INITIAL BUSINESS PLAN SUMMARY - HEATHROW'S - Submit

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INITIAL BUSINESS PLAN SUMMARY - HEATHROW'S - Submit
HEATHROW’S

INITIAL
BUSINESS PLAN
SUMMARY
INITIAL BUSINESS PLAN SUMMARY - HEATHROW'S - Submit
HEATHROW’S VISION:

 TO GIVE PASSENGERS
  THE BEST AIRPORT
SERVICE IN THE WORLD
INITIAL BUSINESS PLAN SUMMARY - HEATHROW'S - Submit
CONTENTS
Our plans and options                                     6

Heathrow today                                            8

Our lessons from Q6                                       10

Delivering growth for consumers                           12

Connecting the whole of the UK to global growth           14
in a changing world

Tackling carbon head on                                   16

Who are our consumers?                                    20

How we have listened carefully to consumers               22

What we heard from you                                    24

Delivering outcomes                                       27

What will the future Heathrow be like for consumers?      28

Delivering outcomes for consumers                         30
– I have more choice of flights and destinations

Delivering outcomes for consumers                         34
– I am confident I can get to and from the airport

Delivering outcomes for consumers                         38   HEATHROW’S                   Regular flights to every corner of the
                                                                                            UK and rail links to North, South, East
                                                                                                                                          capital spend. We are also providing a
                                                                                                                                          comprehensive package of measures to
                                                                                                                                                                                      reduce passenger fares by tens or
                                                                                                                                                                                      even hundreds of pounds a ticket.

                                                               PLAN FOR
– I have a predictable & reliable journey                                                   and West will spread the benefits of          minimise the negative impacts of growth     This value could potentially support the
                                                                                            growth to every nation and region of          on local communities and maximise the       shift to zero carbon flights.
Delivering outcomes for consumers                         42                                our country.                                  benefits they receive.
– I feel comfortable and secure at the airport                 THE 2020s                    This Initial Business Plan shows how we       None of this is easy, but our enviable
                                                                                                                                                                                      We do face some real choices over the
                                                                                                                                                                                      speed, service, connectivity and resilience
Delivering outcomes for consumers                         46                                will deliver the global connections that      track record in delivering complex          that we plan for over the next 15 years.
                                                                                            Britain needs in a way that is sustainable,   infrastructure projects on time and on      We have reflected these in two options,
– I feel cared for & supported                                 Heathrow expansion will      affordable, deliverable and financeable.      budget, and our strong, predominantly       both of which meet the challenge of
Delivering outcomes for consumers                         50   connect all of Britain to    We will meet all the requirement of the
                                                                                                                                          UK supply chain means that we can be        being sustainable, affordable, deliverable
– I have an enjoyable experience at the airport                                                                                           trusted to deliver.                         and financeable.
                                                                                            Airport National Policy Statement (ANPS),
                                                               global growth, putting it    which received the overwhelming               Heathrow expansion will be one of the       This Initial Business Plan is the start of
Delivering outcomes for our communities                   54
– Commitments made by Heathrow for sustainable                at the heart of the global   support of MPs. Since the ANPS vote,          largest privately financed infrastructure   a conversation with consumers, airlines
  growth are met                                                                            we have committed to doing all we can         projects in the world. The current          and other stakeholders. Your feedback
                                                               economy for generations      to achieve net zero flying by 2050. For       regulatory framework, with a Regulated      will be reflected in our Final Business
Delivering outcomes for colleagues                        56                                Heathrow’s own operations at the airport      Asset Base and single till, have proven     Plan in 2020.
– Heathrow is a great place to work
                                                               to come. We will be the      we will be carbon neutral from next year.     the most efficient ways to finance large,
                                                                                                                                                                                      Heathrow expansion will connect all of
                                                                                                                                          long term projects. This plan ensures the
Delivering outcomes for airlines                          58
                                                               best-connected country       IAG, our largest airline customer, has
                                                                                            committed to net zero carbon for              necessary cashflows to support global
                                                                                                                                                                                      Britain to global growth, allowing future
                                                                                                                                                                                      generations to enjoy the benefits of
– Heathrow provides efficient, affordable and reliable        in the world, with regular   flight by 2050. We are working with           debt financing at an investment grade,
                                                                                                                                                                                      aviation that we enjoy today, in a world
   airport services                                                                         them and others to make this the              while maintaining a sufficient return
                                                               direct flights to all the    standard in global aviation, to take the      to attract equity investment to support
                                                                                                                                                                                      without carbon.
Delivering outcomes for investors                         60                                carbon out of flying and remove any           the expansion programme through any
– Heathrow delivers predictable and fair returns               major cities in the United   competitive distortions.                      shocks or the economic cycle.
The strategic options we face                             62   States, China and India,     This plan meets the affordability             The big prize for consumers is through
                                                                                            challenge. This is an incredible              lower airfares. While we have been
Consumer views on options                                 64   the great economies of       achievement, given the increases in           constrained by runway capacity, only
A consolidated view of our plan                           65   the 21st century.            charges that have been required to            around 50% of routes have faced
                                                                                            expand other major hubs. We want              competition between airlines, making
A supporting regulatory framework                         66                                to deliver expansion as cost efficiently      airfares higher than they could be.
                                                                                            as possible, and have worked closely          The introduction of more competition        John Holland-Kaye
The regulatory requirements for our business plan         68                                with our airline customers to minimise        and choice between airlines will            Chief Executive, Heathrow

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INITIAL BUSINESS PLAN SUMMARY - HEATHROW'S - Submit
OUR PLANS AND OPTIONS

We have listened carefully to our consumers and wider stakeholders.                                                                                OPTIONS IMPACT THE DELIVERY AND OUTCOMES FOR CONSUMERS
We believe these plans meet their needs. However, there are trade-offs to be made
and we have reflected some of these in two options “PRIORITISING SAVINGS” and                                                                       PRIORITISING SAVINGS                                PRIORITISING SERVICE
“PRIORITISING SERVICE.” Both options lead to lower passenger fares.

                                                                                                                                                            LOWER FARES                                          LOWER FARES

                                                                                                                                                         £35-£140                                             £20-£80
                                     Affordable                                                                                                                 SAVINGS                                            SAVINGS

                                     Consumer tested for willingness to pay and meets affordability challenge

                                     Financeable
                                     Can be entirely privately financed with the right regulation

                                     Deliverable
                                     Delivers capacity by 2030 and is buildable with an assured plan
                                                                                                                                                                                             Investments identified by consumers to improve service
                                                                                                                                              Faster growth, more competition, more choice          and resilience c. £500m every five years

                                     Sustainable
                                     Meets tough ANPS requirements in noise, air quality and mode
                                     share and compatible with net zero carbon flying by 2050

                                                                                                                                                  Maintaining Heathrow in the top half
                                                                                                                                                    of European airports for service                        Greater Rail Investments

The CAA published its policy update on the early costs of Heathrow expansion in December 2019. Our plan is broadly consistent with          AIRPORT CHARGE	£23.81 (2014p)                      AIRPORT CHARGE	£27.19 (2014p)
the CAA schedule assumptions. However, at first reading we are concerned over whether the CAA is setting the right incentives to allow      (15 year average)
                                                                                                                                                            £26.20 (2018p)                     (15 year average)£29.91 (2018p)
investment. Inability to make these early investments will impact, or could even prevent, the delivery of our plans. We are reviewing the
detail and will respond in due course to the CAA consultation.

6     HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                                                        7
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HEATHROW TODAY

Heathrow enables over 80 million
passengers, to visit the UK, to go on
holiday, conduct business and visit
friends and relatives each year.                                                        80                                  EXCELLENT
                                                                                                                       82% OF PASSENGERS NOW
                                                                                                                      RATING THEIR EXPERIENCE AS
                                                                                                                                                                       16%
                                                                                                                                                                       REDUCTION
                                                                                                                                                                                                               £3bn
                                                                                                                                                                                                                  INVESTED

Heathrow is the UK’s only hub airport.
                                                                                   MILLION                             EXCELLENT OR VERY GOOD,
                                                                                                                       COMPARED TO 40% IN 2006
                                                                                                                                                                      OF OPERATING
                                                                                                                                                                          COSTS
                                                                                                                                                                                                                    IN Q6

                                                                                  PASSENGERS
Hub airports combine direct passengers,                                                                               We have more happy passengers            We’ve become significantly more        In Q6 we invested £3bn in resilience,
                                                                                 SERVED IN 2018
transfer passengers and freight to enable                                                                             travelling through the airport too,      efficient. We systematically cut       baggage and transforming the
                                                                                                                      with our Airport Service Quality         operating costs by 16% in real         passenger journey. We are entering
long-haul aircraft to fly to destinations                                                                             (ASQ) scores on an upward trend          terms between 2014 and 2018.           a new phase of investment which
                                                                                                                      for the last 10 years.                                                          will enable the building of a third
all over the world that cannot be served                                                                                                                                                              runway, new and improved terminal
by ‘point to point’ airports which rely on                                                                                                                                                            infrastructure and better surface
                                                                                                                                                                                                      access options.
local demand alone.

