The Civil Aviation Authority has set out a further stage in its work on how Heathrow’s investment should be regulated, proposing stronger capital governance, independent technical assurance and greater scrutiny of procurement. The framework is being developed for both the airport’s existing two-runway operation and any possible expansion; it does not approve a third runway or settle future airport charges.
The regulator’s October update builds on a May consultation about possible regulatory models and a July update on how those models might be developed. It says there remains a case for adapting regulation to deal with the scale, complexity and risks of major infrastructure spending. It also says some elements could strengthen oversight of significant investment at today’s airport whether or not a new runway proceeds.
More scrutiny of major investment
A central proposal is a strengthened capital committee, supported by independent technical advice. It would examine Heathrow Airport Limited’s investment decisions, procurement and programme delivery. The authority does not expect the committee necessarily to have a veto over spending. Instead, it wants arrangements that let the committee influence the capital programme in good time, with escalation routes when needed. Its recommendations would carry significant weight in both airport investment decisions and later regulatory decisions.
The first focus would be material new assets and large projects, including expansion, a second phase of Terminal 5 optimisation and replacement of existing terminals. The regulator says it will consider over time whether suitable parts of the approach should extend to routine maintenance and replacement programmes, which contain many smaller projects.
Independent assurance is not a guarantee that a project will come in on budget or on schedule. The proposal is intended to improve the information and challenge available while decisions are made. The practical influence of the committee, the detail of its escalation arrangements and how recommendations are handled remain matters for further design.
Incentives, procurement and competition
The authority also plans to develop incentives for efficient and timely delivery, adapted to the risks and maturity of different projects. Options include cost-sharing mechanisms, delivery obligations and monitoring. It recognises that consumers should be protected from excessive cost increases and long delays, but says a simple cap on the overall cost of expansion presents practical difficulties. Further work will examine thresholds that could trigger stronger cost sharing or greater intervention in a programme’s scope and management.
On procurement, the regulator wants stronger oversight and says competitive procurement should be considered across a broad range of assets, including new or redeveloped terminals. It expects Heathrow to provide strong evidence where it considers competition would not benefit consumers. The authority will discuss whether a project during the next price-control period could be used to test the approach. It also intends to develop powers to require competition for the design and construction, or design, construction and operation, of assets where appropriate.
A separate possibility is direct competition if another organisation obtains planning consent to develop some or all of new airport infrastructure. This is conditional on a third party securing a development consent order; the regulator says it is not extending that idea to contractual arrangements. The distinction matters: competitive procurement is a way of choosing suppliers for projects, while direct competition would depend on a separately authorised infrastructure provider.
What happens next
The CAA’s work plan calls for more information from Heathrow, Heathrow West and other stakeholders, as well as external expert advice during 2026. It expects further policy development and engagement through 2027 and aims to develop key parts of the capital-governance approach by the end of that year. The implementation timetable will be determined as the work progresses.
That timetable is separate from the planning process. The airport’s proposed expansion still depends on government planning policy and any future consent process; the CAA document is about economic regulation and consumer safeguards, not permission to build. The regulator also plans a separate consultation later in 2026 on recovery of expansion costs incurred from 2027 onwards, including an updated assessment of costs and consumer benefits.
For passengers and airlines, the eventual significance will depend on the rules adopted and how they affect delivery costs, service quality and the charges paid by airport users. At this stage, the authority has described a framework under development, with key design choices, stakeholder views and the question of how widely reforms should apply still to be worked through.
