2011 CAPITAL INVESTMENT PROGRAMME

Transcription

1 2011 CAPITAL INVESTMENT PROGRAMME (Published including airline feedback following consultation on draft Gatwick Capital Investment Programme, October 2011) JANUARY 2012

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3 GATWICK CAPITAL INVESTMENT PROGRAMME Foreword P05 INTRODUCTION P07 02 TRAFFIC FORECASTS P11 03GATWICK PRODUCT DEVELOPMENT AND INVESTMENT STRATEGY P21 04 CONSULTATION ON THE CAPITAL INVESTMENT PROGRAMME P33 05PROJECT DESCRIPTIONS P45 Appendices Glossary A - Phased Capital Investment Programme 2011 B - Phased Capital Investment Programme 2010 C - Changes to Investment Programme - TRACKER D - Previous Traffic Forecasts E - Meetings, Working Groups and Governance Boards F - decision Log, G - Annex G H - Gatwick Commentary to Airline Response to Gatwick Draft CIP 2011 p101 P103 P105 P107 P109 P111 P113 P125 P133 P139 P144

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5 GATWICK CAPITAL INVESTMENT PROGRAMME Foreword Stewart Wingate Chief Executive Officer

6 06 Foreword It gives me great pleasure to introduce the Gatwick Capital Investment Programme (CIP) for Consultation is an important process, and we attach great value to the views of our stakeholders on our plans. The purpose of this document is to update the airport community regarding the investments planned at Gatwick for the remainder of the recently extended Q5 regulatory period. It aims to be as informative as possible including information on the investment plans at Gatwick to achieve the right priorities both in terms of the timing and the choice of projects. The core aim of the investment programme at Gatwick remains the same. In the South Terminal it s about revitalisation and in the North Terminal it s about adding capacity, whilst out on the airfield we are aiming to optimise runway performance by creating more efficient, flexible airfield operations. By offering real competition in the London airport system and making use of the full potential of the single runway we believe that our annual throughput can grow to around 40 million passengers. We believe that this growth and the impacts associated with it are manageable within acceptable levels. We believe that growing Gatwick is in the best interests of the region, and of the UK as a whole, as it will help stimulate economic growth by creating jobs and the opportunity to travel as well as being good for our passengers, airlines and shareholders. At the same time as growing capacity, it is vital that Gatwick delivers great service all day, every day. Only by doing so will it differentiate itself from other airports, and encourage airlines and passengers to choose to fly from Gatwick. Gatwick Airport remains committed to investing in the right things at the right time. Through appropriate and timely investment in people, facilities, process and technology Gatwick will realise its service and capacity aspirations. For an airport this means being clear about our own ambitions, understanding the goals of our airline customers, and anticipating the future needs of passengers while meeting the needs of passengers today. We do this so that we can efficiently target the investments in infrastructure, assets, technology, and people, which will deliver the best outcomes. Even following the extension to the original five year regulatory period known as Q5, we are already half way through this phase of Gatwick s development. Through this document we want to share our key focus for capital investment for the remainder of the current regulatory period. We are investing around 1.2 billion in new facilities, equipment and systems to transform the airport. A lot has already been delivered over the last couple of years including the new inter terminal shuttle, the North West Zone development, the North Terminal short-term car park and improvements to South Terminal check-in areas. There is still a lot left to do and you will continue to see Gatwick develop in front of your eyes in areas like the new South Terminal Security facility which is already being used by passengers and the South Terminal Forecourt area which is well on its way to provide a radically improved front door for Gatwick. We ve extended the North Terminal and will also be providing it with additional pier served stands. There is planned investment vital to safeguard Gatwick s growth aspirations, ensuring that it keeps pace with technology so we become a modern airport, including baggage developments in both terminals. It is has always been our intention that the Gatwick investment programme evolves and is shaped to meet new challenges and seize opportunities as they arise made in conjunction with you, our airlines and business partners and I look forward to continued dialogue with you to achieve this. I m proud of what we have achieved at Gatwick in a very short time and I m looking forward to the future. I m sure they will be exciting times for all of us, competing to grow and become London s airport of choice and delivering an excellent passenger experience to all our passengers. I am confident that the Gatwick community will remain focussed on our priority of putting the passenger first, reducing queues, getting people away on time, whilst all the while treating passengers as our guests.

7 GATWICK CAPITAL INVESTMENT PROGRAMME Introduction Gatwick Airport published its last CIP in January 2011, following an extended period of consultation on its initial circulation, as a draft for consultation in June With the recent extension to the current regulatory cycle (Q5), we think that now is a great time to share our plans for the airport. This document outlines Gatwick s performance in its first three years of the fifth quinquennium otherwise known as Q5. It also includes future plans for the remainder of an extended Q5 (i.e. until April 2014). As can be seen from the graphic below the three documents can all be considered as standalone documents in their own right. However they are intrinsically interlinked through a common ambition, strategy and core values. Gatwick Master Plan CHANGE AT GATWICK Gatwick is in the middle of the biggest transformation of its history. New and expanded capacity, both on the ground and in the air, will bring world-class facilities and unbeatable service levels, putting passengers at the heart of our business in everything we do. Through an extensive programme of investment Gatwick intends to provide the most appropriate level of capacity, operating environment and level of service in order to meet the demands of our customers. Gatwick Development Strategy Gatwick Capital Investment Programme (CIP) The 2011 CIP for Gatwick states how the airport will develop in future years to meet the needs of its users, including existing and future airlines and passengers. We ve looked into the future and we re excited about what we see, with more people flying to more varied destinations and growing demand for air travel. THE CONTEXT The Gatwick Capital Investment Programme (CIP) sits within a family of Gatwick planning documents that have been developed In order to present a clear picture of Gatwick s roadmap of development within the current, medium and long term view. The Gatwick Master Plan informs the more detailed Development Strategy, which in turn informs the CIP. The Gatwick Master Plan identifies the high-level strategic development direction for Gatwick. The latest Gatwick Master Plan has recently been published in draft form. The Gatwick Development Strategy is a more detailed technical description of development requirements necessary to accommodate the traffic forecasts and deliver against our strategy. The Gatwick Development Strategy will be published in draft and in stages over the next few months as we work through the different topic areas with the airlines. The Gatwick Capital Investment Programme (CIP) includes a detailed description of individual projects designed to address these development requirements and reports on consultation with the airlines. The CIP subsequently flows into the Business Plan / Regulatory Submission that will form the basis of Constructive Engagement (CE).

8 08 Introduction ASSUMPTIONS FOR THE CIP The CIP outlined is based on the assumption that Gatwick will remain a single runway airport up to the 2020s. This single runway-two terminal scenario is the key premise upon which the ten year airport investment programme is based. There are no current plans for an additional runway but we will continue to safeguard for that eventuality should it be needed. One runway constrains longer term growth; however there Is room to grow in the short to medium term, though unused runway capacity. We believe Gatwick can build capacity to accommodate 40mppa. By this time Gatwick will effectively be at full capacity. As well as increasing passenger volumes we intend to offer an improved passenger experience, with many developments focussed on this objective. KEY THEMES Under independent ownership Gatwick s strategic direction is to compete to grow and become London s airport of choice. through the airport. Departing passengers will have easier check-in and security processes, enjoy an enhanced retail offering and on-time departures, while arriving passengers will benefit from faster journeys from gates, less time at immigration, shorter waits at baggage reclaim and more accessible information to help them make informed choices about onward travel and leisure options. Rest assured that we will continue to deliver more value by working more efficiently, challenging everything we do and delivering more for less. An example of where we are delivering more for less are the South Terminal Baggage and Pier 1 projects which prior to the change of ownership were being delivered as two separate, unrelated projects. Through working closely with our airline partners we are delivering an integrated programme of works which will provide a modern baggage system to support the volume in South Terminal as well as a pier that delivers the level of service expected from a modern airport. This approach means that we will realise the same benefits, but it will be cheaper, in fact around 30 million cheaper. At the same time the integrated delivery approach will mean we incur less disruption during construction, less risk to delivery and fewer operational impacts. Gatwick is developing facilities that will provide the most appropriate level of capacity, and the best operating environment and level of service to meet the demands of our customers. The passenger end to end journey is at the centre of everything we do and we always strive to provide the best value for money in developing our facilities. Our original objectives of transforming the passenger journey by improving facilities in South Terminal and creating more space in North Terminal haven t changed. New, modern facilities are being designed and constructed that will expand capacity, both on the ground and in the air, and will ensure excellent service levels and enhanced safety and security. With the recent extension to Q5 we are now committed to investing over 1 billion in the development of our infrastructure and facilities processes and people for the ultimate benefit of Gatwick s passengers on their journey Every pound that Gatwick spends is challenged and questioned, to ensure that it delivers value and efficiencies for airlines and passengers alike. REGULATORY PERIODS (TIMEFRAME) Gatwick is three years into Q5, which has recently been extended to become a six year regulatory cycle and the 2011 CIP reflects this change. Looking back on the first three years of Q5 it can be seen that significant progress has been made in the development of the strategic choice projects which were first highlighted in the joint statement to the CAA from Gatwick and its airline community in July Many projects have been developed and delivered at Gatwick in this time, amongst others these include the new Inter Terminal Shuttle, the North Terminal Forecourt and Interchange, Multi Storey Car Park 6, Pier 2 gates and stands, and the North West Zone. The North Terminal Extension as well as the South Terminal