                                                                                         No.1
                                                SHIPPING OVER

     84 200+                                  £100bn                                      AIRPORT IN
                                                                                                                               99%
                                                                                                                           OF PASSENGERS
                                                                                                                                                                     100%
                                                                                                                                                                       RENEWABLE
                                                                                                                                                                                                                  4:1
                                                                                                                                                                                                              MPs BACKED
    AIRLINES     GLOBAL                           OF IMPORTS                               WESTERN                      TRAVELLING WITH BAGS                           ELECTRICITY                        HEATHROW EXPANSION
     SERVED      DESTINATIONS                     & EXPORTS                                EUROPE

Heathrow currently serves more           It is not just passengers that travel   Heathrow has consistently won        We established our Airport               Heathrow is making progress            An overwhelming majority of
than 200 destinations in more than       through Heathrow; over £100bn           Skytrax awards for World’s Best      Operations Centre (APOC) in 2014         decarbonising the airport’s            almost 4:1 MPs backed Heathrow
80 countries, through 84 airlines,       worth of imports and exports with       Airport Terminal (where our newest   significantly increasing resilience to   infrastructure and is on track to      expansion to connect all of Britain
connecting the UK to the world and       countries outside the EU were           terminals, Terminal 2 and Terminal   weather, technology failures and         be carbon neutral in the next          to global growth.
the world to the UK.                     shipped through Heathrow in             5 compete for top spot), Best        now drones.                              12 months.
                                         2018, helping British businesses        Airport in Western Europe and
In the last five years we also doubled                                                                                80% of our flights now depart            In 2019, we won edie’s Mission
                                         access customers in every corner        Best Airport Shopping.
our domestic routes and now we                                                                                        within 15 minutes of schedule.           Possible Sustainable Business of the
                                         of the globe.
also serve 12 cities in China. We are                                                                                                                          Year Award.
rated number one for connectivity
                                                                                                                                                               Heathrow has been running on
by OAG’s Megahubs index, which is
                                                                                                                                                               100% renewable electricity since
valuable for UK PLC.
                                                                                                                                                               April 2017. We have the UK’s largest
                                                                                                                                                               fleet of electric vehicles.

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OUR LESSONS
FROM Q6

     1                                       2                                          3                                          4                                          5                                           6
WE ARE A                                 INVESTING IN PEOPLE                        AN INTEGRATED END-TO-                      WE ARE NOW COST                            WORKING WITH AIRLINES                       AVIATION MUST GET
SERVICE BUSINESS                         DELIVERS SERVICE                           END OPERATION IS BEST                      COMPETITIVE WITH                           CAN UNLOCK GROWTH                           TO NET ZERO CARBON
We are aligned behind a single vision    At a global hub airport, with the most     FOR SERVICE, EFFICIENCY                    OTHER HUBS                                 While we have a common agenda with          We have to earn our licence to operate
“to give passengers the best airport     diverse consumers on the planet, service   AND RESILIENCE                             We have systematically reduced             airlines on cost, service, sustainability   and to grow. Our “environmentally
service in the world.” Our work          must be delivered by people. We have       Since the snow crisis of 2010, we have     operational costs at Heathrow since        and resilience, we have very different      managed growth” proposal would
with Team Heathrow to improve            therefore invested in the skills of our    taken responsibility for the end-to-end    2014 – our own costs and those of          commercial incentives. Airlines at          mean that we can only grow if we meet
punctuality, speed through immigration   talented people and promoted diversity     passenger journey at Heathrow. We          airlines. We have renegotiated all         Heathrow have a commercial incentive        tough sustainability targets. Heathrow
and baggage connection rates have        to reflect our consumer base. We have      have worked with Team Heathrow             contracts and introduced new terms         to maximise price per passenger (yield),    2.0 has been a ground-breaking
transformed passenger satisfaction.      also invested in mental health and well-   partners to create a complete view         and conditions. This has been extremely    whereas the airport is incentivised to      approach to delivering ambitious
We now have the highest punctuality      being, for example through our             of airport operations in our Airport       challenging, but we have managed to        increase passenger numbers and reduce       sustainability targets. The next challenge
of any major hub airport and are the     “StRaW Buddies” programme, where           Operations Centre (APOC). We have          avoid strike action. Future cost savings   cost per passenger. We have had some        is to decarbonise flight so that future
only one to have improved punctuality    specialist trained colleagues listen,      standardised processes and systems         are likely to come from complete           success in working with airlines to         generations can enjoy the benefits of
in the last five years.                  offer guidance and can recommend           to increase resilience. This has also      process re-engineering and looking         improve load factors. However, lack of      aviation in a world without carbon.
                                         professional help if appropriate.          reduced operating costs and improved       across the value chain.                    competition on around 50% of routes
                                                                                    efficiency and service. The number of                                                 as a result of runway constraints is
                                                                                    “Gold” disruption incidents has fallen                                                making fares higher than they could be.
                                                                                    significantly, and we have been able to
                                                                                    provide support to our airline customers
                                                                                    during disruption to their business. We
                                                                                    were one of the only airports in Europe
                                                                                    to remain open through a week of snow
                                                                                    in early 2018.

                                                                                                                                                                          We believe we have reflected these lessons in designing
                                                                                                                                                                          our outcomes and proposals for service, efficiency and
                                                                                                                                                                          investment through to 2036.

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DELIVERING GROWTH
FOR CONSUMERS
The 2020s will be one of the most exciting periods of change ever for Heathrow.
Growth will accelerate as we develop and then open new capacity with a third
runway. That is a huge win for consumers. All the while we must ensure that
over 80 million passengers a year pass through Heathrow safely and delighted
with their travelling experience.
Our aim today, and throughout                  Engagement Strategy we have listened     The big prize for consumers is through     STRIVING FOR BETTER                       BALANCING VIEWS
this period of change, is to provide           to their needs and increasingly co-      lower fares. While we have been
passengers with the best airport service       developed ideas through new research,    constrained by capacity, only about        We made considerable improvements         Consumers are at the heart of our plans.
in the world.                                  approaches and conversations. We have    50% of routes face competition             during Q6 to become a top-ten airport     We must also recognise that to deliver
                                               spoken to our current passengers and     between airlines, making fares higher      in terms of service while reducing our    for consumers we need to balance, the
Consumers have helped shape our                                                                                                    operating costs and charges.              sometimes competing, views of our
                                               potential future passengers to reflect   than they could be. The introduction of
Initial Business Plan. In the last few years                                                                                                                                 airlines, communities, colleagues and
                                               changing needs.                          competition and choice between airlines    Growth is an opportunity for
we have revamped and expanded our                                                                                                                                            investors. This is in addition to meeting
                                                                                        will reduce passenger fares by tens or     transformational change. We will bring
consumer insight and engagement.                                                                                                                                             the obligations and guidance set by the
                                                                                        even hundreds of pounds on each ticket.    in the best ideas from around the world
Building on a new Consumer                                                                                                                                                   CAA, DfT and wider policy.
                                                                                        The DfT estimates Heathrow expansion       and work in partnership with others
                                                                                        will deliver c£68bn in consumer savings.   to find ways to delight our consumers.    Our plan must be sustainable. Our
                                                                                                                                   This may mean new technologies, or        communities need certainty that we
                                                                                        We also heard from our consumers that      simply doing things in a better, more     will meet the tough Airport National
                                                                                        we need to get the basics right today,     sustainable way. Throughout our Initial   Policy Statement (ANPS) commitments
                                                                                        for example, cleanliness and getting rid   Business Plan, we have tested our         on noise, air quality, surface access and
                                                                                        of queues at any stage of the journey.     assumptions with external benchmarks      carbon. We need to deliver a carbon
                                                                                        A predictable, reliable journey and        and challenged ourselves on efficiency    neutral airport and support the broader
                                                                                        surface access are also high priorities.   and improvements.                         shift to net zero flying.
                                                                                        Consumers want to feel looked after
                                                                                        when they are with us. We also need to                                               Both we and our airline customers are
                                                                                        delight consumers to ensure Heathrow                                                 seeking an affordable scheme. Our
                                                                                        is an airport of choice for consumers                                                plans have been tested for consumers’
                                                                                        today and in the future.                                                             willingness to pay for them. Our plan
                                                                                                                                                                             meets the affordability challenge.
                                                                                                                                                                             Our plan must be financeable. As our
                                                                                                                                                                             growth will be privately funded at no
                                                                                                                                                                             cost to the tax payer, we need to
                                                                                                                                                                             maintain our strong investment grade
                                                                                                                                                                             credit rating through expansion. This
                                                                                                                                                                             plan ensures necessary conditions to do
                                                                                                                                                                             that, while maintaining a sufficient return
                                                                                                                                                                             to attract equity investment to support
                                                                                                                                                                             the expansion programme through any
                                                                                                                                                                             shocks or the economic cycle.
                                                                                                                                                                             We want to deliver expansion as cost
                                                                                                                                                                             efficiently as possible and have worked
                                                                                                                                                                             with airlines to minimise capital spend.
                                                                                                                                                                             Our enviable track record in delivering
                                                                                                                                                                             complex infrastructure projects on
                                                                                                                                                                             time and on budget and our strong,
                                                                                                                                                                             predominantly UK supply chain mean
                                                                                                                                                                             that we can be trusted to deliver.

