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NEWS Last modified on February 15, 2012

Future of Luton Airport operator in doubt over expansion plans

The future operation of London Luton Airport is in doubt after it emerged there are disagreements between its owner and operator over the gateway’s future expansion. 

The future operation of London Luton Airport is in doubt after it emerged there are disagreements between its owner and operator over the gateway’s future expansion.

Luton Borough Council’s subsidiary company London Luton Airport Limited (LLAL), which owns the airport, unveiled plans on Monday (February 13) to double capacity at the gateway to 18mppa.

However, the ambitious plans – which will see capacity increase 47% from a forecast 9.6mppa in 2012, to 18mppa when completed in 2020 – has sparked “concerns” with the airport’s operator, London Luton Airport Operations Limited (LLAOL).

It argues that LLAL’s plan to optimise capacity within its existing boundary by making the most of its runway through various modifications and improvements has serious cost and feasibility implications.

“From our initial review of the Council’s plans we have identified a number of concerns that raise vital questions which must be addressed in the Council’s consultation,” LLAOL said in a statement.

The Abertis/Aena-owned operator warned the plans, which include improving the airport’s congested road network, building a new multi-storey car park, revamping the passenger terminal, aircraft taxiways, aprons, new piers and aircraft parking stands, could be costly and overambitious in relation to current traffic trends.

Under the terms of the 30-year operating concession, which was awarded to LLAOL in 1998, either party can break the contract with effect from April 1, 2014, and both parties have hinted this could happen if no agreement is reached.

Speaking to Airport World Online, Steve Heappey, lead officer at LLAL, said that the funding for the expansion project would come from LLAOL, who would be looking to make a return on their investment over the remaining 16 years of the contract.

He said: “The operator is therefore developing its own proposals for the future expansion of the airport completely independently of our own proposals.”

LLAOL will submit its own ideas for the airport and based on those, the council will “decide whether to allow a new concessionaire take over the reins in 2014.”

If the council decided to terminate the concession in order to implement its proposals, it will have to make a termination payment, reported to be €357 million, to LLAOL reflecting the value of the remaining years of the concession and certain other liabilities.

LLAOL also questioned how the cost of the project would be covered should passenger numbers not reach the level provided for in the council’s plan, it quoted Department for Transport traffic figures which suggest Luton’s passengers will only hit 17mppa by 2050.

Meanwhile, the operator also has environmental concerns, in particular noise and air quality issues associated with the expansion, but it is also worried about increased congestion at the gateway.

The council’s plan for an annual throughput of 18 million passengers, which is twice that of 2010, makes London Luton Airport bigger than Manchester and Stansted airports.

LLAOL said: “As the successful operator, we continue to operate London Luton Airport in the normal course of business. As evidenced by the airport developments and related improvements delivered by us to date, we firmly believe that further development must be based on the core considerations of safety, feasibility, sustainability and environmental sensitivity.

“We will therefore publish our own detailed proposal for the further expansion of London Luton Airport during the second half of the month.

“Our plan will directly address those core considerations, providing a safe, credible and sustainable route to the early development of this vital part of the local and regional economy and a principal source of increased employment and local prosperity.”

In a statement released today (February 15) Heappey added: "Through our consultation launched on Monday we seek and welcome comments, questions and feedback on our proposal to grow London Luton Airport and the benefits that this will bring to Luton and the region. 

"We will consider comments from the existing operator, alongside those of other interested parties.  Any talk of termination compensation is both speculative and premature."


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