9 GATWICK CAPITAL INVESTMENT PROGRAMME Security, Forecourt and Concourse projects can all be seen to be well underway. By working closely with our airline partners we are certain that we can also deliver a modern baggage system to support the volume in South Terminal and more pier service for passengers in the North Terminal. We have already shared with the airline community our view, In terms of capital investment required, for the additional year of Q5 (2013/14). This will be further explored in greater detail in Chapter 3 of this document. Chapter 2 describes Gatwick s existing traffic and provides details of our latest traffic forecasts. It also articulates how these forecasts are translated into facility requirements. Chapter 3 describes the Gatwick Product Development and Investment Strategy, setting out the principal drivers and priorities for investment at the airport. It also includes a more detailed look at some of the investment initiatives at Gatwick that have already been delivered, are currently being delivered and will be delivered at Gatwick in the future. Looking further ahead, Gatwick fully expects that there will be a number of developments that will continue and rollover beyond the newly extended Q5. These developments include the South Terminal baggage system and the provision of pier service for passengers in the North Terminal, as well as the continuing programme of asset replacements and refurbishments across the whole asset base to meet improved service levels across a range of assets. A QUICK GUIDE TO THIS DOCUMENT This CIP is intended to describe the capital investment for Gatwick over an extended Q5 period. It aims to provide details regarding the drivers and priorities for investment as well as giving specific information on current and future projects. It is vital that this document imparts a message that is understood by Gatwick s airline partners and that future investment at Gatwick is informed by this knowledge, together with specific stakeholder requirements. The structure of the document follows a broadly similar format to the 2010 CIP document, taking the reader through the latest outlook on traffic forecasts and how they drive the required investment in the airport through to a detailed description of the overall capital investment at Gatwick. The structure of this document is laid out below: Chapter 4 provides an update on the consultative process undertaken at Gatwick and an outline of how we engage with all our customers and stakeholders, that include airlines, passengers and the wider Gatwick community. It highlights key elements of this consultation. Chapter 5 contains individual project descriptions, including details on costs, for all projects or programmes over 5 million. We hope that by describing the main constituent projects and investment programme in this manner results in a greater understanding of the drivers for investment at project level, the cost breakdowns of the projects and the outputs that will be delivered, in terms of infrastructure and benefits to airlines and passengers are clearly articulated. Appendices are included that show the CIP2011 forecast phased expenditure of all major projects and programmes of greater value than 1 million (Appendix A), the CIP2010 forecasted phasing of expenditure of all major projects and programmes of greater value than 1 million (Appendix B) and a tracker that highlights where and how changes have been made (Appendix C). Also included in the appendices are the previously published traffic forecasts (Appendix D) and a look back over all the consultation forums and working groups since the publication of the previous CIP, highlighting subjects discussed and decisions made (Appendix E & F). A copy of Annex G is also included for reference (Appendix G). Appendix H contains the airline feedback received in response to the draft CIP 2011 as well as Gatwick s response to this feedback.

10 10 Introduction THE CIP IN SUMMARY The Gatwick CIP2011 reflects an investment programme that has been developed and refined through discussion and consultation with our staff, our passengers, our community and particularly our airline partners. Throughout this process, high level options for the development of the airport and specific areas of the airport are regularly assessed with regards to the benefits, costs, output and trade-offs involved. All changes represented in the CIP2011 have been carefully considered, are proportionate to the overall plan, and that the rationale for significant changes has been discussed with airlines before decisions are taken. The CIP should be regarded as both a product of consultation and a basis for future consultation only and, thus, does not represent a mandatory investment programme. In brief, this CIP outlines an investment plan for a recently extended Q5, that totals 1,172 million in out-turn prices. Last year we challenged ourselves to deliver more value by working more efficiently and set ourselves a target of reducing this to 900 million and we continue to do so on a daily basis. Of the original 985 million the current total is 921 million. We also shared with our airlines in July 2011 our plans for the extended year of Q5 (2013/14) which totalled 251 million, and if you add this to the 921 million you will see how we arrived at the total of 1,172 million in out-turn prices. Inevitably with an investment programme of this size and complexity there will be changes, you can see these in the CIP2011 when you compare it to CIP2010. Notably this CIP includes an extended Q5. We hope you recognise that changes to an investment programme of this size and magnitude are inevitable. The continued prioritisation of the plan at a project and programme level is an ongoing process in order to deliver the best possible investment programme at Gatwick ensuring that the anticipated benefits, within this level of expenditure are achieved, to make certain that Gatwick s ambition is realised. Any changes to the plan, large or small, have been made transparently involving the relevant stakeholders along the decision making process. Underpinning any changes to the CIP is the ongoing programme of asset renewal and replacement, ensuring the safety and integrity of our operations, and consistent business performance. For example runway and taxiway resurfacing, surface water drainage, lifts, escalators and passenger conveyers are just some of the critical operational assets that need to be renewed and replaced. We hope that you find this document a useful record of where we are at this moment in the development of Gatwick for the remainder of Q5. YOUR FEEDBACK We are interested to hear the views of our airline business partners on this CIP. The feedback received helps us shape the airport s future development plans and aspirations, ultimately enabling Gatwick to emerge as the airport of choice in London. This document was originally circulated amongst the Gatwick airline community as a draft publication for consultation in October 2011, together with a request for feedback. The period for formal feedback has since expired with responses having been received from two airlines and are included in Appendix H along with Gatwick s responses. The period for consultation regarding this specific document has expired and this is the final version of the Gatwick CIP2011. We do, of course, value your feedback throughout the year. If you have any queries on this document, or would like to comment on the programme, please contact david.gair@gatwickairport.com. Electronic access to this document is enabled by visiting the investment page Gatwick s internet site.

11 GATWICK CAPITAL INVESTMENT PROGRAMME Traffic Forecasts INTRODUCTION PASSENGERS Gatwick is the UK s second busiest airport. It is a vital part of the UK s transport infrastructure and while it offers more travel destinations than any other London airport its operations are very much aligned to the needs of those travelling to and from London and the South East. In 2010/11, Gatwick handled 31.6 million passengers, 11.0% fewer than its peak of 35.6m in The total number of aircraft movements was 242,558 and cargo carried 101,288 tonnes. The 2010/11 total of 242,558 aircraft movements comprised: 235,575 passenger air transport movements (PATMs), giving an average aircraft load of 134 passengers. These flights also carried the great majority of Gatwick s freight as belly-hold cargo 163 cargo air transport movements (CATMs). These were a mixture of international flights, and domestic and Channel Island flights 2,184 general aviation (GA) and air taxi movements 4,636 other flights, the majority by empty civil aircraft on positioning flights. Please note: The forecasts included in this CIP were independently produced by SH&E, prior to the publication of the Department for Transport (DfT) forecasts in their document UK Aviation Forecasts - August On first examination, it would seem that the DfT view of traffic growth at Gatwick hasn t deviated greatly from the assumptions In the South East and east of England Regional Air Services (SERAS) study published in A key assumption of these forecasts is the maximum annual traffic movement ceiling set at 260,000. The SH&E forecasts included in this chapter assume that this level of annual movements can be exceeded, given the right mix of airlines and traffic. Most passengers travel from residences, hotels and businesses within London and the South East. In % of all Gatwick passengers had their journey origins or destinations in London and the counties to the south and east, 29.7% in other areas of the UK and 8.4% were transferring between flights. The majority of Gatwick passengers are travelling for leisure and are residents of the UK. 14.3% of passengers are travelling for business. AIRLINES One of Gatwick s strengths is its range of airline services and routes. In 2010, Gatwick was served by 70 regularly operating passenger airlines, comprising a mix of full service, low cost, and charter airlines. On average, passenger airlines operated 640 daily flights and served over 200 destinations. This equates to more destinations than any other UK airport. In comparison, Heathrow operated an average of 1,250 daily flights, with 88 airlines flying to 185 destinations, while Stansted operated 420 daily flights on average, with 18 airlines serving 150 destinations. Gatwick s two largest carriers account for almost half the passenger traffic at Gatwick. easyjet is the largest, accounting for 35% of passenger traffic, while British Airways accounts for 14%. ROUTES In 2010, airlines operating at Gatwick flew at least one flight a week to over 200 destinations. In 2010, 88.8% of passengers travelled on international services and 11.2% on domestic. The majority of passengers were on short-haul routes to destinations in the UK and Europe, though a number of long-haul destinations such as Orlando, Dubai, Sharm El Sheikh and Bridgetown are among Gatwick s busiest services.

12 Traffic Forecasts 12 AIRCRAFT The variety of aircraft types operating at Gatwick reflects a diverse mix of airlines and routes. Narrow-body jet aircraft such as the Boeing 737 and Airbus A320 are the most common type, reflecting the dominance of short-haul operations. These account for 75.6% of total passenger operations. Wide-body jet aircraft such as the B777 and B747 account for 8.6% of passenger operations and are typically deployed on long-haul routes to North America, the Caribbean, and the Middle East. Regional jets and turboprop aircraft account for approximately 13.1% of passenger operations. Flybe is the main regional jet and turboprop operator, the majority on domestic routes. TRAFFIC FORECASTS In 2010 we commissioned SH&E, a leading aviation consultancy company, to help us prepare revised traffic forecasts for Gatwick. These forecasts were updated by SH&E in May 2011 and are outlined in the following sections. FORECASTING APPROACH The long term forecasts for Gatwick have been prepared using a combination of bottom-up and top-down approaches in order to reflect both the latest expectations regarding air service at the airport, and the long term growth path and capacity constraints of the London airport system. The Gatwick market can not be considered in isolation due to the interplay between the other London airports. Passenger and airline choice is driven by a number of factors, including airport location relative to journey origin/destination, capacity availability, the location of historical services, the relative cost of airport charges and subsequently air fares, and transport options to/from each airport, among others. From a demand perspective the London market has been considered at a macro level initially, to reflect the underlying demand to/from/via the capital. This considers the expected long term relationship between economic growth and demand for air travel, by inbound and outbound travelers using London airports, the likely maturity of this market over time, combining both quantitative and qualitative measures. Subsequently, the distribution of demand has been driven by observed catchment areas, observed passenger behaviour and supply at each airport. This has been done while considering the local constraints at each airport and how they interact with each other across different market segments. In addition, the near term outlook, which we are able to predict with greater certainty based on known carrier plans and expected market conditions, has been constructed on a bottom-up basis. This implies a more granular assessment of market and carrier groups. For the current year, ACL slot applications and forward schedule announcements have been the key inputs, while business development leads and targets, coupled with airline capacity plans have been used to inform the following two years of growth. KEY DRIVERS FOR SOUTH EAST DEMAND The demand for air travel is considered a derived demand, in that it is not demanded for its own sake, but rather to facilitate the movement of goods and people for business or leisure purposes. As such, the main drivers of demand for air travel are the growth in economic activity, international trade, inbound and outbound tourism, the relative cost of air travel compared to other modes and other factors such as tastes and fashions, taxation and environmental legislation. Economic activity shows strong historical correlation with air travel across many markets and GDP has been used as one of the key drivers of long term growth in these forecasts. It captures many of the key trends driving demand, including:

