Following the completion of a major ownership deal by Saudi Arabia’s Public Investment Fund (PIF) to acquire a 15% stake in Heathrow’s parent company, FGP TopCo, London Heathrow Airport announced an accelerated capital investment and upgrade program.
The multi-billion-pound modernizing scheme represents the largest private-sector transport infrastructure investment in the UK. The funding allocation covers comprehensive operational and facility upgrades across all passenger terminals, specifically targeting critical airside infrastructure, next-generation security screening lanes, and a overhaul of the airport’s legacy baggage handling systems. By injecting private capital into these capital expenditure projects alongside co-investor Ardian, PIF’s backing supports Heathrow’s goal of boosting passenger throughput, reducing departure delays, and improving long-term capacity resilience across its operations.
With the involvement of Saudi Arabia’s backing, this participation showcases Saudi’s institutions investment in the development of airport infrastructure not just in the kingdom alone but also globally.
December 26, 2024
The world’s busiest airport is set for a monumental revamp project to improve traffic flow. UK’s Heathrow Airport is set for a monumental revamp project that will see it increase the amount of passengers it can handle. The project is expected to entail improving baggage systems and resurfacing the northern runway. Moreover, it entails the use of 140 advanced security scanners to enable more liquids to be carried onboard planes.
The project was made possible by a private investment from a Saudi Arabian wealth fund. The nation bestowed the airport $2.9 billion, the biggest-ever capital investment in UK transport from the private sector. The upgrade project is expected to take a full thrust, with plans to build a third runway at Heathrow also on the horizon. The consent for this endeavour already gained Parliament’s approval in 2018. The slow progress is attributed to the Labor government’s forward-thinking approach to planning.
The Significance of the Upgrade Project on the World’s Busiest Airport
The upgrade project on the world’s busiest airport could potentially significantly increase the traffic it handles annually. According to estimates, a new runway could boost passenger capacity to 142 million a year. The increase could be a significant improvement from the 79 million passengers it recorded in 2023. Thomas Woldbye, the airport’s chief executive, noted that the scheme needs a “clear steer” from the government. He said that this would greatly facilitate the propagation of the project’s momentum.
“We will continue to invest more than £1 billion of private sector cash each year into the airport to deliver facilities our airlines and passengers want while boosting the UK economy and creating opportunities for businesses up and down the country,” he told The Telegraph. Progress on plans for a new runway could potentially see Heathrow’s aging third terminal demolished. Furthermore, this will double the size of terminal two and increase the satellite terminals between 2 and 5. The Department for Transport has noted that the expansion must demonstrate [a contribution] to economic growth.
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Other Upgrades on the Heathrow Airport
The world’s busiest airport has chosen Costain to deliver its new investment program, primarily focusing on upgrading Terminal 2 and improving overall asset efficiency. Costain is a delivery partner offering construction, consulting, and digital capabilities. Thus, it will collaborate with Heathrow over the next four years. Moreover, they will shape, create, and deliver asset renewal and construction projects procured through the H7 framework’s Terminal Asset Renewal Partner and Major Project Partner lots. Heathrow Airport intends to invest £3.6 billion in capital over the next five years. This will help the airport recover from the commercial impact of Covid. The project includes next-generation security scanners and a new baggage system in Terminal 2.
Consequently, they are expected to cost approximately £1.3 billion. Costain’s first commission as a delivery partner is early contractor participation in the £35 million design phase of the T2 baggage handling facility and system upgrade. “I am delighted that our construction, consulting, and digital experts have been selected to help Heathrow transform its performance,” said Sue Kershaw, managing director for Transportation at Costain. “Our integrated team will collaborate closely with Heathrow to address the challenges of recovering from Covid. This will help become a net-zero airport and attract new customers and airlines. Consequently, it will provide passengers with a world-class airport experience.”
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Upgrade works at Heathrow Airport.
Upgrades on the world’s busiest airport by the Costain Heathrow team entail work on projects throughout their lifecycle, including the following items:
- Terminal 2 and adjacent facilities will be upgraded and improved.
- Major projects. This include the construction of baggage handling facilities and the implementation of baggage systems.
Helen Elsby, Heathrow’s chief solutions officer, stated, “We have bold plans to improve Heathrow over the next four years. This will ensure journeys are smooth, safe, and dependable.”
“We are pleased to have chosen a number of excellent partners on the critical infrastructure upgrades that will underpin this. Consequently, we will continue to work with our regulator on a deal that supports this critical work.
We are delighted to welcome Costain back to Heathrow and to be working with them. This will lead to the upgrade of the airport’s passenger experience.”
Project Factsheet
Project Name: London Heathrow Airport Upgrade & Modernization Program
Target Asset: London Heathrow Airport (LHR), United Kingdom
Investor / Equity Partner: Public Investment Fund (PIF) of Saudi Arabia (15% equity stake in parent company FGP TopCo)
Co-Investor: Ardian (22.6% equity stake)
Total Investment Value: £2.3 Billion capital investment plan
Scope of Work & Key Developments
- Terminal Enhancements: Full operational and cosmetic upgrades across Terminals 2, 3, 4, and 5 to handle increasing passenger capacity.
- Security and Border Tech: Deployment of Next-Generation Security Checkpoint (NGSC) scanners and automated biometric security lanes.
- Baggage Handling Overhaul: Upgrading legacy hold baggage handling and sorting systems across airside areas.
- Airside and Track Upgrades: Modernization of airfield infrastructure, taxiways, and gate connectivity.
Strategic Objectives
- Accelerate airport capital expenditure (CAPEX) without public taxpayer funding.
- Improve operational resilience, reduce departure delays, and enhance passenger throughput.
- Align with Saudi PIF’s strategy to diversify international assets in global transport and infrastructure hubs.
Project Team
Lead Investment and Equity Partners
- Public Investment Fund (PIF): Sovereign wealth fund of Saudi Arabia (holding a 15% equity stake).
- Ardian: French private equity and infrastructure investment firm (the largest shareholder, holding 32.6%).
Co-Owners and Institutional Investors (FGP TopCo Consortium)
- Qatar Investment Authority (QIA): Sovereign wealth fund of Qatar (20%).
- GIC: Sovereign wealth fund of Singapore (11.2%).
- Australian Retirement Trust: Australian superannuation fund (11.18%).
- China Investment Corporation (CIC): Sovereign wealth fund of China (10%).
Operational and Delivery Entities
- Heathrow Airport Holdings Ltd: The primary operating authority responsible for designing, executing, and managing the multi-billion-pound infrastructure and terminal upgrades.
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