Heathrow’s Supreme Court case: can it avoid paying for the failed 3rd Runway?
The Supreme Court will, on 7th and 8th October, hear the appeal by Heathrow airport, against the ruling by the Appeal Court, that the Airports NPS is illegal. Rival scheme to build a Heathrow runway (keen to expand the airport), “Heathrow Hub” explains why Heathrow is going ahead with this further expense of the Supreme Court hearing, when it is struggling with huge financial problems and the reduction in demand for flights, due to Covid. The way Heathrow’s finances work is that, the more it spends – therefore increasing the size of its Regulated Asset Base (RAB) – the higher the return it can earn, and the more it can charge airlines. So it has a vested interest in keeping its spending high, to the fury of the airlines. Heathrow Hub say: “It is not commonly understood that if Heathrow abandoned its Supreme Court case then the CAA would be unlikely to approve its attempt to recover the £550m it has spent on the failed 3rd Runway, including a provision for its legal costs.” If Heathrow did not struggle to the end, to try to get the runway approved, it would have to finance those huge costs itself. Hence the reason for going ahead with the legal process, even though Heathrow admits no new runway is needed for at least 10+ years. .Tweet Heathrow’s Supreme Court case this week: who will pay for the failed 3rd Runway? Press release from Heathrow Hub, Extended Runway scheme 6th October 2020 – Heathrow’s Supreme Court case could result in airlines and passengers being landed with a £550m bill for the failed 3rd Runway and shows how the economic regulation of the airport is seriously flawed. On 7th October, Heathrow Airport will be in the Supreme Court appealing February’s judgement by the Court of Appeal, which found the 3rd Runway was incompatible with the UK’s climate change commitments. However, Heathrow Hub, the independent proposal for incremental expansion via an Extended Northern Runway, believes Heathrow’s real motive is to show it is making every effort to pursue expansion, and therefore leave the Civil Aviation Authority (CAA) with no option but to force passengers and airlines to pick up the £550m bill for the failed 3rd Runway scheme. The CAA has indicated it is minded to approve the sum, which could yet increase further and would be collected via passenger charges levied on airlines and their passengers. While Heathrow continues to advocate the scheme, the CAA’s policy allows its costs to be added to the airport’s so-called Regulated Asset Base. This enables Heathrow to run up capital expenditure, including legal costs, earn a return on it, and then pass the bill on via higher passenger charges. If the regulator refused to approve the sum and Heathrow’s shareholders were forced to pay, then there is a provision in the original Statement of Principles and most recently the 2018 Relationship Framework, signed by the airport and the Department for Transport. This could potentially give Heathrow a case against the Government, should it withdraw its support for the scheme, thereby putting taxpayers on the hook. Heathrow has some £17bn of debt, partly due to substantial dividends paid by the company to its shareholders in recent years. The Cov