This major infrastructure programme marks Heathrow’s most significant transformation in over a decade.

Heathrow Airport has recently submitted to the CAA (Civil Aviation Authority), a £10bn expansion plan, completely backed by private investment to improve service levels and boost reliability, while creating new terminal space for new lounges, shops and restaurants within existing terminals

£2bn of that £10bn total comprises an equity contribution from Heathrow shareholders, which the Uk hub said means that the investment plan can be delivered affordably.

The five-year investment plan will create skilled jobs and drive growth across Heathrow’s UK-based supply chain.

The project will be delivered by a UK-based supply chain 60% of which is based outside London and the South East, supporting skilled jobs and local businesses around the country in this Parliament. Crucially, it is funded entirely through private investment, not taxpayer money, and is designed to be cost-effective.

Alongside passenger improvements, by 2031, the H8 business plan aims to deliver over £5.3 billion in total revenues, with a compounded annual growth rate (CAGR) of 2% and an overall revenue growth of 8% within H8.

This equates to a 1% CAGR and 5% overall growth in relation to 2024 income (all at 2024 prices).

Once complete, Heathrow will be able to serve 10 million more passengers a year, a 12% increase in capacity that supports our airlines’ growth plans. Cargo handling will also get a significant lift, with plans to increase freight capacity by 20%, giving UK businesses a more efficient gateway to international markets.

A basic overview of the financing structure for Heathrow’s H8 Businesss Plan.

A Heathrow spokesperson noted: “The funding, which is fully private investment, has been gathered from a wide pool of current stakeholders within Heathrow’s Consortium pooled from a wide net of its existing Consortium.”

The spokesperson added: “Within the scope of this five-year plan, we will be creating 70,000sq m of additional space for retail, F&B, and Lounge Access. The majority of the reconstruction will be centred in T3 and T5.”

This is reflective of an impact of 19% of total space and additional new space of +3.5%.

The stakeholders in question include: FGP Topco Limited, a consortium owned and led by Ardian (22.61%); Qatar Investment Authority (20.00%); Public Investment Fund (15.01%); GIC (11.20%); Australian Retirement Trust (11.18%); China Investment Corporation (10.00%); Ferrovial S.A. (5.25%); Caisse de dépôt et placement du Québec (CDPQ) (2.65%); and Universities Superannuation Scheme (USS) (2.10%).

Improving the retail environment

Heathrow’s H8 Business Plan noted: “In Terminal 3, the F&B offering is currently space-constrained resulting in poor passenger experience, impacting on revenue too. Initiatives will increase space and strategically allocate it across retail categories. There is also a choice to deliver new lounges in Terminal 3 Pier 6 during H8.

Terminal 5 presents the greatest opportunity for capacity creation. Planned measures include relocation of the WDF proposition to enhance flow space and store visibility through a walk- past layout, expanding F&B proposition, and re-allocation of existing lounge space for use as seating.

The Terminal 4 IDL requires improvements to F&B, seating and attractiveness to wider retail brands.”

The bulk of the improvements to the arrangement and flow of the retail areas in Heathrow will be centralised around T3,T4 and T5.

Further, Heathrow is planning the redevelopment of the Central Terminal Area and will seek planning permission to demolish the old Terminal 1, extend Terminal 2 and build a new southern road tunnel to improve access.

Notably, Heathrow said the redevelopment be delivered affordably with stretching efficiency savings of over £800 million (£500m efficiency savings on capital spend), operating cost efficiencies of 6%, and an airport charge that remains lower than it was a decade ago in real terms.

Heathrow stated it has been working closely with airline partners – including hosting over 120 hours of joint planning – and heard from more than 2 million passengers to understand what matters most, resulting in a customer-led investment plan spanning 2027 – 2031.

Comment from the CEO

Commenting on the investment plan, Heathrow CEO Thomas Woldbye said: “We’re making good progress on our strategy to become an extraordinary airport – having become Europe’s most punctual major airport so far this year. But our customers want us to improve our international rankings further, as do we. To compete with global hubs, we must invest.

Our five-year plan boosts operational resilience, delivers the better service passengers expect and unlocks the growth capacity airlines want with stretching efficiency targets and a like-for-like lower airport charge than a decade ago. With Heathrow’s UK-based supply chain, this private investment will create jobs and drive national growth during this Parliament. We are ready to deliver the more efficient, sustainable Heathrow that will keep Britain connected to the world.”

The plans have been submitted to the CAA; Heathrow added it will support this process alongside its airline partners, as it looks forward to getting started with delivering improvements to make Heathrow an airport fit for the future.

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