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CONNECTING THE WHOLE OF
THE UK TO GLOBAL GROWTH
IN A CHANGING WORLD
The aviation industry has been significantly disrupted in the last few      These trends have changed consumer         New aircraft technology is allowing          However, while Heathrow has been
                                                                            expectations to have better service at     airlines to add more “spokes” from           operating at capacity, we have had to
decades, particularly from within: new economic models (e.g. low-           lower cost and to be more in control of    their main hubs, which means that            turn away airlines who have typically
                                                                            their time. Technology is transforming     more UK regional airports now enjoy          chosen to operate instead from our
cost carriers), new technology (e.g. self-service), automation of airport   aviation’s role in society, reducing the   direct flights to big hubs such as           main European hub competitors in
                                                                            impact of noise on local communities,      Singapore, New York and Dubai. But           France, Germany and elsewhere. We
processes (e.g. baggage), new distribution systems (e.g. Skyscanner)        reducing CO2 emissions, but also           it also means that more regional cities      have not been able to develop the
and new technology (e.g. Artificial Intelligence) have transformed the      allowing more cities to be connected.      around the world can now be served           frequent business routes to meet all
                                                                                                                       directly from Heathrow. Our goal is to       of the demand to markets such as
way we work.                                                                We build airport infrastructure to last    be the best-connected airport in Europe      China and India that Britain will need if
                                                                            for 50-60 years, so in developing our      to all the major cities in the US, China     it is to remain one of the world’s great
                                                                            masterplan, we are trying to anticipate    and India – the great economies of           trading nations.
                                                                            the future needs of passengers. We also    the 21st Century. That will secure
                                                                                                                                                                    Expansion will allow IAG, Virgin and
                                                                            need to remain flexible to accommodate     Britain’s position at the heart of the
                                                                                                                                                                    other UK airlines to grow, as well
                                                                            changing airline ownership and             global economy.
                                                                                                                                                                    as allowing international airlines to
                                                                            partnerships. Our masterplan
                                                                                                                                                                    expand in the UK. We expect a mix of
                                                                            accommodates this through fewer,           A SIGNIFICANT                                “low cost” carriers as well as network
                                                                            larger terminals, better inter-terminal    OPPORTUNITY FOR                              airlines. With up to 40 new long-haul
                                                                            connections for passengers and bags
                                                                            and common use facilities.
                                                                                                                       AIRLINE GROWTH                               routes as well as more domestic and
                                                                                                                                                                    European routes, Britain will be the best-
                                                                                                                       Global air traffic demand is expected
                                                                                                                                                                    connected country in the world.
                                                                            TAKING BRITAIN                             to grow rapidly, doubling by 2030,
                                                                            FURTHER - THE BENEFITS                     due to population growth, an ageing
                                                                                                                       demographic travelling more and              ENVIRONMENTALLY
                                                                            OF A HUB                                   the growth of emerging economies,            MANAGED GROWTH
                                                                            Heathrow is one of the world’s great       particularly in the East. We anticipate      Through the Airports Commission and
                                                                            airports. We are the largest passenger     there is sufficient demand for an            Airports National Policy Statement
                                                                            airport in Europe and the largest cargo    expanded Heathrow.                           (ANPS) we have agreed a tough set
                                                                            port in the UK. Almost all our cargo is                                                 of measures around carbon, noise, air
                                                                                                                       Heathrow is the number one destination
                                                                            carried in the hold of passenger planes,                                                quality and congestion on local roads.
                                                                                                                       for international airlines. Heathrow
                                                                            so as we develop more long-haul                                                         We are proposing a mechanism that
                                                                                                                       is fantastically well located, within
                                                                            destinations, we also develop more                                                      incentivises airlines and the airport to
                                                                                                                       a direct flight of 95% of the global
                                                                            direct trading routes.                                                                  meet these tough targets to release
                                                                                                                       economy. London is the biggest aviation
                                                                            By pooling demand from across Europe,      market in the world, meaning strong          new capacity. This is a ground-breaking
                                                                            we can support regular long-haul flights   point to point demand. We compete            approach which will ensure that the
                                                                            to more destinations than any other        with other hubs in Europe and the            aims of the aviation community and
                                                                            airport in the world. This is a rare and   Middle East, particularly for transfer       the local community are aligned.
                                                                            valuable asset for the UK. The UK enjoys   passengers and cargo. We compete             It is described in more detail in our
                                                                            20 times more trade with countries to      on convenience, service and cost. Our        consultation materials.
                                                                            which it has a direct flight than those    competitive advantages are our high
                                                                            without. Through regular connections to    value catchment area, high frequency
                                                                            every corner of the UK, we spread the      connections and premium service
                                                                            benefits of a world class hub to every     standards. Increasingly, we will
                                                                            nation and region of our country.          need to provide better transfer facilities
                                                                                                                       for passengers and simpler processes
                                                                                                                       for cargo.

