noise and carbon. And what we may want to make sure is that all the boundaries of those are clearly. articulated to us to make sure that we can mitigate across all of them. So, so the clearer those those tests can be with us, the better.
It may not be as simple as pass fail because this, as I've said, is a master plan over a whole period of time. And so the mitigations that we will have to put in will be put in place . Over a
It may not be as simple as pass fail because this, as I've said, is a master plan over a whole period of time. And so the mitigations that we will have to put in will be put in place . Over a
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Speaker 7
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Speaker 7
on your scheme after 2050? So firstly, obviously we're saying that we absolutely understand the climate, the challenge with that, and we are absolutely aligned to driving forward all solutions to. mitigate the carbon impacts. This is again, also not something that just applies to expansion, but applies to all of our business today in terms of what we do. And we actually have factors in place today to help support this.
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Speaker 7
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Speaker 7
Like our. Incentivisation model, to uplift. sustainable aviation fuel. So we have assessed so obviously our targets as well are aligned to to. 2050 to be net zero by 2050. What we have done is modelled all of the carbon. implications for the life of the project. And we have a credible way through to deliver that. albeit we will be dependent on.
policies that need to be in place to enable us to do that. And we would agree with the the committee's response on that. The current policies alone won't be enough to get us there. And so we want to work with government as a partner and other third parties to make sure all the . Right
policies that need to be in place to enable us to do that. And we would agree with the the committee's response on that. The current policies alone won't be enough to get us there. And so we want to work with government as a partner and other third parties to make sure all the . Right
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Speaker 7
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Speaker 7
as we would, as I said, in the detail process. So what does it show? Will will say, as I've said, the the the proposal that we would need to submit in our DCO will have to model the impact over the life of the plan that we are submitting. That shows a credible path to us remaining within the carbon test that are in the policy.
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Scott Arthur
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Scott Arthur
Budgets, and where do you think that the. biggest risks lie? The we. In our planning. What we need to do is to live up to the thresholds set by the NPS. And Helen said we have a credible, credible plan to do that. How that will happen over time will change. There is a whole, as you know, a whole sort of a funnel of how do we mitigate.
CO2 emissions from aviation, which consists of sustainable aviation fuel. It consists of new aircraft. It consists of better, better airspace management. It consists of carbon capture, carbon capture and storage. And all of those factors will come with different with different percentages. And I I'm convinced over the next ten, 20 years, that will change. We will know new things. If you look at the curve, actually, aviation is ahead when it comes to new aircraft.
There has been, I think Covid, for example, had a very strong effect of that. So we actually we are ahead of the curve on that. We are below the curve on on sustainable aviation fuel. Although Heathrow is the airport in the world with the highest uptake of of sustainable aviation fuel, both in absolute terms and in percentage terms. So we are on our way, if you like. I think those things will change over time, but we will have a clear .
A
CO2 emissions from aviation, which consists of sustainable aviation fuel. It consists of new aircraft. It consists of better, better airspace management. It consists of carbon capture, carbon capture and storage. And all of those factors will come with different with different percentages. And I I'm convinced over the next ten, 20 years, that will change. We will know new things. If you look at the curve, actually, aviation is ahead when it comes to new aircraft.
There has been, I think Covid, for example, had a very strong effect of that. So we actually we are ahead of the curve on that. We are below the curve on on sustainable aviation fuel. Although Heathrow is the airport in the world with the highest uptake of of sustainable aviation fuel, both in absolute terms and in percentage terms. So we are on our way, if you like. I think those things will change over time, but we will have a clear .
A
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Scott Arthur
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Scott Arthur
scale that will be required. Is that not a bigger risk than without being a technology expert? I would say there is a difference. Absolutely. That that moving, moving a motorway is not a proven technology. Many people have done it. SAF is a proven technology. I mean, we load up to up to five, 6% of it every day. So it works. We need much more of it. And we need government policy to support that, as with mandates .
Put in
Put in
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Alex Mayer
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Alex Mayer
Heathrow is probably more less dependent on EV electric power on the apron for tugs and mechanisms and so on than many of our other airports, partly because you've got an issue about grid capacity. That's what we've been told as as MPs when we visited. Is, is that is there a challenge on grid power for the existing. airport to further decarbonise and also improve air quality at the airport? And is there a.
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Scott Arthur
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Scott Arthur
for it's good for climate. We've been told you don't have charging capacity because of where we are today. Is that based on the latest analysis, we will have enough power for the next decade. And that may be new information, but we do have that. We do have an application in for, for, for another grid connection, which we put in place already a couple of years ago. So that application is there that should give us that connection.
Latest, I think in.
Latest, I think in.
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Alex Mayer
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Alex Mayer
power is also in the plan and included in the cost. Thank you. So we have right I think we oh , sorry. Sorry, Alex. Go on. The Alex Cohen, the Climate Change Committee, told us. yesterday that they are of the view that the aviation sector should bear the costs of carbon. removals and additional costs associated with. sustainable aviation fuels if the government agreed and adopted that position.
