May 24, 2018 / 4:06 PM / 7 months ago

UK transport minister says cost of Heathrow must be kept down

LONDON (Reuters) - The cost of expanding Heathrow Airport must be kept down, British transport minister Chris Grayling said on Thursday, heeding airline warnings that the airport’s new runway must not be so expensive that passengers end up paying higher prices.

Britain's Transport Secretary Chris Grayling speaks at the re-opening of London Bridge Station after extensive redevelopment, in London, May 9, 2018. Jeff Spicer/Pool via Reuters

Heathrow is Europe’s busiest airport but it is now full. Members of Parliament will vote on whether to approve its expansion before July, but first the policy details on which they will vote must be finalised.

Grayling gave an insight into the government’s position in a speech, saying the new runway should not result in passengers paying much higher ticket prices.

“Heathrow’s customers should not pay for a ‘gold plated’ solution,” Grayling said. “The expansion of the airport must provide value for money to every party.”

Airlines like British Airways-owner IAG (ICAG.L) and Virgin Atlantic have been vocal in their worries that the new runway could be very expensive, meaning usage costs rise so much they are deterred from using it.

Grayling said he was taking those concerns on board.

“It remains one of my fundamental priorities to deliver the ambition I set in 2016 – to keep airport charges as close as possible to current levels - so price increases are not passed on to airlines, and ultimately consumers,” he added.

Heathrow has estimated the bill for expansion at 14 billion pounds, having said last year it could shave 2.5 billion pounds off the original estimate.

Grayling said the aviation regulator would oversee discussions between the airport, owned by Ferrovial (FER.MC), the Qatar Investment Authority, China Investment Corporation and others, and the airlines on the new runway, and that airlines who want to use Heathrow in future would also be consulted.

The government is currently working on its draft Airports National Policy Statement. Once published, parliament will vote on the matter, which Grayling has said will take place before the end of the first half of this year.

Reporting by Sarah Young; editing by Stephen Addison

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