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TACKLING CARBON
HEAD ON
There are many benefits of aviation. It connects consumers to the world - enabling       CARBON NEUTRAL                              engines on the ground. We will improve       NEAR: ACCELERATE
                                                                                         AIRPORT FROM 2020                           public transport options for passengers      SUSTAINABLE
visits to family and friends, letting people explore their world and connecting the UK                                               and the 70,000-plus people who work
                                                                                                                                                                                  ALTERNATIVE FUELS (SAFs)
                                                                                         Heathrow has made significant progress      at Heathrow.
to markets, trade and global growth.                                                     in decarbonising our infrastructure –                                                    Heathrow wants to work with
                                                                                         reducing emissions by 93% since 1990        DECARBONISING FLIGHT                         Government to tackle the gross carbon
The challenge is to protect the benefits   Heathrow can’t solve the carbon               through steps including:                                                                 emissions from flights head on. SAFs are
                                                                                                                                     An expanding, commercially successful        the fastest way for aviation to reduce
of aviation in a world without carbon.     challenge alone. Where we control             •	Reducing use of heat and electricity     industry, including a growing Heathrow,      gross carbon emissions. SAFs from
It is possible. It will need a complete    emissions - from our infrastructure -            with low energy technology               provides an opportunity to accelerate        second-generation biofuels are now
industry shift – with more investment in   we will get to carbon neutral from next
                                                                                         •	Smart infrastructure design to cut       decarbonising wider UK flying as well.       proven to work safely, can be blended
offsetting and carbon capture schemes,     year. The real prize beyond that is to
                                                                                            direct emissions                         In the 2020s we need to accelerate and       with traditional kerosene, run through
a major switch to sustainable fuels and    decarbonise flights - which account
                                                                                                                                     scale solutions. We believe zero carbon      existing infrastructure and aircraft
new flight technologies.                   for 95% of aviation’s overall carbon          •	Investing in on-site renewable           flight is possible. Our plan is structured   engines. They can potentially deliver
                                           footprint. We will support our airline           energy including biomass and solar
Consumers say sustainability matters                                                                                                 to allow us to work with others to make      up to 100% cuts in flight emissions.
                                           customers’ growing commitment to
directly to them too:                                                                                                                it reality.                                  The cost of SAFs is currently too high.
                                           net zero flight.                              We already run our airport on 100%
•	60% think reducing emissions                                                          renewable electricity. Our cars and small                                                Airlines must be supported in adopting
   should be an industry priority                                                        vans will be electric from 2020. Our
                                                                                                                                     NOW: CARBON                                  these breakthrough fuels. We believe
                                                                                         last major source of emissions is from      OFFSETTING AND                               that potential ways to help include
•	38% of people would be
   willing to pay a levy to help protect                                                 heating the airport with gas. The final     REMOVAL                                      prioritising second generation biofuels
                                                                                         big step is to switch off our boilers and                                                for aviation, mandating a rising volume
   the environment (8% more than                                                                                                     Carbon offsetting is an important part       of SAFs, stimulating production of SAFs
   in 2018)1                                                                             go carbon free. We are planning to          of aviation’s transition to net zero.
                                                                                         do that by the mid-2030s at the latest                                                   and narrowing the cost gap between
                                                                                                                                     The one thing passengers can do              fossil fuels and SAFs. Heathrow will do
                                                                                         with a heat exchange scheme included        immediately is to fund reducing and
                                                                                         in our plan but we want to go faster if                                                  what it can by structuring our charges.
                                                                                                                                     removing emissions in other parts of the     However, Government support is
                                                                                         we can. We already run Terminal 2 on        economy. Flights in Europe have been
                                                                                         green gas and from 2020 will do the                                                      needed to stimulate this change at
                                                                                                                                     in the Emissions Trading System since        the speed needed.
                                                                                         same for all our buildings which will cut   2012, reducing 130m tonnes of carbon
                                                                                         our absolute emissions. We will remove      by 2018. A binding UN agreement will
                                                                                         any remaining emissions through natural     offset all growth in global flights from
                                                                                                                                                                                  NEXT: ZERO-CARBON
                                                                                         climate solutions in the UK, such as        2020. Some airlines are going further,       FLIGHT
                                                                                         peatland restoration and major forestry     such as IAG offsetting all domestic          In the long-term, the goal is flying
                                                                                         projects in Scotland.                       flights, and easyJet all its flights. We     without producing any carbon.
                                                                                                                                     are looking at how our landing charges       Manufacturers and start-ups are
                                                                                         REMOVING CARBON FROM                        could provide a stronger incentive for       investing in electric flight. These could
                                                                                         GROUND OPERATIONS                           airlines to reduce carbon or offset. We      start to be used for short-haul routes
                                                                                                                                     will promote responsible offsetting to       from the 2030s. We will need the right
                                                                                         The two major UK-based carriers at
                                                                                                                                     our passengers too so that they can          electric charging network for these
                                                                                         Heathrow, IAG and Virgin, have both
                                                                                                                                     choose to fly “carbon neutral today.”        planes. The weight of batteries means
                                                                                         committed to be net zero by 2050.
                                                                                                                                     Nature-based carbon removals in the          they are not an option for long journeys,
                                                                                         We need to support them and other
                                                                                                                                     UK, which include peatland, forest and       but renewably produced hydrogen
                                                                                         airlines to deliver their ambitions.
                                                                                                                                     soil projects, offer cost effective and      could be. In the meantime, airlines are
                                                                                         We can help by setting standards for
                                                                                                                                     trustworthy, verifiable opportunities        making significant progress by choosing
                                                                                         operations on the ground and investing
                                                                                                                                     to remove residual emissions from            to operate newer, cleaner and quieter
                                                                                         in the right infrastructure. We will
                                                                                                                                     flights. They also protect and enhance       aircraft and we actively encourage that
                                                                                         introduce an Ultra-Low Emissions Zone
                                                                                                                                     biodiversity and manage flood risk.          through our charges today. We have
                                                                                         for airside vehicles in 2025 and build
                                                                                         the infrastructure to support electric                                                   not built the cost of these infrastructure
                                                                                         vehicles. We will upgrade plug-in air-                                                   changes that could be required for this
                                                                                         conditioning and change our charging,                                                    into our plan.
                                                                                         so aircraft do not need to run their

                                                                                         1
                                                                                             NATS, Aviation Index 2019

16   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                            17
INITIAL BUSINESS PLAN SUMMARY - HEATHROW'S - Submit
AIRSPACE                                     OUR COMMITMENTS
MODERNISATION                                Heathrow 2.0 is our overall plan for
Airspace change is required as part          sustainable growth. It sets out how
of our expansion and part of plans           we will improve life for colleagues and
to modernise the wider UK’s airspace         communities, contribute to a thriving
to benefit the environment and               economy, and how we can help to
passengers. The major changes to flight      tackle global challenges including
paths will make airspace more efficient      climate change.
by improving punctuality, cutting CO2        We have made commitments as part
emissions, better managing noise by          of our expansion which will not be
exploring the use of multiple routes,        compromised. Our commitments require
reducing of aircraft holding at low levels   investment which is reflected in our
and ensuring capacity to meet future         plan. We recognise that there may
demand. We will also collaborate in          be instances where acting sustainably
the EU’s Single European Sky proposal,       means not choosing the cheapest
which will significantly reduce emissions    option, and Heathrow is clear on
and improve service.                         advocating this choice where we
                                             think it right.
CLEAN AIR
                                             We are collaborating with other
Clean air on the ground in local             firms across global aviation through
communities is vital for health. Road        our sustainability partnerships with
transport is the single biggest lever to     Sustainable Aviation, Air Transport
improve air quality as well as reducing      Action Group (ATAG) and the World
carbon emissions. Even with expansion,       Economic Forum (WEF).
we will have no more airport related
traffic on the roads relative to today’s     Some of the carbon initiatives with
levels. We have shown this is possible.      financial impacts in our plans include:
Over the last 20 years, Heathrow’s           •	Carbon offsetting through UK
passenger numbers have risen,                   forestry and peatland restoration
with airport related traffic remaining
the same.                                    •	Maximising investment in on-site
                                                generation and energy demand
We continue to reduce the reliance on           reduction and management
cars to access the airport by:
                                             •	Masterplan components such as
•	Improving public transport options           new zero carbon heating schemes
•	Supporting ways to reduce the             •	Use of less carbon intensive
   reliance on cars to access the airport       materials and manufacturing
•	Introducing an Ultra-Low Emissions           principles during construction
   Zone, followed by a Vehicle Access        •	Expanded infrastructure for charging
   Charge in the 2020s                          electric and hybrid vehicles
                                             We are clear that Heathrow and aviation
                                             can only grow if we cut carbon. It would
                                             be a huge mistake to try to cut flying
                                             instead. Taking the carbon out of flying
                                             is possible, but we all need to tackle that
                                             challenge head on. Previous attempts to
                                             cut carbon by stopping airport growth
                                             have just exported emissions. The
                                             better solution is to decarbonise flight,
                                             protecting the benefits of aviation for
                                             future generations.