13 GATWICK CAPITAL INVESTMENT PROGRAMME Business confidence - when GDP is growing at a healthy rate, business confidence is high, and demand for business travel is high. Population growth - e.g. significant population growth from immigration creates more GDP, and also drives VFR (visiting friends and relatives) and other travel demand. Leisure spending - when GDP is growing well, consumer confidence is high and people have the income and confidence to take more holidays. Conversely, during a recession, some people lose their incomes and cannot afford discretionary travel, while others may not lose incomes but do lose confidence so also travel less. Market maturity - developed, mature markets generally grow more slowly than developing markets. In the former markets, the incremental growth in air travel demand (expressed as a percentage) is also generally lower than in developing markets which are growing from a much lower base. At individual airport level, traffic growth tends to show greater variability, due to other market-specific shocks such as the arrival or departure of a new airline, or based on local disruption weather, construction or political unrest. Gatwick s traffic has also experienced shocks over time, due to a combination of both broader national and international shocks such as war, oil price hikes and recessions, as well as more local shocks such as weather disruption or the arrival or departure of based airlines. Long term forecasts, by their nature, do not forecast specific future shocks, but rather present the expected mid-point or trend around which actual growth is most likely to fluctuate. In producing these forecasts, SH&E has modelled a number of possible negative shock scenarios, such as terrorist attacks, the withdrawal of a significant based carrier, or a double dip recession. The impact of these scenarios has been used to inform the long term growth rates, although as with all forecasts actual events may, and probably will, differ from those assumed ex ante. The current economic outlook for the UK is uncertain, although most independent commentators expect eventual recovery to positive growth following the recent widespread recession. In these long term forecasts, a balanced view has been taken, which reflects recovery in the near term and modest but positive growth over the long run. The headwinds buffeting aviation in the UK, such as fuel prices, APD, environmental legislation, dampened disposable incomes etc, are reflected in the low elasticity of demand assumed for the London market as a whole, considerably below the levels experienced historically. EXTERNAL NEGATIVE SHOCKS In the UK, there has historically been a strong and consistent relationship between GDP and Air Travel, consistent with the basic premise that as incomes and economic activity increase, business and leisure demand also increase. This relationship has generally held during downturns also. For example, when there has been a recession, and economic growth has turned negative, demand for UK air travel has fallen also. ASSUMPTIONS - GENERAL The three cases produced in these forecasts are intended to provide a likely range of growth profiles for Gatwick over the forecast horizon. A set of optimistic and pessimistic assumptions have been analyzed and a set of scenarios created, which provide a reasonable boundary for upside and downside risk. It may be seen that over the very long term, the three cases converge towards the assumed runway capacity of Gatwick, beyond which they all grow very modestly. ASSUMPTIONS - LOW CASE The low case reflects the downside risk In the forecasts, with a more pessimistic set of assumptions in both the short and the long term. In the bottom-up analysis, the low case assumes that many of the new services assumed in the Base Case do not materialise, and over the long term, the average growth rate is very modest, reflecting a considerably lower steady state rate of economic growth and/or significant future negative shocks to growth.

14 Traffic Forecasts 14 ASSUMPTIONS - BASE CASE In the first three years, growth is driven by known and expected capacity additions by existing and new carriers. The base case takes a balanced view of both positive and negative factors. Over the long term, a GDP elasticity of around unity is assumed in the base case, reflecting an ongoing link to economic growth, but also increasing market maturity and a combination of negative influences on demand, such as increasing air travel costs relative to other modes.. ASSUMPTIONS - HIGH CASE The high case is intended to reflect a reasonable optimistic scenario, illustrating a set of positive conditions but remaining within previously sustained growth rates seen at Gatwick. In the short term, the High Case assumes a more pronounced rebound from the recession, and over the long term assumes a lower degree of market maturity. This case is considered appropriate for the purposes of capacity planning, as it provides an indication of the maximum likely traffic volume at Gatwick over the planning horizon. The tables below show the passenger and air traffic movement forecasts prepared in December 2010 by SH&E and the subsequently revised by SH&E forecast in May This latest set will be adopted by Gatwick for the three scenarios, Base, High and Low. CIP11 ANNUAL PASSENGER FORECASTS (MILLIONS) December 2010 May 2011 Low Base High Low Base High 2008/09 actual /10 actual Q5 2010/11 actual / / / / / / / / Growth Rate p.a. (Q5) 1.6% 3.4% 4.7% Growth Rate p.a. (2014/ /19) 2.1% 2.8% 3.1% 1.4% 2.1% 3.1% CIP11 ANNUAL AIRCRAFT MOVEMENTS (THOUSANDS) May 2011 Passenger ATMs Base Case Low Base High CATM Non- ATM 2008/09 actual /10 actual Q5 2010/11 actual / / / / / / / / Growth Rate p.a. (Q5) 0.9% 2.7% 4.0% - - Growth Rate p.a. (2014/ /19) 0.5% 1.2% 2.0% - - For the purpose of comparison the passenger forecasts included in the 2008, 2009 and 2010 (draft and final publication) are included in Appendix D. USING GATWICK TRAFFIC FORECASTS TO DETERMINE FACILITY REQUIREMENTS The driver for infrastructure capacity is peak demand. The need for infrastructure to satisfy the peak demand remains, regardless of annual passenger numbers as some slots will always be more commercially viable as certain times of the day are more attractive to passengers. It is for this reason that the busy day schedule and medium term forecasts are used to model facility requirements looking forward ten years.

15 GATWICK CAPITAL INVESTMENT PROGRAMME GENERATION OF A BUSY DAY SCHEDULE Generating a busy day profile for Gatwick involves creating an interlace scheduled based on assumptions relating to peak spreading and future airline groups, fleets and markets served. The annual forecasts are used as a starting point from which peak spreading assumptions are made. In producing these interlaced schedules, due care is taken to reflect the current and expected future mix of services during the busy day (expected to remain in August), with assumptions made regarding the timing of new routes, additional frequencies, likely aircraft types, load factors and expected turnaround times. From these future indicative schedules, it is possible to derive expected future service requirements throughout Gatwick s busiest periods. In addition, these schedules have been used to inform some of the derivative forecasts such as stand demand, terminal splits of passenger flows and noise. CONVERTING BUSY DAY SCHEDULE INTO DEMAND FOR FACILITIES The busy day schedules are put through spreadsheet or simulation models to assess facility requirements, with the main terminal simulation model being the CAST modelling system. The CAST model requires a large number of input parameters, which need to be updated prior to model runs. These parameters can come from regular survey data (e.g. EU / non-eu passenger breakdowns by airline from the CAA survey), ad-hoc survey data (e.g. average transaction times through immigration or at check-in), or data collected from the airport operation or airlines (e.g. numbers of bags by flight, or breakdown of passenger method of check-in). In some cases it may be necessary to agree to parameters that are suitable for the year being assessed with other areas of the business (e.g. agreeing reasonable assumptions on methods of check-in in future years, rather than assuming latest observed values will continue to apply). The main constraint when creating a busy day flight schedule is runway capacity, and new slots can only be allocated in the future schedules where there is spare capacity, which is now very limited at Gatwick. The schedules need to meet control totals for each carrier, market sector and fleet mix, for maximum runway arrivals and departures by hour, and reasonable turnaround constraints for each carrier and market combination. Since November 2010, these busy day schedules have been prepared for GAL by SH&E, and are aligned with their forecasts at annual level, using assumptions on changes over time to busy day to annual flight movement and passenger volume ratios. In addition, service level targets that the airport will seek to achieve in the assessment year are in line with our longer term service level strategy. A notable example is security queuing times, for which the airport has measurable SQR targets. Gatwick is undertaking a significant exercise to work up service standards for a wide variety of areas, taking into account IATA standards, the regulatory SQR targets, and benchmarking against other airports. It is also important to bear in mind reasonable assumptions on what can be achieved operationally, and the cost of meeting different service standards. The simulation model can then be run to determine the facilities that are required to ensure forecast busy day demand is met, given the agreed processing parameters and service level targets. Where the results are particularly sensitive to assumptions, what if scenarios can be run in order to highlight the scale of risk. The end result of this process is a recommendation for the type and size of facilities required and by when, with a further suggestion of where capacity for additional facilities may need to be

16 Traffic Forecasts 16 safeguarded. In some cases the required facilities may already be in place, in which case no further development is needed, but in many cases there will be a shortfall in current provision. The forecast busy day schedules have been used to project facilities demand in 2013/14, 2018/19 and 2024/25, albeit with greater uncertainty and risks attached for the latter scenarios. Given the long lifespan of most facilities, the longer term projection can be used to inform decisions on development, in particular on safeguarding for future expansion and the overall sizing of different areas of the airport. GATWICK TERMINAL FACILITIES - PROVIDED AND FORECAST The tables that follow show the future forecast terminal facility requirements at Gatwick until 2013/14 in North Terminal, South Terminal and the Airfield, using the busy day schedules to assess demand. The service level assumptions that have been used in these assessments are quoted in the tables that follow:

17 GATWICK CAPITAL INVESTMENT PROGRAMME GATWICK TERMINAL FACILITIES: PROVIDED AND FORECAST TO 2017/18, WITH RAG STATUS INCLUDING Q5 DEVELOPMENT NORTH TERMINAL Annual pax Total busy day Movements Maximum hourly Movements Busy hour Departures runway Flow International Arrivals busy hour runway flow Domestic arrivals Busy hour runway Flow Current Provision Service Standards Assumed in Assessments - - Summer 2011 Based on Actual Schedule ST: 18.7mppa NT: 15.2mppa High Case Scenario 2013/14 Facilities Required by Summer 2013 ST: 18.3mppa NT: 18.3mppa (rolling hour) 3500 (rolling hour) (rolling hour) 2650 (rolling hour) (rolling hour) 520 (rolling hour) Check-in Baggage system - Chutes Baggage system - Early bag store Central search Desk Provision: 144 Kiosk Provision: 35 Provision: 128 chutes Early Bag Store: 0 Lanes: 16 Economy: Maximum queue time of 10 minutes in total on the busy day (5 minutes each form kiosks and bag drop) CIP: Maximum queue time of 3 minutes in total at traditional desks Check In Strategy: Passengers can check in bags on arrival at airport Short-haul chutes open 90 minutes before scheduled time of departure, long-haul 180 minutes Chutes open 30 mins earlier after 18:00 100%load factors and 20% contingency uplift Busy Hour Flow: ~2750 at 05:00 Busy Hour Flow: 3050 at 05:00 Assumes: 2012/2013 Check In type splits Total Traditional / Bag Drop Desk Demand at 90% Utilisation 10% Service Desk Uplift: Kiosk Utilisation: Requirement: 83 chutes Requirement: 2030 bag (early bag store) Economy: busy hour passengers do not queue for longer than 5 minutes Requirement: on the busy day 16 lanes at 200 pph throughputs CIP: busy hour passengers do not queue for longer than 1 minutes on the busy day Assumes: Total Traditional / Bag Drop Desk Demand at 90% Utilisation 10% Service Desk Uplift: Kiosk Demand at 100% Utilisation: Planned Desk Provision: 144 Planned Kiosk Provision: 105 Requirement: 91 chutes Requirement: 2340 bag (early bag store) Requirement: lanes at 200 pph throughputs Idl total area Idl seating, retail & Catering IDL total space: 13,200m² Seating provision: 1266 Catering area provision: 2500m² Retail area provision: 5380m² Seats: 0.5 seats per peak occupancy passengers 1.3m² per seat Retail / Catering: 1.3m² for all IDL passengers, 40% in catering 3.0m² for all IDL passengers, 35% in retail Circulation space: 20%-30% of total IDL space Requirement: Busy Day Peak Occupancy: ~2450 Total IDL space recommended: at least 15,100m² (excluding toilets, special lounges, retail storage etc) Requirement: Indicative seat requirement 1230, to meet target QSM score Catering area requirement: up to 3,200m² Retail area requirement: up to 7,300m² Requirement: Busy Day Peak Occupancy: ~2950 Total IDL space recommended: at least 18,100m² (excluding toilets, special lounges, retail storage etc) Requirement: Indicative seat requirement 1480, to meet target QSM score Catering area requirement: up to 3,800m² Retail area requirement: up to 8,800m² Flight connections Current capacity: 2 lanes (can expand to 3 lanes) Requirement: Busy hour passengers do not queue for longer than 5 minutes on the busy day Requirement: 2 lanes at 200 pph throughputs Requirement: 2 lanes at 200 pph throughputs Immigration inflow Requirement: Busy hour EU passengers do not queue for longer than 10 minutes; Busy hour non-eu passengers do not queue for longer than 20 minutes. Busy Hour Flow: ~2050 at 12:00 Busy Hour Flow: ~2600 at 07:00 Immigration desks Traditional Desk Provision: 17 E-pass Gate Provision: 5 Traditional desk requirement: E-pass gate requirement: 8-10 Traditional desk requirement: E-pass gate requirement: Reclaim belts Current provision: 9 international belts following North Terminal Extension construction (1 long and 2 domestic belts) Requirement: Belt available for all flights during busy hour, to support KPI of all pax receiving baggage within 60 minutes of arrival on stand. Requirement: International: 7 (Including 1 long belt) Domestic: 1 belt sufficient (2 would be ideal to reduce congestion at peak times) Requirement: International: 8 belts (including 2 long belts) Domestic: 1 belt Landside retail & catering Catering area provision: ~1400m² Retail area provision: ~1800m² Landside peak occupancy: Arrivals concourse peak occupancy is ~16% of peak hour flow + Landside dwell assumed ~10 minutes on average. 1.3m² catering area per person at peak occupancy. 1.0m² retail area per person at peak occupancy Assumes: Arrivals concourse peak occupancy: 330 Landside departures peak occupancy: 460 Combined landside peak occupancy: up to 790 Catering area requirement: up to 1,030m² Retail area requirement: up to 790m² Assumes: Arrivals concourse peak occupancy: 450 Landside departures peak occupancy: 510 Combined landside peak occupancy: up to 960 Catering area requirement: up to 1,250m² Retail area requirement: up to 960m²

18 Traffic Forecasts 18 Annual pax Total busy day Movements Maximum hourly Movements Busy hour Departures runway Flow International Arrivals busy hour runway flow Domestic arrivals Busy hour runway Flow Current Provision GATWICK TERMINAL FACILITIES: PROVIDED AND FORECAST TO 2017/18, WITH RAG STATUS INCLUDING Q5 DEVELOPMENT SOUTH TERMINAL Service Standards Assumed in Assessments - - Summer 2011 Based on Actual Schedule ST: 18.7mppa NT: 15.2mppa High Case Scenario 2013/14 Facilities Required by Summer 2013 ST: 18.3mppa NT: 18.3mppa (rolling hour) 4060 (rolling hour) (rolling hour) 2350 (rolling hour) (rolling hour) 520 (rolling hour) Check-in Baggage system - Chutes Baggage system - Early bag store Desk Provision: 189 Kiosk Provision: 31 Provision: 135 chutes Early Bag Store: 0 Economy: Maximum queue time of 10 minutes in total on the busy day (5 minutes each for kiosks and bag drop) CIP: Maximum queue time of 3 minutes in total at traditional desks Check In Strategy: Passengers can check in bags on arrival at airport Short-haul chutes open 90 minutes before scheduled time of departure, long-haul 180 minutes Chutes open 30 mins earlier after 18:00 100% load factors and 20% contingency uplift Busy Hour Flow: ~3370 at 07:00 Busy Hour Flow: ~3320 at 07:00 Assumes: 2012/2013 Check In type splits Total Traditional / Bag Drop Desk Demand at 90%Utilisation 10% Service Desk Uplift: ~ Kiosk Demand at 100% Utilisation: Planned Desk Provision: 189 Planned Kiosk Provision: 31 Requirement: 98 chutes Requirement: 1950 bag (early bag store) Assumes: Total Traditional / Bag Drop Desk Demand at 90% Utilisation 10% Service Desk Uplift: Kiosk Demand at 100% Utilisation: Planned Desk Provision: 189 Planned Kiosk Provision: 31 Requirement: 104 chutes Requirement: 2050 bag (early bag store) Central search Current provision: 19 lanes Economy: busy hour passengers do not queue for longer than 5 minutes on the busy day CIP: busy hour passengers do not queue for longer than 1 minutes on the busy day Requirement: 19 lanes at 200 pph throughputs Requirement: 21 lanes at 200 pph throughputs Idl total area Idl seating, retail & Catering IDL total space: ~14,700m² Seating provision: 1700 Catering area provision: 3500m² Retail area provision: 6500m² Seats: 0.5 seats per peak occupancy passengers 1.3m² per seat Retail / Catering: 1.3m² for all IDL passengers, 40% in catering 3.0m² for all IDL passengers, 35% in retail Circulation space: 20%-30% of total IDL space Requirement: Busy Day Peak Occupancy: ~3800 Total IDL space recommended: at least 23,500m² (excluding toilets, special lounges, retail storage etc). Requirement: Indicative seat requirement 1900, to meet target QSM score Catering area requiremen: up to 4,900m² Retail area requirement: up to 11,400m² Requirement: Busy Day Peak Occupancy: ~3700 Total IDL space recommended: at least 23,500m² (excluding toilets, special lounges, retail storage etc). Requirement: Indicative seat requirement 1850, to meet target QSM score Catering area requirement: up to 4,800m² Retail area requirement: up to 11,100m² Flight connections Current provision: 1 lane; can expand to 2 lanes Requirement: Busy hour passengers do not queue for longer than 5 minutes on the busy day Requirement: 1 lane at 200pph Requirement: 1 lane at 200pph throughputs Immigration inflow Requirement: Busy hour EU passengers do not queue for longer than 10 minutes; Busy hour non-eu passengers do not queue for longer than 20 minutes. Busy Hour Flow: ~2350 at 1000 Busy Hour Flow: 2180 at 18:00 Immigration desks Desk provision: 23 Traditional desk requirement: E-pass gate requirement: Traditional desk requirement: E-pass gate requirement: Reclaim belts Current provision: 8 international belts and 1 domestic belt Requirement: Belt available for all flights during busy hour, to support KPI of all pax receiving baggage within 60 minutes of arrival on stand. Requirement: International: 7 belts Domestic 1 belt Requirement: International: 7-8 belts Domestic: 1 belt Landside retail & catering Catering area provision: ~1320m² Retail area provision: ~850m² Requirement: Arrivals concourse peak occupancy: 510 Landside departures peak occupancy: 560 Combined landside peak occupancy: up to 1070 Requirement: Arrivals concourse peak occupancy: 510 Landside departures peak occupancy: 560 Combined landside peak occupancy: up to 1070 Requirement: Arrivals concourse peak occupancy: 480 Landside departures peak occupancy: 550 Combined landside peak occupancy: up to 1030 Catering area requirement: 1,390m² Retail area requirement: 1,070m² Catering area requirement: 1,390m² Retail area requirement: 1,070m² Catering area requirement: 1,340m² Retail area requirement: 1,030m²

