Heathrow passengers to face higher fares as CAA approves cost recovery
The regulator has permitted Heathrow Airport Limited to recoup £320m in early expansion costs through increased airline charges over the next 25 years.
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Heathrow passengers face decades of higher fares after the Civil Aviation Authority (CAA) authorised Heathrow Airport Limited to recover up to £320m in early expansion costs. The regulator has overridden objections from airlines to allow the airport to charge for planning work conducted since 2025. These costs are typically passed on to travellers through increased air fares.
Impact on passenger costs
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Chancellor John Healey announced approval for the £33bn project, despite appraisal showing a negative net present value and a consultation that closed on 1 September 2026
Current airport charges sit at approximately £26.22 per passenger. According to the CAA, the new decision will increase the maximum charge per passenger by about 15p in 2028, with an estimated rise of 30p in following years. This decision follows a period of competition where the CAA also allowed a rival expansion scheme, Heathrow West, to claim back £4.1m spent on its plans in 2025. The regulator stated this refund was necessary to promote competition.
Airline and regulatory response
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The move has heightened concerns for airlines regarding the massive scale of the proposed third runway. Heathrow estimates the total cost of the project at £33bn, which includes a £1.5bn project to divert the M25. British Airways, the largest airline at the airport, told the CAA that early cost recovery risks making the expansion unaffordable for consumers and inconsistent with a credible benefits case.
Our decision strikes a balance between supporting the delivery of benefits to consumers through timely progress on Heathrow expansion, whilst protecting them from undue increases in costs.
Tim Johnson, CAA Director of Consumers and Markets
A spokesperson for Heathrow said the expansion would provide more choice and a real economic boost to the country. The airport noted that unlocking private investment requires a supportive regulatory framework. The airline is currently considering the CAA proposals to inform future investment decisions.
Political and regional context
The expansion remains a point of political contention. The government recently launched a consultation on the Heathrow expansion national policy statement, with the former chancellor Rachel Reeves stating a desire to see construction begin by 2035. However, some leaders have criticised the focus on the capital, with Andy Burnham previously arguing that the plans divert infrastructure investment away from the north and into London. Additionally, a study by the New Economics Foundation suggested the third runway could divert thousands of jobs from Birmingham and the Midlands to the south.
A separate process will be conducted to decide how costs incurred from 2027 will be managed.
Questions this report answers
+How much will passengers pay more in fares?
Passengers will face fare increases of about 15p per person in 2028, rising to an estimated 30p in subsequent years. This follows the CAA’s approval for Heathrow to recover £320m in early expansion costs through higher airline charges, which airlines typically pass on to travellers.
+How long will the higher charges last?
The £320m in early expansion costs will be recouped over 20 to 25 years through increased airline charges. This means passengers will likely face higher fares for decades as the airport recovers the planning costs approved by the CAA.
+What is the total cost of the Heathrow expansion project?
The total estimated cost of the Heathrow expansion, including a third runway, terminal expansion, and M25 diversion, is £33bn. This figure was confirmed by Heathrow Airport and includes a £1.5bn project to divert the M25 motorway.
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