18   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                              19
WHO ARE OUR
CONSUMERS?
                                              OUR CURRENT CONSUMERS2                                                                                                                        OUR FUTURE CONSUMERS

                       Age                             Connecting/Direct                          Frequency of Travel
                                                                                                  in the past 12 months
                   65+                                       Connecting
                   5%        14-24                                                                     7 or more                                                                           More fliers from emerging
         55-64               17%
                                                               28%                                       13%                                                                               markets and key trade routes               44% of additional air passenger trips
         11%                                                                                                                                                                               like China, India, Indonesia               will come from China and India.5
                                                                                               4-6                        First                                                            and Vietnam
                                                                                              15%         Average no.    Flight
     45-54                                                                                                 of Flights:   40%
     18%
                                 25-34                                                                       4.1
                                 29%
               35-44                                           Direct                                     2-3
               20%                                                                                       32%                                                                                                                          “John Lewis - nothing is too
                                                               72%
                                                                                                                                                                                           Passengers with higher                       much trouble.”
                                                                                                                                                                                           expectations, making
                                                                                                                                                                                           more discerning choices                    “Apple – they tell you how long
                                                                                                                                                                                           regarding travel                             you’ve got to wait if there are
             Top 10 Residencies                                                                   Top 10 Trade Routes
                                                         Top 10 Airlines                                                                                                                                                                queues. Brilliant.” 6
                                                                                                    (Cargo Tonnage)
1. United Kingdom                     45.5%   1. British Airways                   47.0%   1. United States of America      31%
2. United States of America           18.1%   2. American Airlines                 4.8%    2. India                           6%
3. Germany                            3.8%    3. Virgin Atlantic                   3.7%    3. China                           6%
                                                                                                                                                                                                                                      “I think this is going to involve lots of
4. Canada                             2.8%    4. United Airlines                   2.6%    4. United Arab Emirates            6%                                                                                                        ‘smart technology’, such as real-time
5. Australia                          2.3%    5. Aer Lingus                        2.5%    5. Canada                          4%                                                                                                        tracking of passenger numbers,
                                                                                                                                                                                           End-to-end personalised
6. India                              1.8%    6. Lufthansa                         2.2%    6. Hong Kong                       4%                                                           journey driven by data                       management of queues etc., as well as
7. Ireland                            1.7%    7. Emirates                          2.2%    7. Qatar                           4%                                                           services and connectivity                    more personalisation, where passengers
8. France                             1.6%    8. Air Canada                        2.1%    8. Singapore                       3%                                                                                                        can receive discount vouchers for their
                                                                                                                                                                                                                                        favourite airport retailers/restaurants
9. Switzerland                        1.3%    9. SAS                               1.7%    9. South Africa                    2%
                                                                                                                                                                                                                                        ahead of their visit.”3
10. Italy                             1.1%    10. Qatar Airways                    1.6%    10. Japan                          2%

                                     Purpose of Trip                                              Top 10 Destinations

                                                                                                  1. New York                                                                              Older demographics mean
                                      31%                                                                                                                                                  new demands on mobility                    By 2050, the UN expects 21% of the
Visiting friends/relatives                                                                        2. Dubai                                                                                                                            global population to be over 60.4
                                                                                                                                                                                           and convenience
                                                                                                  3. Dublin
                                                                                                  4. Amsterdam
                                                                        Business
                                                        32%                                       5. Hong Kong
                                                                                                  6. Frankfurt
                                                                                                  7. Madrid
                                     37%                                                          8. Los Angeles
         Holiday
                                                                                                  9. Munich                        2
                                                                                                                                     Heathrow Passenger profiler (survey of departing passengers), Twelve months to September 2019
                                                                                                  10. Doha                         3
                                                                                                                                     Arup, Future of Air Travel, 2016
                                                                                                                                   4
                                                                                                                                     Join the Dots, Innovations, January 2019
                                                                                                                                   5
                                                                                                                                     IATA, 20 Year Air Passenger Forecast, April 2019
                                                                                                                                   6
                                                                                                                                     Caroline Thompson Associates, Willingness to Pay: Qualitative Research Findings, November 2017

20     HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                                                                                    21
HOW WE HAVE LISTENED
CAREFULLY TO CONSUMERS
                                                                                                                                              For H7 we have built our plans based on        Horizon has been central to our              The CCB has challenged our research
                                                                                                                                              a more sophisticated understanding of          engagement programme. Horizon is an          and engagement work programme -
                                                                                                                                              consumers. We have developed a new             online community of 3007 current and         aspects of the research, how we have
                                                                                                                                              consumer research and engagement               601 potential Heathrow users. They are       interpreted the results and how we are
                                                                                                                                              strategy to deliver a step change in the       set up to engage, often in real time,        reflecting them in our plans. To date,
                                                                                                                                              breadth and depth of our engagement.           virtually or live, with both narrow and      we have completed approximately 30
                                                                                                                                              We have conducted consumer research            broader issues related to how we shape       additional separate pieces of research
                                                                                                                                              and engagement through multiple                the airport. This new community has          specifically focused on the development
                                                                                                                                              formats and techniques with over one           allowed direct passenger participation in    of the H7 Initial Business Plan and
                                                                                                                                              million current and future consumers,          shaping our H7 Initial Business Plan and     masterplan and in response to feedback
                                                                                                                                              including engaging many thousands of           expansion masterplan.                        and challenges from the CCB.
                                                                                                                                              consumers through in-depth discussions
                                                                                                                                                                                             The Consumer Challenge Board                 An example of such was the
                                                                                                                                              and studies. We have increasingly
                                                                                                                                                                                             (CCB) helped shape our consumer              enhancement of our definiton to go
                                                                                                                                              developed and validated our plans
                                                                                                                                                                                             engagement strategy and provided             further than just mobility issues and
                                                CC

                                                                                                                                              based on this growing new insight.
                                                 B

                                                                                              S E AT
                                                 &

                                                                                                                                                                                             independent challenge on the use of our      the standard Passengers with Reduced

                                                                                            ST
                                                     A

                                                                                                 T EG
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                                                                                                  T
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                                                                                                   R
                                                                                                                                                                                             consumer research and engagement in          Mobility (PRM) legislation. The CCB

                                                                                                    IN Y
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                                                          w

                                                                                                      G
                                                              or
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                                                               ng                                                                                                                            our business planning.                       suggested we followed best practice
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                                                                      ou                                                                                                                                                                  develop our new framework. This has
                                                                        ps
                                                                           he
                                                                             ld
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                                                                                  on
                                                                                                                                                                                                                                          informing our design principles and our

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                                                             er nt

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                                                                                                                                                    S
                                                                                                            B
                                                                                                                                                                                                                                          This constructive feedback will continue

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22   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                                                                                     23
WHAT WE HEARD
FROM YOU
Through engagement we know increasingly more about what matters most to                                                                          LEISURE
consumers from their experience at Heathrow. We can also start describing how
expansion could best serve consumers and other stakeholders.                                                                                    “I want to get there
                                                                                                                                                  [to my flight] on time
Consumers want a smooth, stress free                      Consumer expectations continue to          Consumers do not want us to treat            and that we don’t
journey that flows well and gets them                     rise based on their other experiences.     everyone the same; different                 have any delays…
to the gate or to their onward                            Consumers welcome an airport               consumers have different needs,
destination quickly and efficiently.                      experience that induces a sense of well-   depending on whether it is their first       no security check
Travelling can be stressful, caused by                    being as well as meeting their practical   flight, if they need assistance, or they     queue. Just getting
anxiety to get to the flight on time, and                 needs. This can be an experience           are an anxious flyer.                        through quickly.”
for the flight to be on time. Therefore                   that makes it stand out: the sense of
ease, control and predictability are all                  personal care and welcome, the
key factors for consumers.                                terminal design, the sense of calm,                                                                                UK BUSINESS
                                                          the sense of place, the elements that
                                                          surprise or delight.
                                                                                                                                                                            “Now more than ever,
                                                                                                                                                 BUSINESS                     we need connections
For H7, we have greatly increased our consumer engagement. Since 2017 we have engaged with over one million consumers to                                                      through Heathrow
inform our business plan. In 2019 alone, our consumer research has involved engaging with over 350,000 consumers and taken
over 70,000 hours. Here is just a snapshot of what they’ve said7:                                                                               “It could be more            for exporting to new
                                                                                                                                                  personalised. As a          markets and to attract
                                                                                                                                                  frequent traveller          investment.”
                                                                                                                                                  there could be more
                                                                                                                                                  done to use your
                                                                                                                                                  known identify to
                                                                                                                                                  help you.”