How
How
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Speaker 1
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Speaker 1
would that impact the. of your scheme? Well, you can you can sort of argue that that's what happens today. We support. generally the user pay principle, both for airport charges but also for carbon. So so we are sort of aligned with that. That is what happens today. The mechanism we have today in our charge is that it. encourages the use of sustainable aviation.
Fuel actually means that it's. redistributed between the airlines to give them a incentive to do that. The airlines take that up fully, which means today users are already paying for the stuff . That is
Fuel actually means that it's. redistributed between the airlines to give them a incentive to do that. The airlines take that up fully, which means today users are already paying for the stuff . That is
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Speaker 1
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Speaker 1
And therefore hit your bottom line. not a demand on Heathrow. Heathrow has a special position in the sense that if we did not have if we'd had a third runway today, we'd probably have. 120 million passengers rather than the 85 we have. So the demand for Heathrow is enormous, and I think it just underlines the opportunity that we're currently missing. And on and on that on the calculations I've done before and on my previous airport where we were frontrunners in actually doing this, the amounts we were talking about to pay for the additional staff would not.
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Speaker 2
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Speaker 2
Deter more than very, very small amounts of of demand. The only thing I would add to that, Thomas, is obviously, as we've been talking about this morning, the affordability question is a key one for, for, for this project. And therefore, I think it again comes back to making sure that we're getting the balance right between making sure it's not unaffordable so that we all lose the benefit. And that is why we are committed to working with policy makers, to working with.
industry to ensure that whatever solutions are delivered are as low a cost as.
industry to ensure that whatever solutions are delivered are as low a cost as.
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Speaker 2
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I wondered what you meant by that. So we we've improved the noise position quite considerably at Heathrow over the number of years to. To give you some statistics, we've. The noise exposure area has reduced by over. 40% over the last two decades. And, and the, the. percentage in, in a sort of a noise contour, if you like, has also reduced. significantly since 2006.
So I think all we're trying to say is we want to make sure that the noise. criteria is right and is balanced with the, the impact that the. increase capacity at Heathrow will have. But we shouldn't ignore all the good work that has gone into. achieving . That
So I think all we're trying to say is we want to make sure that the noise. criteria is right and is balanced with the, the impact that the. increase capacity at Heathrow will have. But we shouldn't ignore all the good work that has gone into. achieving . That
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Speaker 2
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Speaker 2
So a bit like the measures that include what kind of measures? Well, so I think it's just about making sure that we're comparing it to the right point in time. So again, like the SAF incentive that Thomas talked about, we also use our airport charges to. incentivise airlines to have quieter aircraft at Heathrow already. So chapter 14 aircraft, which is the quietest aircraft.
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Speaker 3
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Speaker 3
The test that we would have, we would have to provide the mitigations for anyway in terms of. So this nice segue into community compensation. So you've talked about there's a lower footprint. What's the uptake of the noise mitigation measures currently for all those that are eligible? How many people how many people are . Actually
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Speaker 1
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Additional, for example, in the house purchase price, I think is lodged in the MPs. So that is already there for the more technical ones like noise and others. I think, as Helen said earlier, I think I should give the outcome based thresholds and the and the and the DCO should then specify how do we get permission? How do we tend to solve that? I think we personally, I think when we do a project like this, we should try to stick to the.
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Speaker 1
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Speaker 1
Hectares of of nature positive land that we are managing all the time. We have more than 4000 species. We have an increase in the amount of species found in that land, and we intend to continue that work. We have a nature positive report that comes out every year. It has benchmark awards on on its on its quality. We have no plans to either change . That
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Speaker 2
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Speaker 2
work nor change its implications for the third runway. Yeah, I mean, I would actually say I would go as far as to say that, you know, with an opportunity of this size and scale, we have a real opportunity to make a real positive difference to this, both for both for people and for wildlife around the airport. We absolutely understand that this is a concern of our local communities. We hear that and we really want to work with them.
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Speaker 1
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Speaker 1
create new local air quality challenges? We measure particles all the time, including ultrafine particles. And today there are no thresholds, which is a bit of a challenge for you. It's a difficult science. I've been spending many, many years on my previous airport, where we were one of the pioneers in measuring ERPs and their . Effects,
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Speaker 4
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Speaker 4
any other dangerous substance, you will have thresholds that you need to live up to. Okay. Thank you very much. I think because of time, we've had a really long and. informative pair of sessions today. And I'd like to, as always, thank you for the evidence, the time you spent preparing. If there's anything you didn't get a chance to cover, please do feel free to write to us. And we've got a couple of points we possibly might want to explore with you.
That concludes today's meeting. We'll finish our oral evidence on the draft Heathrow expansion NPS next week. When we hear from the aviation.
That concludes today's meeting. We'll finish our oral evidence on the draft Heathrow expansion NPS next week. When we hear from the aviation.
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