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How Arora Group ruffled feathers with Heathrow runway proposal

Vidya Ram London | Updated on January 09, 2018 Published on August 13, 2017

Surinder Arora

Indian-origin businessman puts forward idea to knock £6.7 b off project cost; gets backing from BA

When the British government gave the go-ahead to the construction of a third runway at Heathrow airport last October, it seemed it had finally put an end to the long running and heated battle over the future of the first new full length runway that south-east England had had since the Second World War.

That assumption was put paid to decisively last month as the Arora Group, an established hotel and property empire owned by Indian-origin businessman Surinder Arora, revealed that it had submitted a proposal as part of the consultation the government had launched, that would knock a startling £6.7 billion off the cost of the project.

Crucially, the project received backing from airlines, including the International Airlines Group, which owns British Airways (the biggest airline at Heathrow). “Arora’s Heathrow proposal is a welcome alternative to the airport’s own costly scheme,” its CEO Willie Walsh told the FT last month.

Speaking at the group’s 600-bed Sofitel Heathrow, Arora, who was born in Sultanpur Lodhi in Punjab, is quietly confident that his move has ruffled feathers at the very least, and shaken the project out of the complacency it was in danger of falling into, with his very public campaign. (The group has a fully dedicated website outlining the proposal and how it differs from Heathrow’s plans, submitted to Howard Davies, who headed the independent commission recommending the expansion at Heathrow over the alternatives).

Arora sees his bid as a crucial part of challenging the Heathrow “monopoly.” “The way in which the business is currently regulated in the UK…the airport has no incentive to be efficient — in fact, they are incentivised to be inefficient, not doing things in a different way,” he said. “That’s what led us to come up with a different idea — in the 21st century, we should be looking at what they do in other countries where different terminals are owned by different entities that create competition…Heathrow is the most expensive airport in the world and there is no reason why this should be the case and unless we think outside the box it’s not going to change.”

This he believes will be particularly crucial for Britain going forward, as it prepares to exit the EU. “From the point of view of the nation, if we want a slice of the world economy, we need to make sure we have full accessibility, the right infrastructure.”

Crucial to Arora’s strategy has been including the perspectives of airlines. “The airport has always assumed that those 75 million passengers belong to them because they want to sell them duty free, food...We look at it differently — we see those passengers as belonging to the airline and they are my customers. So we decided to sit down with the airlines and ask them what they would like,” he said, recalling a consultation meeting with airlines at which they discussed the size of the runway and where it should be.

“They said we’ve never been consulted in this way by Heathrow, which came as a bit of a shock to me. We have said for it to be successful we must treat airlines as partners and with respect…we may not be able to deliver everything they ask for but even if we pick out some of the best ideas we can make it more user friendly, customer friendly and efficient.” He also believes his own experience in and around Heathrow — an area he has been working in since 1977 — and his own experience as a pilot (he holds a private pilots licence) have added weight to the proposal.

Among its key elements are scrapping the expansion of Heathrow Terminal 2 and an airside passenger transit system. One option within the Group’s plans includes the avoidance of construction on the M25 motorway, which, he said, would cause unnecessary disruption, though it met the government’s requirements on length of runway, capacity, environmental and noise impact.

Arora arrived from Punjab in 1972, living with his parents, brother and another family of four in a three-bedroom house in Southall. His early jobs included a customer services officer for British Airways and waiter at Renaissance London Heathrow, which he bought many years later. His big breakthrough came when he convinced British Airways to let him set up a crew hotel for them, and established the Arora Group in 1999, branching beyond hotel development to the management of properties, and construction and development.

While he regularly visits India, and has been “blown away” by some of the airport development projects he has seen in the country (Mumbai in particular), he plans to keep his focus on Britain. “I don’t want to take on more than we can swallow and we only take on projects where we feel we have the expertise. This project is huge by any standards in the world.”

While winning the contract would propel the company into a different ballpark, he is confident of its ability to manage this, noting that in its history it is yet to fall behind on a deadline or go back to its lenders for further funds. “I was never a hotelier till the late 1990s, when I thought of the idea of a crew hotel and everyone thought I was nuts — even my own bankers. But I was determined and said I would bring the best people on board to deliver and that is exactly what I did,” he said.

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Published on August 13, 2017
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