                                                                                                                                                 LEISURE

                                                                                                                                                “Maybe an App…
                                                                                                                                                  The gate information.
                                                                                                                                                  If it’s personal to you    CARGO
       LEISURE                                                 BUSINESS                                 LEISURE
                                                                                                                                                  it can tell you where
                                                                                                                                                                            “As Britain’s hub airport,
     “To have a wheelchair                                 “I want a really quick                   “One of the things I                       your gate is and how
                                                                                                                                                                              only Heathrow can
       available when                                         immigration system -                      found at Heathrow                         to get there. It comes
                                                                                                                                                                              provide us with the
       disembarking. We had                                   just want to be                           is the lack of light. It                  up and it tells you
                                                                                                                                                                              global connections we
       to wait.”                                              home once I get                           needs more greenery                       when your flight is
                                                                                                                                                                              need to get our salmon
                                                              off that plane.”                          and plants.”                              ready to board. You
                                                                                                                                                                              to stores, stalls and
                                                                                                                                                  don’t even have to
                                                                                                                                                                              dinner tables across
                                                                                                                                                  ask anyone.”
                                                                                                                                                                              the world.”
7
    Caroline Thompson Associates, Willingness to Pay: Qualitative Research Findings, November 2017

24       HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                         25
We’ve also listened to our airlines:
                                                                                                                    DELIVERING
                                                                                                                    OUTCOMES
      WILLIE WALSH, CEO IAG, 2019                               SHAI WEISS, CEO VIRGIN ATLANTIC, 2019

     “We do support the expansion of Heathrow, but            “We need a stronger hub airport in order to
       it has to be at the right price and it cannot             connect Britain to the world, but we need
       be the consumers using Heathrow that are                  to make sure it works for British customers        We synthesised our extensive research into six consumer outcomes and
       expected to pick up the bill.”                            and businesses. And the way to do that is
                                                                 through competition.”
                                                                                                                    also have collaboratively developed four stakeholder outcomes.

And our communities through consultations:
                                                                                                                                                                                             Stakeholder
      CONCERNS FOR EMISSIONS, EITHER AIR QUALITY OR CARBON                                                                                                                                    outcomes

 “This is a significant step change in Heathrow’s effort to clean up           Former London Deputy Mayor for

                                                                                                                                                                                                                                         Hea
  local ground level air pollution by shifting people into the cleanest        Transport and Chair of independent

                                                                                                                                                         met r
                                                                                                                                                            o
                                                                               Heathrow Transport Area Forum,                                                                                 I feel comfortable

                                                                                                                                                                                                                                         thro fforda
                                                                                                                                                         wf
  modes of transport. I have never pulled my punches talking to the            Val Shawcross                                                                                                     and secure at

                                                                                                                                              gro eathro
  airport about local air quality and I look forward to continuing to

                                                                                                                                                                                                                                             wp
                                                                                                                                                                                                                                             a
                                                                                                                                                     are
                                                                                                                              nity
                                                                                                                                                                                                  the airport
  hold Heathrow to account in my new independent role as Chair

                                                                                                                                                                                                                                                 rov le airp
                                                                                                                                                 wth

                                                                                                                                                                          ea a t

                                                                                                                                                                                                                                                            Airl
                                                                                                                                                                        th to en

                                                                                                                                                                                                                   pr liab
                                                                                                                                                                            irp nd
                                                                                                                                                 H
  of the Heathrow Area Transport Forum.”

                                                                                                                                                                                  t

                                                                                                                                                                                                                    re

                                                                                                                                                                                                                                                    ides
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                                                                                                                                                                                                                     I h tab urn
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                                                                                                                                      airp e by

                                                                                                                                                                                                                        ic jo
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                                                                                                                                                                 fro n con

                                                                                                                                                                                                                                                                  ines
                                                                                                                                                                                                                                                         effi t servi
                                                                                                                                          ort
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                                                                                                                                                                                                                                                             or
                                                                                                                                                                      a
                                                                                                                                                                      I
                                                                                                                                      t
      CONCERN FOR NOISE FROM INCREASED ATMS AND CONCENTRATION OF FLIGHT PATHS OVER SPECIFIC AREAS

                                                                                                                          sus itmen

                                                                                                                                                                                                                                                                  t, re es
                                                                                                                                                                                                                                 d
                                                                                                                                                                                             Consumer

                                                                                                                                                                                                                                                                       liab
                                                                                                                                                                                                                                                                        c
                                                                                                                             tain
                                                                                                                              m
 “Whilst a majority of local people support Heathrow for jobs, they            Seema Malhotra, Member of
                                                                                                                                                                                             outcomes

                                                                                                                          Com

                                                                                                                                                                                                                                                                            le
                                                                               Parliament for Feltham and Heston

                                                                                                                                                                                                                                                                         and
  also want a fair deal. That’s why in March alongside local Cranford

                                                                                                                                                                  I h of f stin
  residents and councillors, I called on Heathrow to extend the

                                                                                                                                                                                                                                  d
                                                                                                                                                                     av lig at

                                                                                                                                                                                                                              te an
  Quieter Homes Initiative and our representation has been fed

                                                                                                                                                                       e m ht ion

                                                                                                                                                                                                                            or or
                                                                                                                                                                         de

                                                                                                                                                                                                                                d
  into the Noise Consultation.”

                                                                                                                                                                                                                         pp d f
                                                                                                                                                                           or s an s

                                                                                                                                                                                                                       su are
                                                                                                                                                                             ec d
                                                                                                                                                                                ho

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                                                                                                                                                                                                                       ee
                                                                                                                                                                                   ice

                                                                                                                                                                                                                   If
      CONSIDERATION OF THE ECONOMIC AND SOCIAL BENEFITS OF AN EXPANDED HEATHROW                                                                                                              I have an enjoyable
                                                                                                                                                                                               experience at the
                                                                                                                                          He               Co
     “In Slough we recognise that the proposed Heathrow expansion will         Cllr James Swindlehurst, Leader of
                                                                                                                                               ath
                                                                                                                                                     ro            lle                              airport
                                                                                                                                                                                                                                    o rs icatble
                                                                                                                                                        w              ag                                                         t
                                                                                                                                                                                                                                 s pred
      bring huge benefits to our local area, including new jobs, improved      Slough Borough Council on the HSPG                                            is
                                                                                                                                                                              ue                                           e s s
                                                                                                                                                                                                                        Inv deliverrreturn
                                                                                                                                                                  ag
      public transport and an enhanced transport infrastructure. We do
                                                                                                                                                                     rea
                                                                                                                                                                         tp
                                                                                                                                                                           lac
                                                                                                                                                                                   s
      realise that all of this will not come without its challenges, which                                                                                                    et                                              w     i
                                                                                                                                                                                 ow                                         ro nd fa
                                                                                                                                                                                                                       th     a
      is why hosting a summit like this as part of the Heathrow Strategic                                                                                                              or
                                                                                                                                                                                         k                         Hea
      Planning Group (HSPG) will ensure that any potential impacts are
      raised and minimised.”

26     HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                                                                                  27
WHAT WILL THE FUTURE                                                                                                                                       New landside spaces and
                                                                                                                                                     passenger terminal interchange

HEATHROW BE LIKE FOR
CONSUMERS?

                            New runway and airfield capacity   New on airport hotels and offices   New rail and road access   New security process

New retail and digital offers

                                                                                                                              12-Mile Green Loop and new spaces on perimeter

28   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                         29
DELIVERING OUTCOMES
FOR CONSUMERS
“I have more choice of flights and destinations”
OVERVIEW                                           WHAT WE HEARD FROM CONSUMERS

Consumers want the airport to offer                To be the airport of choice, Heathrow needs to be able
more destinations served more widely               to support as wide a range as possible of consumers’
by airlines, at more convenient times              travel plans. We heard three needs:
and more competitive prices. They
                                                   Flights I want when I need them                       Trust in Heathrow
want to be able to trust Heathrow                  Consumers have told us that to be an                  Consumers need to trust that Heathrow
will deliver. Central to our plan for the          option for them, Heathrow has to offer                will deliver their travel plans. Consumers
                                                   flights to their chosen destination at a              tell us it is important that they have clear
next 15 years therefore is expanding               time that meets their needs. Consumers’               and comparable information before
                                                   overall aim is to find the right flight for           they travel so that they can make an
our capacity to add at least 260,000               their trip. If Heathrow doesn’t offer it,             informed decision. They also need to
                                                   they’ll travel from elsewhere.                        have confidence that Heathrow will
more flights a year. This new capacity                                                                   provide the journey as planned. Previous
                                                   57% of British travellers would support
could allow us to serve 6 million more             more choice at Heathrow airport, while
                                                                                                         experience is a key driver of passenger
                                                                                                         choice and trust in Heathrow. So too
passengers per year by 2028 and an                 59% of passengers would choose
                                                   to connect via Heathrow if there
                                                                                                         are consumer views on our sustainability
                                                                                                         and responsibility in the widest sense.
additional 30 million more by 2036.                were more airlines and routes to
                                                                                                         Perceptions of Heathrow from other
                                                   choose from.8
Airfares could be £20 to £140 a ticket                                                                   sources also impact consumers’
                                                                                                         willingness to choose us.
                                                   Good value and affordable travel
cheaper than otherwise. We could
                                                   For Heathrow to meet consumers’ needs
serve up to 100 new destinations,                  when booking, the cost of the overall
                                                   journey needs to represent good value
connecting the whole of the UK to                  for money. They consider the whole
vital trading links including China,               cost of the journey. That includes the
                                                   overall ticket price from Heathrow,
India and the United States.                       travel to the airport, direct airport costs
                                                   and the “notional cost of stress.” This
                                                   is compared to the value and service
                                                   of the whole journey – flight, airport
                                                   and access.
                                                   Cost is an influencing factor on where
                                                   consumers fly from – but cost means
                                                   more than the ticket price.9
                                                   Of those who have not flown recently,
                                                   31% cite budget constrains/ the cost of
                                                   travel as the main barrier.10

