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Heathrow plans to slash third runway costs by £2.5bn

Heathrow Airport has set out plans to slash the cost of its third runway expansion by £2.5bn.

The airport unveiled some of the cost-cutting options it is considering, including plans to build a new ’mini Terminal 5’ and phasing terminal work across 15 years to bring down the total third runway construction costs to £14bn.

The plan marks a breakaway from Heathrow’s initial plan, which was to build a new major terminal between the airport’s northern runway and planned third runway to the north-west of the airport.

However, it is understood that this has now been ruled out by the airport due to the expense of the underground passageways and baggage systems that would need to be built to support the new terminal.

The new mini T5 will be built next to the existing terminal 5, and will share baggage facilities and London Underground and Crossrail terminals further bringing down costs.

In addition to the mini terminal, Heathrow is considering expanding terminal 2 and terminal 5 buildings to help meet passenger demand.

To bring down costs and ensure more efficient construction, the airport has suggested phasing the construction needed for expansion over a longer period of time.

Under the new plans, capacity at each terminal will be increased incrementally between 2020 and 2035 to better match the demand and bring the total cost of expansion down to £14bn.

When the third runway is completed, Heathrow, which currently accommodates 85.5m passengers a year, will need to increase that number to 130m passengers.

Nevertheless, the transport secretary Chris Grayling has suggested this expansion must be done while keeping landing charges at the same level putting extra on the airport to slash costs.

Heathrow executive director expansion Emma Gilthorpe said: “The secretary of state set us the challenge to deliver an expanded airport for Britain with passenger charges staying close to current levels.

“We have now identified potential savings of £2.5bn and are increasingly confident we can meet the affordability challenge.

“We are looking forward to presenting detailed options on how to do it in our consultation in January, and while we will continue to work to reduce the cost of expansion, we will not compromise on our local commitments.”

The plans come after Heathrow revealed it would be launching a 10-week consultation in January seeking views on its latest plans.

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