19 GATWICK CAPITAL INVESTMENT PROGRAMME GATWICK AIRFIELD FACILITIES: PROVIDED AND FORECAST TO 2013/14, WITH RAG STATUS INCLUDING Q5 DEVELOPMENTSummer AIRFIELD Annual pax Current Provision Service Standards Assumed in Assessments - - Summer 2011 Based on Actual Schedule ST: 18.7mppa NT: 15.2mppa High Case Scenario 2013/14 Facilities Required by Summer 2013 ST: 18.3mppa NT: 18.3mppa Busy day atms Peak hour atms Daily capacity Runway 3 RETs and 3 RATs on 26L & 08R Maximum 10 minute delay. On a busy day almost all the available capacity is utilised and Gatwick is not able to satisfy all demand for slots. However, on other days of the year utilisation is much reduced. 95.8% 96.6% Taxiways 5 Taxiways N-S and 3 taxiways E-W providing alternative routes to piers There is no specific service standard for taxiways although on route delays between the runway and stand should be kept to a minimum and new developments should serve to maintain or reduce taxi times. Current problems in Pier 1 cul-de sac. Similar but less severe problem in Pier 2 / 3 cul de sac where push back conflicts can occur. Stands Provision: 114, 56E + 2F, 16 MARS Note 734 MARS are excluded from count. Stand 57 included as E MARS. Holding stands excluded. Any arrival should have an available stand of the right size to park on at all times. Requirement equals Busy day peak occupancy + 10% NORTH TERMINAL Provision: 114, 56E + 2F, 16 MARS Requirement: 105, 26E/D DProvision: 114, 56E + 2F, 16 MARS Requirement: 109, 31E/D Pier served stands Provision: 32, 15E, 3 MARS 95%of passengers should be pier served and there should be sufficient coaching capacity to accommodate all remote services. Provision: 32, 15E, 3 MARS Demand: 45, 12E/D 95% - 96% PSL Provision: 32, 15E, 3 MARS Demand: 56, 13E/D96% PSL (Assumes SH towing and apportionment removed) Note that this reduces to 93% with planned P5 development works. Arrivals coach bays 95%of arrivals coaches should not need to hold for offloading passengers. Coaching gates 11 International coaching gates plus one domestic on P5 Sufficient coaching gates should be provided so that there is always a coaching gate available to accommodate busy day demand Demand: 5-6 coaching gates Demand: 5-6 coaching gates SOUTH TERMINAL Pier served stands Provision: 35, 15E, 7 MARS 95%of passengers should be pier served and there should be sufficient coaching capacity to accommodate all remote services. Provision: 35, 15E, 7 Demand: 49, 14E/D 97% PSLPIER Provision: 35, 15E, 7 MARS Demand: 44, 15E/D 99% PSL 60:40 split of EZY to NT facilitates work on Pier 1. With Pier 1 closed the PSL drops to 94-95% Arrivals coach bays 95%of arrivals coaches should not need to hold for offloading passengers. 3 2 with Pier 1 closed for reconfiguration all 4 gates are required Coaching gates Although there are 5 coaching gates provided only 3 can be used simulaneousl due to space constraints. plus one additional domestic to be provided on 10A. Sufficient coaching gates should be provided so that there is always a coaching gate available to accommodate busy day demand

20 Traffic Forecasts 20 CONCLUSIONS Gatwick is already the busiest single-runway airport in the world. During the summer peak, demand outstrips available supply. With no second runway currently planned, the existing runway needs to be better utilised, particularly on a year-round basis to provide capacity for maximising further medium term growth. The forecasts include assumptions on external shocks over the forecast period. Based on the last ten years the likelihood of an event is high and SH&E considered the nature of external shocks and their likely effect on passenger traffic and subsequent recovery rate. Economic shocks, particularly economic recessions, have typically had a larger and longer lasting negative impact on aviation growth than events such as SARS, terrorist attacks and political unrest. capacity constraints are still modelled, but to a somewhat lesser degree than in the Base Case. The Base Case represents SH&E s most likely forecasts, taking a balanced view of the demand and supply side factors driving future traffic volumes at Gatwick. In spite of some major exogenous shocks, the global aviation market has grown mainly in a consistent manner, at a long term average rate of around 5-6% per annum. Growth has varied significantly by region of the world, with markets in some countries maturing earlier than others. While Europe and North America are now considered largely mature markets, some other regions such as the Middle East and Asia are still generating strong aviation growth as economies develop and expand. SH&E s Low Case represents a set of negative yet conceivable circumstances, whereby the rebound from the recent downturn is slow and prolonged, and the long term average rate of growth is weakened by economic volatility and potential negative shocks to demand. The Base Case forecast translates to a set of reasonable assumptions at the airline and market level, illustrating how growth may be achieved. Recovery is under way in 2011 and the long term outlook for aviation demand remains broadly positive, however market sentiment remains cautious and the shorter term outlook volatile with unrest in the Middle East and North Africa (MENA) region, a recurring rise in oil prices, and fragile economic recovery in many European markets, including the UK, continuing to impact aviation demand. Gatwick is and will remain a predominantly short haul European airport with all market sectors expected to grow. In terms of volume it will be the short haul segment that grows the most with growth on the long haul passenger segment driven by additional services from new and established carriers at Gatwick. These new carriers could be new operators to the London market or potential spill from an increasingly constrained Heathrow market. In contrast, the High Case illustrates the volumes that may be expected if a more positive set of circumstances materialise, representing an optimistic but achievable growth path. In this scenario, a robust near-term rebound is assumed, coupled with ongoing successes in attracting new carriers and routes to Gatwick now that Gatwick is free to compete and has developed a strong air service marketing approach. Over the longer term, market maturity and

21 GATWICK CAPITAL INVESTMENT PROGRAMME Gatwick Product Development and Investment Strategy Compete to grow and become London s airport of choice OUR AMBitiON & strategy INTRODUCTION Gatwick is the second largest airport in the UK and busiest point-to-point airport in Europe, handling 31.6 million passengers in 2010/11. It is also the busiest single-runway airport in the world, scheduling up to 53 aircraft movements per hour in peak times. Deliver the best passenger experience Help our airlines grow Increase value and efficiency Protect and enhance our reputation Build a strong EH&S culture Develop the best people, processes and technology Gatwick achieves this whilst it competes directly with Heathrow, Stansted, Luton and London City as well as with European airports in one of the busiest air transport markets in the world. Gatwick s intention is to generate growth in passenger numbers, on a scale that you have already seen in Chapter 2 where we identified a clear growth path with the existing single runway and two terminal operation. At the heart of everything we do at Gatwick is our ambition, our strategy and our values. In this chapter we will explore all of these and explain how they are translated into the capital investment plan. OUR AMBITION Gatwick s strategy and ambition Is quite simple really we are competing to grow and become London s airport of choice. As outlined above, Gatwick is competing in one of the busiest air transport markets in the world and the Gatwick Investment Strategy starts from our understanding of Gatwick s role of serving passengers within that competitive market. Competition creates choice, and our ambition is for Gatwick to become London s airport of choice. Delivering great service every day is a key competitive advantage that will encourage airlines and passengers to choose to fly from Gatwick. Gatwick continues to focus our priority of putting the passenger first by treating them as our guest, reducing queues and getting them off on time.

22 DELIVER GREAT SERVICE EVERY DAY BE BETTER THAN THE REST WORK TOGETHER AS ONE TEAM Gatwick Product Development and Investment Strategy 22 OUR STRATEGY OUR VALUES We have set out six strategic priorities to help us achieve our ambition which is as follows: 1. Deliver the best passenger experience - by listening to our passengers and delivering the kind of service that will make them choose to fly from Gatwick 2. Help our airlines grow - by understanding their goals and developing commercial partnerships As has already been stated on a number of occasions we want to become London s airport of choice in a way that benefits all of our people, our business partners and our communities. To make sure we do, we have identified these three underpinning principles that we believe will guide and shape our attitudes and actions, ensuring that we always deliver for our passengers: 3. Increase value and efficiency - by maximising income from retail, property and car parks, lowering our operating costs and investing efficiently 4. Protect and enhance our reputation - by building strong and constructive relationships with our stakeholders based on openness and trust 5. Build a strong environment, health and safety culture - by maintaining a relentless focus on achieving zero incidents approachable proactive energetic challenging innovative pace integrity respect accountable 6. Develop the best people, processes and technology - by investing in high performing people, driving continuous improvement and deploying the right systems Delivering great service every day is a key competitive advantage that will encourage airlines and passengers to choose to fly from Gatwick.