                                                    Populus/Virgin Atlantic Survey, October 2019
                                                   8

                                                   9
                                                     Caroline Thompson Associates, Willingness to Pay: Qualitative Research Findings, November 2017
                                                   10
                                                      CAA, UK Aviation Consumer Survey, June 2019

30   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                         31
WHAT WE WILL DELIVER                                                                                                                                   OUR DELIVERABLES
                                                                                                                                                       IN A SNAPSHOT
More choice with a new runway               Opening more routes also means more                   hopes that through the slot allocation
                                            domestic connections to emerging                      process and flexible terminal occupancy
We have consistently worked with
                                            growth economies around the world.                    we will encourage a diverse set of
our airlines to start or increase flights
                                            As the UK’s only hub airport, being able              airlines able to provide compelling
to destinations in demand. We have
                                            to offer more choice of destinations                  offers to consumers.
also attracted new airlines such as
                                                                                                                                                       New capacity
                                            through more carriers will have a unique
China Southern and Garuda Indonesia.                                                              We also understand the growing
                                            multiplier effect by helping to strengthen
However, we have been capped by a                                                                 requirement from consumers to have
                                            the UK’s connection proposition and                                                                        Capacity for at least 260,000 more flights
480,000 Air Transport Movement (ATM)                                                              their service providers act in a socially
                                            trade links through increased cargo.                                                                       per year with a new runway
limit. At the centre of our plans for                                                             and environmentally responsible way.
the 15 years from 2022 is delivering a      Direct air connections support economic               This will be reflected in how we expand
new runway and new capacity to raise        growth. UK businesses trade 20 times                  and operate – from the most basic
that limit. Our expansion plans play a      more with emerging markets that                       services we provide in the terminals such
large part in delivering on this outcome    have direct daily flights than with                   as water refill points to the construction
for consumers. Capacity means we            those with less frequent or no direct                 methods and materials we use to build.
can offer them more choice of flights,      services. Through expansion we have                   We will need airlines to support this,
to more destinations over the 2020s
and beyond. We will give airlines that
                                            the opportunity to double our cargo
                                            capacity, bringing significant trading
                                                                                                  by flying more efficient new aircraft,
                                                                                                  switching to sustainable fuels and
                                                                                                                                                       More choice
currently do not operate at the scale       links and benefits to exporters of all size           signing up to night flight regimes                   Up to 100 new international and domestic routes
they might wish, or do not operate          across the UK.                                        amongst other important measures. We
from Heathrow at all, the opportunity                                                             will continue to use our pricing structure
                                            Subsequent phases of expansion will see
to grow their businesses. Expansion will                                                          to incentivise these behaviours.
                                            us able to release more runway capacity
also help to drive down ticket prices
                                            in a phased way from the late 2020s                   The impact of strategic options
for consumers, thanks to releasing the
                                            – we are proposing to release at least
capacity constraint. Long-term this is                                                            •	The pace of growth will have an
                                                                                                                                                       More passengers
                                            24,000 ATMs a year subject to meeting
the surest way to ensure that flights                                                                impact on airline choice, where
                                            environmental targets. We will also
available from Heathrow are affordable.                                                              slower growth means a more gradual
                                            construct new terminal capacity in both                                                                    c.88m passengers by 2028 (+6%)
                                                                                                     release of slots and therefore less
                                            the west and east of the airport to meet                                                                   c.120m passengers served by 2036 (+43%)
More choice with Early Growth                                                                        competition and impact on airfares
                                            passenger and airline demand.
We can start to deliver more choice for                                                           •	Faster growth is possible within
consumers right from 2022, ahead of a       Reflecting the values of our                             environmental limits, but we are
new runway. We are proposing targeted       consumers                                                mindful of these constraints and the
investments and improvements to the                                                                  impact on airline operations. We
                                            We recognise that different passengers
use of existing terminal infrastructure                                                              anticipate that parts of the airport
                                            have different requirements from their
alongside an additional 25,000 ATMs                                                                  could feel slightly more congested
on the existing two runways. These
improvements can reinforce Heathrow’s
                                            time at Heathrow and from their choice
                                            of airline. For this reason, Heathrow
                                                                                                     but aim to mitigate this through
                                                                                                     efficiency improvements.
                                                                                                                                                       Cheaper fares
resilience at the same time. By adapting                                                                                                               Airfares £20-£140 lower per ticket
our current infrastructure and with
support from airlines, Heathrow
estimates that load factor can increase     Heathrow Passenger Forecast (m)
from 79.4% in 2018, up to the IATA               130
average of 81.9%. This 2.5%-point
increase to average load factors would

                                                                                                                                                       Boosting UK exports
                                                 120
deliver an extra 2.5m passengers to
the airport, which would also improve
airport economics and reduce the                 110                                                                                                   Expanding cargo capacity so that we can handle three
airport charge.                                                                                                                                        million tonnes per annum
                                                 100

                                                  90

                                                  80

                                                  70
                                                       2018      2020        2022   2024     2026        2028     2030   2032       2034       2036

                                                              Central case                 Prioritising Service                 Prioritising savings

32   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                 33
DELIVERING OUTCOMES
FOR CONSUMERS
“I am confident I can get to and from the airport”
OVERVIEW                                             WHAT WE HEARD FROM CONSUMERS

A consumer’s physical journey begins                 Speed                                         Trust
from the moment they leave their home,               Time is critical for consumers travelling     As with a consumer’s choice of airport,
                                                     to or from an airport. They either have       they need to trust that a surface access
office or hotel. Therefore, getting to,              a flight to catch or want to get to           option will deliver for them. The service
                                                     their destination as quickly as possible.     needs to be reliable and predictable.
from and around Heathrow matters to                  Consumers’ perception of speed is             Consumers often choose transport
airport experience and airport choice.               important when they are making                they frequently use or are reticent to
                                                     choices between modes.                        change if an option has worked for
Consumers want to do so quickly,                     Private transport modes, i.e. car and
                                                                                                   them before.

easily and in a way they trust.                      taxi, remain an important choice at           Providing consistent up-to-date
                                                     Heathrow. Consumers perceive these            information is also key to ensure
                                                     modes to be direct and give them the          passenger trust. As with ease,
Perception, research and relative value
                                                     feeling of control. When calculating          consumers want to access the right
for money all affect airport and mode
                                                     speed, consumers look at the end-to-          information at the right time to forward
choice. By 2040 we can expand the
                                                     end journey, including time to and from       plan and reassure on the go.
range and resilience of rail and road
                                                     train or coach stations and making
links, closing gaps in our access to the
                                                     changes between modes.                        Sustainability
west and south and bringing 90%
more people within an hour by public                 “Drive with no hold ups on roads...          Consumers also care about the general
transport than there are today. Lower                  straight to a parking space and as soon     sustainability of travel.
public transport fares combined with                   as unloaded the shuttle bus turns up...
                                                                                                   “Making travel more affordable,
new vehicle charging at the airport will               then straight to the terminal”12
                                                                                                     comfortable and climate friendly are
incentivise more sustainable modes
                                                     However, consumers do trade-off this            great initiatives for Heathrow and
of transport. Raising the share of
                                                     need for a quicker journey with price,          will allow its reputation to grow
journeys on public transport to 50%
                                                     to find the best value for money for            even further.”14
will also cut congestion and delay for
                                                     them for each trip.
all consumers.                                                                                     They support efforts to cut carbon
                                                                                                   emissions, improve air quality and cut
Simpler, intuitive consumer journeys to              Ease
                                                                                                   congestion for everyone’s benefit.
all parts of the airport will improve the
                                                     Consumers clearly say they want to            Heathrow will also only be able to
experience for all and create a further
                                                     get to or from Heathrow via the most          grow if we meet stretching ANPS
positive incentive for sustainable
                                                     simple, intuitive and direct route with       requirements for mode share.
choices. We could invest to improve
                                                     the fewest changes. An easy journey
wayfinding across the airport too.
                                                     minimises stress and improves the
                                                     airport experience.
                                                     To make their journey easy,
                                                     consumers say they want to have
                                                     the knowledge they need to make
                                                     the right decisions for them. Without
                                                     information, the experience becomes
                                                     much more stressful.
                                                     “Easy access. It’s the biggest one for me.
                                                       If I can’t get there easily it becomes a    12
                                                                                                       Join the Dots, Surface Access Report, August 2018
                                                       big event. [I’m worried about] getting      13
                                                                                                        Caroline Thompson Associates, Willingness to
                                                       there on time.”13                                 Pay: Qualitative Research Findings,
                                                                                                         November 2017
                                                                                                   14
                                                                                                      Join the Dots, Surface Access Interventions,
                                                                                                       April 2019

