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Heathrow, Gatwick expansion costs under-estimated: Davies

Analysis of the proposed runway expansion plans at London's Heathrow and Gatwick airports short-listed by the UK commission looking into future capacity, suggests costs have been under-estimated for all three projects in their submissions.

The Airports Commission, which will produce recommendations on future runway capacity for the south-east to the UK Government when it reports next summer, has today opened a consultation on its analysis of the proposals.

The wide-ranging consultation finds that the costs estimated in submissions for all three projects short-listed - a second runway at Gatwick, a third runway at Heathrow and Heathrow Hub's proposed extension to the northern runway - are lower than those from its own analysis.

It estimates the construction of a second runway at Gatwick, together with a third terminal and all associated infrastructure, will cost up to £9.3 billion ($14.8 billion). This is almost higher £2 billion higher than Gatwick's forecast.

"This...is in large part a result of differing opinions on the application of risk and optimism bias," the Commssion says. Gatwick estimates per passenger charges would rise from £9 currently to £12-15 as a result of expansion. But the Commission says its analysis indicates average charges rising to between £15 and £18, with peak charges of up to £23.

The Commission estimates the cost of Heathrow Hub's proposed runway extension, together with new terminal and other facilities, at around £13.5 billion. This is higher than Heathrow Hub's estimate of £10.1 billion.

It says Heathrow Hub's estimate of an increase in charges per passenger to £22 is lower than its estimates that it could to between £27-28, with a peak charge of up to £30.

It estimates the cost constructing a new runway at Heathrow, as well as terminal and other related facitlies, at £18.6 billion - around £4 higher than the proposal, excluding £800 million of surface access costs. "These costs are higher than for either of the other schemes, mainly because of higher land acquisition and transit system costs," it says.

Heathrow Airport estimates charges would peak at roughly £27 before returning to approximately current levels [around £20] by 2050. The Commission’s analysis indicates charges rising to between £28 and £29, with peak charges of up to £32.

"We have not yet taken a view on which proposal strikes the most effective balance between the assessment criteria," says Airports Commission head Howard Davies. "It is important first that we provide an opportunity for this evidence to be examined, challenged and improved. This consultation gives everyone with an interest in the issue of airport expansion that opportunity."

The consultation will run until 3 February.

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