23 GATWICK CAPITAL INVESTMENT PROGRAMME Being better than the rest and better at everything we do will ensure that we challenge our rivals and compete for market share. Everyone who works at the airport, In what ever capacity, has a role to play. Only by working together as one team will we, as a community deliver the high standards of service that we all know that passengers expect. Here at Gatwick we are proud of the collaborative work that has already been undertaken with our airlines and partners to agree on Gatwick s Passenger Commitments. These commitments go to the heart of what passengers want and it s what we re striving to achieve: We ll treat you as our guest We hate queues We love to be on time AIRPORT INVESTMENT/DEVELOPMENT OPTIONS As previously stated in this document the 2011 CIP is based on the assumption that Gatwick will remain a single runwaytwo terminal airport up to the 2020s. Additionally, the development direction of Gatwick Airport over the period covered by this CIP is governed by five key documents: 1. The 1979 Legal Agreement with West Sussex County Council ruling out the construction of a second runway before August The Gatwick Development Strategy [1st draft by the end of 2011] 3. The 2008 Legal Agreement with West Sussex County Council 4. Gatwick 2010 Decade of Change 5. The updated Gatwick Master Plan As a visual demonstration of the future development of Gatwick we draw your attention to the Land Use Plans included in the 2011 Gatwick Master Plan that represent a spatial look ahead to INVESTMENT PRIORITIES The fundamental building blocks of Gatwick s investment strategy are the following five investment priorities: 1. Capacity 2. Service 3. Return 4. Asset Stewardship 5. Compliance Although these investment priorities can be described as broad themes, they none the less underpin all decisions made regarding capital investment at Gatwick. Although Gatwick always strives to articulate the quantifiable and qualitative costs and benefits realised from an individual project business case, it should be appreciated that the introduction of any capital investment initiative is driven by one, some or all of these core investment priorities. The asset stewardship and compliance priorities are especially important to the maintenance of airport integrity, ensuring that the airport is safe, secure, meets environmental obligations and has a robust asset replacement programme meeting all mandatory and statutory compliance. All of the projects contained within this publication are aligned to the principles outlined above. What follows is a further explanation regarding these five investment priorities. All of the documents above envisage the airport remaining a single runway, two terminal operation, contained within the currently defined airport boundary. These principles are also supported by Crawley Borough Council in its Local Development Framework.

24 24 Gatwick Product Development and Investment Strategy Capacity: Ensure appropriate infrastructure exists to support forecasted growth This investment priority is of fundamental importance to the future development of Gatwick and its community. It can be considered as two-fold, firstly promoting growth in passenger numbers and secondly to enable the airport to cope with predicted growth. Key to this investment priority is enabling Gatwick s ability to accommodate demand, relating to service, facilities and infrastructure. When we develop investment initiatives, in particular when considering particular elements of the passenger journey, or simply by location within the airport campus we ensure that the following is carefully considered: 1. Delivery of capacity in line with forecast demand 2. different growth scenarios and fleet and traffic mix assumptions 3. Facility capacities and key constraints such as the runway The driver for infrastructure capacity is peak demand, the peaky nature of demand at an airport being driven by the commercial viability and attractiveness of slots. Successful delivery against this priority will be the provision of capacity and flexibility in order to meet the demand generated by the existing and future carrier base and passenger types, through the accommodation of a variety of aircraft in all size categories that can be introduced at Gatwick. The types of facilities affected by changing or varied fleets are taxiways and aircraft stands as well as facilities inside the terminal. Service: Passenger and Airline Service Expectations Service provision and the provision of excellent facilities for our passengers has always been the driving force behind the development of Q5, no more so than under new ownership. Only by delivering great service all day, every day will Gatwick differentiate itself from other airports, and encourage airlines and passengers to choose to fly from Gatwick. In order to achieve success against this driver we are: 1. Examining each stage of the passenger journey throughout the airport and considering what the appropriate service levels are for Gatwick s future aspirations. 2. Analysing what is required to bridge the gap between the current levels of performance in terms of passenger perception versus our aspirations. 3. delivering infrastructure and solutions that either bridge that gap or exceed it. Included in the CIP2011 Draft for Consultation, circulated in October 2011, was a table that outlined Gatwick s desired passenger service standards for Gatwick for 2011/2012. Following feedback received from our airlines regarding concerns that these were aspirational standards that had been independently set out by Gatwick this table has been removed. Gatwick looks forward to continued working with the airline community to further define passenger standards at the airport. The investment programme remains focussed on the longer term requirements given the timescales required to provide new infrastructure whilst monitoring any short term impact on the longer term traffic trends.

25 GATWICK CAPITAL INVESTMENT PROGRAMME We re already reaping the rewards of a service led approach with complaints falling by 50% and compliments having doubled since Return: Reduce Operating Costs Or Increase Non-Aeronautical Revenue. It should come as no surprise to anyone that Gatwick is striving to reduce operating costs and increase nonaeronautical revenues. Greater efficiency is a prime goal for all businesses, to ensure that they can work smarter to achieve: Facilities Asset stewardship Commercial Asset stewardship Airfield Asset stewardship All projects are conducted in priority order and in conjunction with other developments at Gatwick to ensure that the maximum benefit is gained without duplication of efforts. Such is the nature of the programme that it represents ongoing investment in asset replacements that started prior to Q5 and are planned to continue beyond Q5. 1. First class delivery 2. World class quality 3. At the lowest possible cost In terms of the capital investment programme this means delivering projects for less money whilst achieving a higher value end product, maximising efficiency, minimising costs and maximising service quality through the use of technological and service innovation. Asset Stewardship: Maintain assets to optimise service and operating cost. Only through a comprehensive and sustained programme of asset replacement focused on ensuring the safety and integrity of our assets will we achieve consistent operating performance, thus optimising service and operating cost. This investment priority manifests itself both as a specific asset replacement programme and also the timely replacement of assets as part of other airport developments across the whole asset base. A consequence of underinvestment in asset stewardship will be the increased probability of asset failure and subsequent deterioration in service and increase in operating costs due to an increase in both planned and unplanned maintenance. The range of asset refurbishment and replacement projects undertaken are managed through the asset stewardship areas of: Compliance: Meet aeronautical and non-aeronautical requirements and reduce risk. A number of initiatives each year have Health, Safety, Security & Environment issues as a main driver. They represent action undertaken arising from recommendations following risk assessments, audits, incidents or near misses. This investment priority is compliance driven and as such responds to process and dictate governed by the DfT, CAA and other regulatory bodies. Ensuring the safety and security of all our passengers is a serious business, but a top priority to first and foremost comply and secondly, to constantly reduce the vulnerability and risk encountered at our airport campus. In terms of the capital investment programme this investment driver is realised through improved protection or resilience with enhancements that can be physical, technological and / or process improvements. DELIVERY AGAINST THESE INVESTMENT PRIORITIES Delivery against these investment priorities is manifest through having the right team in place focussing on the right projects in the CIP. Organisational Since the publication of CIP2010 there have been some major changes within the Development Team that we hope you will agree will ensure the maximum benefits delivered for all passengers using Gatwick. As a part of the evolution

26 26 Gatwick Product Development and Investment Strategy of the Development organisation at Gatwick, and to improve business processes, enabling Gatwick to compete and grow, we have reshaped the Development team organisational structure. The Six Sigma team has being integrated into Development and merged with the Investment Strategy to form the Product Development and Strategy team. This joining of two specialist areas will ensures that a holistic view is taken when developing Gatwick into London s airport of choice. There is a renewed vigour to the exploration of solutions that are not necessarily a build option. The consideration of People, Process, Systems and Infrastructure and any combination of these will all be fully explored. The delivery side of the Development team has also undergone significant changes since the publication of CIP2010. The delivery team is in the process of being realigned to focus on the delivery of products across the airport campus. The formation of a Terminals team, an Airfield team, and a Piers and Baggage team will encourage the delivery of parity of products and services across the airport, through shared learning and best practices. Terminal Interchange (NTI), Inter Terminal Shuttle, North Terminal Additional Pier Service (Pier 5), South Terminal Baggage Factory & Pier 1, North Terminal Additional Pier Service and Pier 2 Modifications, Crew Reporting and South Terminal Domestic Arrivals. Return: Digital Media Upgrade, Operational Efficiency Programme, IT Transformation, North and South Terminal IDL Capacity Expansion and the Longbridge House hotel development which is a change of use, non capital project. Asset stewardship: Taxiways Lima, November & Papa, Snow Equipment, South Terminal Tunnel Refurbishment, Telecomms Programme (Data & Voice), Clean, Working & Friendly Programme, Minor Projects, Facilities Asset Stewardship, Commercial Asset Stewardship and Airfield Asset Stewardship. Compliance: River Mole Flood Alleviation, Pond D Rehabilitation, Pollution Lagoon, South Terminal Fire Protection System and various projects in the Security Development Programme Projects SUMMARY OF INVESTMENT AT GATWICK IN Q5 The key strategic choice projects in Gatwick s 2011 CIP that support the five investment priorities can be found below, each listed against the main investment driver(s) they contribute towards: Capacity: Rail Station Contribution, North Terminal Short Term Car Parking (MSCP-6), North Terminal Extension (NTX), North Terminal Baggage Upgrade, South Terminal Arrivals Concourse Reconfiguration, Roadway Improvements, South Terminal Departure Lounge Capacity, North West Zone, Juliet Kink, Alpha Hold, North Terminal Early Bag Store Expansion, A380 on pier, Airfield peak capacity expansion, North Terminal Additional Pier Service (Pier 5) and North Terminal Additional Pier Service. Service: North Terminal Canopy & Paving Lower Forecourt, South and North Terminal Security, South Terminal Forecourt and Landside, South Terminal Immigration, North Terminal Forecourt (NTF), North The primary objectives of the Gatwick investment programme are to improve service quality standards by enhancing the passenger experience, upgrading the fabric of the airport and increasing terminal and airfield capacity to meet forecast growth. In the South Terminal much of the work underway is about modernisation. It s very much the same in the North Terminal but we re also focussing on expanding the capacity in North. Work is well underway, and we are on target to deliver a brighter and better Gatwick, but now at a lower cost. We know you ve already been patient but you ll have to bear with us for a little while longer as we still have a lot to do, but we re sure that the disruption will be worth the wait. This CIP outlines an investment plan for a recently extended Q5, that totals 1,172 million in out-turn prices. The original capital programme, prior to the change of ownership at Gatwick was costing 985 million for the five year period and didn t include:

27 GATWICK CAPITAL INVESTMENT PROGRAMME The new consolidated security search area for South Terminal at the Village level. The extra two security search lanes for the North Terminal to meet forecast demand. The purchase of additional Snow equipment. The rehabilitation of Taxiways Papa and November. Last year we challenged ourselves to deliver more value by working more efficiently and set ourselves a target of reducing this to 900 million and we continue to do so on a daily basis. Of the original 985 million the current total is 921 million. We also shared with the airlines in July 2011 our plans for the extended year of Q5 (2013/14) which totalled 251 million. If you add this to the 921 million you will see how we arrived at the total of 1,172 million in out-turn prices. Like CIP2010, a phased forecast spend has not been included beyond the current regulatory cycle, however, you will see that the extended 2013/14 (Q5+1) year has been included in Appendix A. What follows is a description of the capital works going on around the Gatwick campus that this phased forecast spend represents. North Terminal: Work is well underway, in fact we are rapidly nearing completion on the North Terminal Extension of the landside envelope of North Terminal adding approximately 12,500m² of floor area for additional check-in and arrivals baggage reclaim facilities. For departing passengers in the North Terminal there will be the provision of a further four additional security search lanes in order to provide the required capacity for next summer and provide a faster journey through the terminal. (Two additional lanes were delivered to meet summer 2011 demand) Also planned in the North Terminal is an upgrade of the Baggage System and an Early Baggage Storage Facility to support the planned increase in passenger throughput. By far the largest development planned for the North Terminal is the development of Piers and to deliver additional pier served stands in order to maintain pier service levels as the capacity and throughput of North Terminal is increased. South Terminal: We re already making great progress in the South Terminal, where we are busy constructing a new entrance building in the South Terminal Forecourt area which will improve the accessibility from the forecourt and multistorey car parks with new lifts and simplifying the routes in and out of the terminal. The newly consolidated security facility has already opened up on the 3rd level of the Terminal and lanes will continue to open up until Christmas this year. The new facility has improved wayfinding, efficiency and incorporated the latest security technology as well as which, additional new food and beverage outlets have opened up adjacent to this new facility. Upgrades are also ongoing in South Terminal Check in area, improving the passenger experience on the landside concourse by upgrading the floor finishes. Passengers are also benefiting from the newly refurbished and enlarged gate-rooms on Pier 2, in addition to which the recent completion of the reconfiguration of the south side of the pier and the adjacent apron has accommodated the most modern short-haul aircraft. For our arriving passengers the immigration hall has been redesigned with new ceilings and floor finishes. The South Terminal Baggage and Pier 1 remains the most significant investment project in the South Terminal in terms of both complexity and benefits realised. This major upgrade to the baggage system will increase capacity, improve efficiency and enabling bags to be checked-in earlier. This combined with the replacement of Pier 1, Gatwick s oldest pier, will transform the passenger experience in the South Terminal and enable a more efficient operation on the airfield. Airfield: Out on the airfield there has been great progress with the delivery of the resurfacing of the Northern Runway, the purchase of new snow equipment and also the rehabilitation of taxiway Lima. It doesn t end there however, also planned is the rehabilitation of the main runway and the rehabilitation of taxiways Papa and November. As well as an on-going programme of airfield asset replacement.

28 Gatwick Product Development and Investment Strategy 28 The above lists are not exhaustive but give an indication of the scale and range of improvements that are underway or planned in the current Q5 regulatory cycle. Collectively they will enable Gatwick to handle the predicted growth in passenger numbers while improving the passenger experience and services on offer more efficiently. You can find project description sheets, including cost breakdowns for all the major projects and programmes with a GAL Number at in the Q5 CIP over 5 million in Chapter 5. Also included in Appendix A is the phased CIP for 2011 (in constant and out-turn prices). North Terminal Short Term Car Parking (MSCP6) Pier 2 Modifications (South Side) Northern Runway North Terminal Forecourt (NTF) North Terminal Interchange (NTI) North Terminal Extension (NTX) Taxiway Lima Rail Station Contribution Snow Equipment Again, an overview of the phased delivery of infrastructure can be found in Appendix A. UPDATE ON 2011/12 CHANGES FROM CIP10 Looking back on the third year of the quinquennium, significant progress has been made in developing strategic choice projects first highlighted in the joint statement from Gatwick and the airline community in July There have been extensive development activities and the Gatwick CIP now consists of projects in increasing maturity of development and delivery on the ground. Under new ownership the original capital plan was reviewed and refocused to deliver a better product for a lower cost. The final CIP2010 was published in January 2011, since then there have been relatively few changes to the capital plan. We believe that this is a reflection of the fact that the right plan is now in place for Gatwick to compete to grow to become London s airport of choice. Throughout 2011/12 these projects have been developed and delivered with input from the airline community through project working groups and the CPB and JSG. The project milestones achieved since the publication of CIP2010 is summarised below: The biggest change to the capital plan this year is the inclusion of the extension year of Q5. Other than this the most significant changes that can be seen are regarding the phasing and prioritisation of the delivery of projects. Significant changes from CIP 2010 that have been agreed through the JSG include: South Terminal Security (Phase 2) to proceed to Tollgate 4 (Construction Decision) Main Runway Resurfacing to progress through Tollgates 3 & 4 (Options and Construction Decision) North Terminal Security (additional 4 lanes) to progress through Tollgate 3 (Options Decision) Pier 5 to progress through Tollgate 3 ST Baggage & Pier 1 to progress through Tollgate 3 Projects delivered in 2011/12 As well as the delivery of the more minor projects through the established programmes of work, the following major project has been delivered since the publication of CIP2010: North Terminal Security (phase 1) - Total 12.8 million - increased scope/budget Main Runway Rehabilitation - Total 45 million - rephased North Terminal Baggage Voids million - new project North Terminal Additional Pier Service (Pier 5) - 30 million phased into Q5+1 - re-phased South Terminal Domestic Arrivals - Total 9.5 million - reduced scope/budget South Terminal Security - Total 48.0 million - increased scope/budget South Terminal IDL Reconfiguration - Total 20.0 million - increased scope/budget

29 GATWICK CAPITAL INVESTMENT PROGRAMME We are constantly reviewing and prioritising to ensure that pound for pound the investment programme punches above its weight. Any other changes can be found in the annual tracker included as Appendix C. UP AND COMING MILESTONES Looking into 2011/12 and beyond, the project milestones that are within sight in the North Terminal, South Terminal and Airfield programmes at the time of going to print are: North Terminal North Terminal Extension (NTX) - Trigger Date (December 2011), Tollgate 6 (January 2012) North Terminal Baggage (NTB) - Tollgate 5 - Full System (October 2012) North Terminal Security (Phase 2) - Security Phase 2 Tollgate 4 (October 2011), Tollgate 5 (May 2012), Tollgate 6 (June 2012) Pier 5 (phase 1) - Tollgate 4 (December 2011), Phase 1 Start on Site (March 2012), Phase 1 Tollgate 5 (June 2013), Phase 1 Tollgate 6 (July 2013) NT Additional Pier Service - Tollgate 3 (May 2012), Tollgate 4 (May 2013), Start on Site (October 2013) Please note: Gatwick considers NT Pier Service a key element of the CIP for which the consultation process is on-going. As with any investment opportunity these dates are subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Pre Make Up Buffer (PMB) - Tollgate 3 (October 2011), Tollgate 4 (March 2012), Start on site (August 2012), Tollgate 5 (June 2013), Tollgate 6 (June 2013) North Terminal Baggage Voids - Tollgate 3 (September 2011), Tollgate 4 (February 2012), Start on Site (June 2012) South Terminal South Terminal Forecourt - Trigger Date (March 2012) Surface Water - Pond D - Start on Site (March 2012), Tollgate 5 (February 2013), Tollgate 6 (June 2013), Pond E - Tollgates 5 and 6 (March 2012) South Terminal Baggage - Phase 1 (HBS) Tollgate 5 (August 2012), Tollgate 6 (October 2012), Tollgate 7 (October 2013), Phase 2 (Baggage Factory) - Tollgate 4 (June 2012), Tollgate 5 (January 2015), Tollgate 6 (March 2015) Pier 2 (North-side) - Trigger Date (November 2011) South Terminal Security - Trigger Dates (December 2011 and April 2012) South Terminal Immigration (Hall) - Tollgate 5 (January 2012), Tollgate 6 (February 2012) Airfield Northern Runway - Tollgate 5 (December 2011), Tollgate 6 (February 2012) Papa November Taxiways - Tollgate 4 (November 2011), Start on Site (February 2012), Tollgate 5 (June 2012), Tollgate 6 (August 2012) Main Runway Rehabilitation - Start on Site (March 2012), Tollgate 5 (December 2012), Tollgate 6 (February 2013) Airfield Operations Safety Unit (AOSU) - Tollgate 3 (November 2011), Tollgate 4 (June 2012), Start on Site (August 2012), Tollgate 5 (July 2013), Tollgate 6 (August 2013) Q5 EXTENSION YEAR AND BEYOND Beyond March 2013 it was clear that further investment would be needed at Gatwick airport. There will be the need for further capacity related projects to bring all the components of the airport to a point where they match the capacity potential of the existing single runway. There will be the need to invest in new infrastructure to replace existing assets where these have reached the end of their design lives or they need upgrading to improve