34   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                          35
WHAT WE WILL DELIVER                                                                                                                   Consumers will see a wider and cheaper                         OUR DELIVERABLES
                                                                                                                                       range of rail fares as the Elizabeth                           IN A SNAPSHOT
                                                                                                                                       Line and other services begin. We
We plan a long-term programme of rail, road and on-airport changes to 2036 that                                                        will continue to expand the range of
will make Heathrow an easier and faster airport to access for more consumers. We                                                       discounts on the revamped Heathrow
                                                                                                                                       Express. Our plan will also increase
will become a fully integrated transport hub with rail lines to north, south, east and                                                 subsidies for local buses and to
                                                                                                                                       incentivise airport colleagues to shift
west. We can offer more choices and resilient back-up options for journeys. The                                                        out of single-occupancy cars. A “green
package of better choices and different financial incentives should also shift how                                                     loop” around the perimeter of the
                                                                                                                                       airport will connect bus routes with cycle
                                                                                                                                                                                                      Bigger catchment area
                                                                                                                                                                                                      More of the largest towns connected to Heathrow. Elizabeth
people access Heathrow - with 50% of passengers using public transport by 2030,                                                        and walking paths.
                                                                                                                                                                                                      Line and refreshed Heathrow Express services
a 25% fall in colleague car journeys by the same date and no increase in airport                                                       To protect air quality around the airport,                     • Western Rail by mid-2020s
                                                                                                                                       we are proposing an HULEZ (Heathrow                            • Southern Rail by mid-2030s
related traffic. If we deliver all these improved links, by 2030, over 40% of Britain’s                                                Ultra Low Emissions Zone) from 2022
                                                                                                                                       that will charge the older, more polluting
population will be within three hours of the airport.                                                                                  vehicles extra. This becomes a general
                                                                                                                                       Heathrow Vehicle Access Charge
New rail links                               Better road links and new                     We will redevelop our Central Terminal      (HVAC) of around £15 from 2026 to
                                             transport services                            Area in Terminal 2 (T2) and Terminal
                                                                                                                                                                                                      Cheaper rail fares
Committed new public rail schemes,                                                                                                     ease congestion for travellers even as
                                                                                           3 (T3) to support growth. We have           we grow. The charges will be recycled
such as the Elizabeth Line, HS2 and          Even as we promote a shift to public
                                                                                           also designed better public transport       to bring down airport charges and fund
upgrades to the Piccadilly line will mean    transport, road links will continue to be                                                                                                                More and cheaper options on rail and bus fares
                                                                                           interchanges as part of our masterplan,     airport linked transport investments.
2.1m more people will be 90 minutes          indispensable for consumers. In the last
                                                                                           creating easier connections and
from Heathrow by public transport.           five years taxi and private hire trips have                                               We are currently discussing with DfT,
                                                                                           interchanges and making us a transport
More of these rail journeys will be direct   risen from 12% to 17% of all journeys                                                     an airport contribution to Western Rail
                                                                                           hub beyond aviation.
and easier too. Heathrow Express tops        to Heathrow as consumers have                                                             project. If the project was delayed or
the UK in rail satisfaction surveys due      taken to the convenience and price of                                                     cancelled we can still meet mode share
                                                                                           More intuitive terminal access
to its easy, 15 minute reliable service.     services like Uber (which now makes up                                                    targets with alternative investments and
The service will be rejuvenated with a
modern fleet before the start of H7 and
                                             almost 30% of these trips). In response
                                             Heathrow plans to work with providers
                                                                                           Legacy infrastructure means that access
                                                                                           in, out and around terminals is not
                                                                                                                                       a higher vehicle access charge. However
                                                                                                                                       consumers prefer the rail option so we
                                                                                                                                                                                                      Less road congestion
continue to operate to at least 2028.        to develop new offers – such as shared        as simple as consumers might want.                                                                         Southern Road tunnel and two junctions to M25
                                                                                                                                       offer options to increase the likelihood
We are also working with DfT to create       rides, backfilling incentives, and even       Changes of direction, level and gaps in     of delivery.
new airport rail links. A Western Rail       managed air-taxi services. These steps        information confuse, stress and delay. As
link to Reading would allow passengers       will mitigate congestion, emissions and       we expand the airport we can steadily       36% of those who currently park at
to travel to the airport from the South      other downsides of theses shifts while        improve this part of the journey. We        the airport would be less likely to do
Coast, South West, South Wales and           maximising the consumer convenience           plan new ‘transport interchanges’ in the    so following an emissions charge15
West Midlands without going into             and choice. These new multi-user              east and west that will create shorter,
London. In the 2030s a Southern Rail
link connecting the South West and
                                             services improve congestion and air
                                             quality and could be considered a form
                                                                                           line of sight journeys to terminals,
                                                                                           particularly from public transport.
                                                                                                                                       The impact of strategic option
                                                                                                                                                                                                      Integrated vehicle
Waterloo to Heathrow is also planned.
A key option is any airport contribution
                                             of “public transport.”                        This will create more welcoming, less
                                                                                           stressful environments. New terminal
                                                                                                                                       •	We assume building Western Rail in
                                                                                                                                          both options, but our contribution                          parkways
                                             Our masterplan will build new                                                                varies. Investment in any Southern                          Consolidated parking with easy transfers to terminals
to these schemes balanced with overall                                                     spaces such as T5X will have fewer             Rail Link also varies by option
                                             consolidated parkways on the southern
consumer costs.                                                                            floors reducing changes in level and
                                             and later the northern perimeter to                                                       •	Road, tunnel and parkway
                                                                                           direction. We also see opportunities to
                                             offer a different mix of parking and                                                         construction would be the same
                                                                                           invest in digital and physical wayfinding
                                             vehicle charging services. They will have                                                    in each option
                                                                                           to reassure and guide passengers in a
                                             direct links into terminals. We will also
                                                                                           more 21st century way.                      •	Passenger interchanges with new
                                                                                                                                                                                                      New cycle paths
                                             invest to improve local bus services and
                                             coach links, including 24-hour buses                                                         terminals come in faster in the
                                                                                           Changing financial incentives                  Prioritising Savings option
                                             similar to the recently introduced Rail Air                                                                                                              Perimeter Green Loop with 12 miles of cycle paths
                                             link from Guildford.                          Consumers want the widest possible          •	Fare, carparking and HULEZ/ HVAC                            by 2035
                                                                                           range of price and service options when        changes are similar in both options,
                                             By 2030 we will address some
                                                                                           judging access value for money. We             although with faster growth there
                                             critical pinch points in road access by
                                                                                           must also incentivise more sustainable         may be a need to bring some
                                             opening the Southern Road Tunnel
                                                                                           travel choices. A mix of charges and           forward sooner
                                             giving access to the Central Terminal
                                                                                           discounts are part of our plans to 2036.
                                             Area from the south for the first time.
                                             Likewise, two new M25 junctions will
                                             create safer, easier and faster routes
                                             into both Terminal 5 (T5) and the new                                                                                                                    Access charging
                                             Southern parkway.                                                                                                                                        Access charging (HULEZ 2022; HVAC from 2026)
                                                                                                                                       15
                                                                                                                                            Join the Dots, Surface Access Interventions, April 2019

36   HEATHROW’S INITIAL BUSINESS PLAN SUMMARY                                                                                                                                                                                                                  37
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