Seeking growth, Britain considers rival Heathrow expansion plans

By Sarah Young

LONDON (Reuters) -Britain's government will consider two competing, multi-billion-pound plans to build a runway to increase capacity at the country's biggest airport Heathrow that it hopes will kickstart economic growth.

Finance minister Rachel Reeves in January gave her backing to Heathrow expansion as she sought to end decades of indecision due to environmental concerns. 

The government has said airlines' increased use of sustainable aviation fuel means airport enlargements do not necessarily derail net zero targets.

Located west of London, Heathrow is Europe's busiest hub and operates at full capacity, putting a brake on Britain's economy. Its two runways compare with four each in Paris' Charles de Gaulle and Frankfurt Airport, and six at Amsterdam's Schiphol.

Heathrow Airport submitted a proposal for a new runway to the government on Thursday with an estimated total price tag of 49 billion pounds ($65 billion), which it said would be privately-financed.

The Arora Group, which owns land and hotels around Heathrow, said its plan for a new runway would cost under 25 billion pounds but that does not include all the development costs.

Under Heathrow's plan, the runway and airfield infrastructure would cost 21 billion pounds, with the balance funding a new terminal, modernising existing infrastructure and moving a motorway. 

As well as a new runway at Heathrow, the government will by October 27 make a final decision on whether to expand Gatwick, the country's second largest airport, after saying it was inclined to do so in February. 

At Heathrow, both projects aim for the new runway to be operational by 2035. 

The Heathrow plan includes a full-length, 3,500-metre (11,483 ft) runway and building a tunnel to move a section of London's M25 motorway.

Arora's plan is to build a slightly shorter runway without moving the motorway, but at 2,800 metres in length, it would be unable to accommodate the biggest widebody jets.

Airlines, such as British Airways-owner IAG, have long complained that Heathrow is one of the most expensive airports in the world in terms of its charges, and they have been worried expansion will mean higher fees. 

An IAG spokesperson said it backed a shorter runway.

"Avoiding the need to cross the M25 would remove complexity, reduce costs and help deliver better value for passengers," the spokesperson said. 

The submissions now be reviewed by the government over the summer, the Department for Transport said.

($1 = 0.7551 pounds)

(Reporting by Sarah Young; additional reporting by Alistair Smout; editing by Barbara Lewis)