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LONDON: March 25, 2018. As Qantas begins non-stop service between Perth and London, a report by the UK Parliament’s Transport Select Committee says the British government should safeguard user charges prior to approving the construction of a third runway at Heathrow.

Describing the Northwest Runway proposal as the highest cost expansion option and one of the largest privately financed infrastructure projects in the world, Committee chair MP Lillian Greenwood said there were no guarantees in place to protect customers from the costs associated with the scheme.

QantasWhile acknowledging expanding Heathrow is the “right location”, IATA regional vice president Europe Rafael Schvartzman noted the Committee’s recommendations on cost control should be essential reading for the government and Heathrow Airport Holdings (HAL).

“We need guarantees regarding how costs will be managed, especially if key risks are not known at this stage. An unaffordable Heathrow will have a detrimental impact on the competitiveness of the UK’s only hub airport in comparison to rivals in France, Germany and Netherlands," said Schvartzman.

IATA also shares the Committee’s view that HAL estimates of £14-17 billion for a third runway and associated infrastructure - including a bridge over the M25 motorway - are “optimistic”.

At the same time it warns the proposal to ban early morning flight arrivals will undermine the economic case for the new runway before it's even built.

"Carriers from the US, China and Asia arriving in Europe in the early morning currently have a choice: to stop at Heathrow or land in continental Europe,” explained Schvartzman. “Eliminating night flights removes that choice and may make it uneconomic or impossible for the UK to sustain air links to all these destinations. With the UK looking to open new trade lanes post-Brexit, it can ill-afford to weaken these connections," he continued.

Currently Heathrow has more than 100 direct flights to Chinese cities every week with 55 to Hong Kong, 22 to Shanghai, 20 to Beijing, 10 to Guangzhou and two to Qingdao. This number is expected to increase when Beijing Capital Airlines converts its existing charter operation to a twice-weekly schedule service to Qingdao on March 26, and Hainan Airlines and Tianjin Airlines launch three weekly services to Changsha and X’ian in the summer.

China’s sovereign wealth fund China Investment Corporation holds 10 percent of HAL.

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