30 Gatwick Product Development and Investment Strategy 30 passenger service, energy efficiency or productivity. There is also a requirement to invest in infrastructure to meet future standards of environmental performance or to meet new safety and security legislation. As previously stated the CAA has determined that the current regulatory cycle should be extended, under the current arrangements at Heathrow and Gatwick by an additional year. The now 6 year Q5 capital programme consists of a number of major projects and programmes which include current live projects, rolling programmes and a number of new projects. These projects and programmes were outlined at the Airline Q5+1 Capital Investment Programme Launch session on 21 July 2011 detailing a total forecast expenditure of million. The projects and programmes as outlined are included below categorised by investment driver: Capacity ( 68.5m total): North Terminal Early Bag Store ( 13m), Railway Contribution ( 6.5m), A380 on pier ( 5m), Airfield Peak Capacity Expansion ( 7m) and Pier 5 ( 37m) Service ( 89.3m total): Crew Reporting ( 12.0m), South Terminal Domestic Arrivals ( 9.5m), South Terminal Baggage and Pier 1 ( 52.3m) and Other projects < 5m ( 15.5m) Return ( 31.0m total): North Terminal and South Terminal IDL Reconfigurations ( 27.0m) and Other projects < 5m ( 4m) Asset Stewardship ( 44.2m total): Facilities Asset Stewardship ( 23.6m), Commercial Asset Stewardship ( 6m) and Airfield Asset Stewardship ( 14.6m) Compliance ( 17.6m total) We are looking forward to developing and shaping future phases of the capital investment plan, with the airline community over the coming months. The formal process of Constructive Engagement is anticipated to begin in April As we look ahead there are a couple of projects that rollover from Q5 into future years. These rollover projects are the North Terminal Additional Pier Service and South Terminal Baggage and Pier 1 projects that continue to be developed in conjunction with the airline community In accordance with Annex G. In addition to which our five investment priorities capacity, service, return, asset stewardship and compliance remain the same. Gatwick is confident that through the Constructive Engagement process the individual projects and programmes that will finally constitute the future CIP will contribute to providing the most appropriate level of capacity, the best operating environment and level of service to meet the demands of our customers. SUSTAINABILITY At every stage of the redevelopment of Gatwick airport, environmental sustainability is high on the agenda. Starting with getting the design right and using the right materials, this focus continues throughout construction implementing best practices with the ultimate objective to ensure the new facilities are operated and maintained in the most efficient and sustainable manner possible. Our sustainability strategy is embedded within our current and future capital investment plans to ensure that tomorrow s buildings and structures will be more energy efficient than today s. However, sustainability for us is not simply about ensuring responsible construction development, it s about the sustainable growth of the Gatwick community at both a local and global level. In August 2010 we published Decade of Change outlining our sustainability priorities which are: enable Gatwick to be the airport of choice for our passengers and customers ensure the safety and security of our passengers, partners and employees generate national and regional economic wealth, connectivity, increased airport catchment and employment reduce adverse impacts to the environment build and maintain constructive relationships with stakeholders recognise the value of our employees, partners and communities

31 GATWICK CAPITAL INVESTMENT PROGRAMME We are committed to operating, developing and growing Gatwick Airport sustainably which means minimising our impact on the environment and maximising the socioeconomic benefits for the local community, region and the nation. The key areas where improvements will be made in order to contribute to our sustainability priorities are: Improving the quality of surface access to Gatwick is a crucial element of our quest towards sustainable growth. As well as helping to manage the airport s overall environmental impact an effective and efficient surface access system also benefits the local community. The car parking strategy is designed to deter the need for off-airport car parking provision and protect the surrounding countryside from further development and unauthorised off-airport car parking operations. SEPARATION AND TRANSFORMATION Gatwick s focus, when it comes to IT, is to keep it simple. Now that Gatwick operates independently we no longer need the complexities that come with a system designed to run 7 airports. Gatwick is developing its entire IT systems network to ensure that its size and complexity is appropriate to the size of Gatwick s operation. When the ownership of Gatwick changed there was a massive 140 IT legacy systems that were inherited, still owned and managed by the previous owner. The separation and transformation of the Gatwick IT Infrastructure is rolling out a programme of new systems with completion planned for summer On completion of this programme the number of systems in use will have been halved with absolutely no loss of functionality or resilience. The provision of excellent bus and coach facilities for those travelling to Gatwick will encourage people to choose these modes of transport. Waste is generated from a number of sources including our construction activities. Through waste management we strive to optimise the value of waste to energy schemes and introduce initiatives to continually assess waste streams with an aim to either reducing them or increasing their content of recyclables. There s no getting away from it, we are a big asset and therefore a big consumer of energy. We have an active programme of investment in new technologies in order to minimise this consumption. Water is another important consideration to the sustainable growth of the airport. Our aim is to assure our business partners that Gatwick has sufficient resilience for a stable operating environment. In order to do so we are investing in significant infrastructure upgrades to ensure that we can meet our discharge consents and maintain the quality of the water that flows from the airport. We have constructed a number of storage reservoirs or balancing ponds, to regulate the rate at which rainwater flows into the River Mole and other water courses. We are also introducing automated metering which will enable us to target specific areas of the airport where we can make the greatest impact Gatwick is working with the airline community to develop IT systems that best meet the needs of the passenger, delivering top class service. At the JSG in July 2011 the following IT Separation projects were agreed for inclusion into the investment programme. This was the culmination a number of working sessions that have been undertaken since July last year. The specific projects agreed were: Company wide business system (SAP) HR Payroll & Admin Car Park Booking & Reporting Document Management IT Infra Server Services IT Data Centre BAA Software Novation Other minor separation projects This shows a commitment to supporting our people with the right systems and the right processes. We re working smarter to drive an efficient operation providing better service through IT innovation.

32 Gatwick Product Development and Investment Strategy 32 SUMMARY The total expenditure outlined in this investment plan for a newly extended Q5 totals 1,172 million in out-turn prices. We are continually striving to deliver more value by working more efficiently and challenging everything we do and every pound we are planning to spend at Gatwick. intent to deliver the most appropriate level of capacity and the most appropriate operating environment and level of service in order to meet the demands of customers. We look forward to the continuation of this consultative process especially as we focus our joint attention on developing future investment plans with the airline community to achieve the ambition of developing Gatwick into London s Airport of choice. Since the publication of CIP2010 we ve made some changes to our team in order to improve how we develop and deliver against the five investment priorities of capacity, service, return, asset stewardship and compliance. The merger of the Six Sigma and Investment Strategy teams will enhance the development of solutions, ensuring that the right projects are developed and subsequently appear in the CIP having been fully explored considering people, process, systems and infrastructure. The formation of a Terminals team, an Airfield team, and a Piers and Baggage team will encourage the delivery of parity of products and services across the airport, through shared learning and best practices. We feel that significant progress was made following the discussions regarding Q5+1 which commenced in May 2010 and culminated in the update on 21 July Although the formal consultation process of Constructive Engagement (CE) doesn t officially commence until around April 2012, Gatwick has every intention of continuing with the consultation process. We hope you find this CIP2011 update a useful accompanying document throughout this process. This document represents a CIP issued as an output of and for the purposes of further consultation and thus does not represent a mandatory investment programme. These plans are continually reviewed to reflect the impact, if any, of multiple factors that could influence the size and shape of the plan. Gatwick Airport welcomes the opportunity to continue to have a productive dialogue with its customers on their priorities and the extent to which this investment programme meets their needs. However, we believe that these proposals constitute the correct component projects for the future growth of the airport. It is always Gatwick s

33 GATWICK CAPITAL INVESTMENT PROGRAMME Consultation on the Capital Investment Programme INTRODUCTION Consultation on the CIP started at Gatwick in July 2005, with the commencement of the Constructive Engagement (CE) process which was designed initially for Gatwick and its airline partners to work together in order to reach agreement, as far as is possible, on some of the main elements of the Price Control Business Plan (PCBP) and submit this to the CAA prior to its Price Review Decision on Q5. The original CE process that was initially focussed on the collaborative development of Q5 has since been and gone, however the consultative process and structure that was borne out of CE has continued in earnest at Gatwick. Under new ownership, Gatwick is proud of the open and honest, mature relationship it has with its airline partners. The enhanced dialogue between Gatwick and its airline partners regarding capital investment is especially important as we look ahead to the future. Q5 EXTENSION The current price control and associated arrangements commonly known as Q5, in respect of both Heathrow and Gatwick airports, were due to expire at the end of March Subsequent to this the CAA has decided to extend the current price and service quality regulation at Heathrow and Gatwick by one year to March The key driver for the extension of the regulatory cycle is the CAA s appetite to develop future arrangements in line with the Government s proposals for its reform of economic regulation. Under these proposals, the CAA would have a new primary duty focused on the interests of passengers. It would also oversee a licensing regime for airport operators, and have concurrent competition and enforcement powers with the Office of Fair Trading. These reforms would enable the CAA to develop a more passenger focused, flexible and tailored set of arrangements for each airport that continues to require regulation. Following this decision, Gatwick and its airlines, through its Joint Steering Group (JSG), have agreed to the following characteristics that will frame the Q5 extension year 2013/14: to alter the maximum price cap in 2013/14 from RPI+2% to RPI-0.5% the existing capital expenditure triggers will cease to operate as at 31 March Gatwick will consult on and seek to agree new triggers applicable for 2013/14 with respect to 60 per cent of the 2013/14 capital expenditure programme any failure by Gatwick to agree triggers with its airlines by June 2012 will lead to the parties seeking a binding determination from the CAA. (Unless they jointly seek an extension of time) Gatwick s 2013/14 capital expenditure programme will be consulted on using the normal price control consultation processes For the purposes of this document and future consultation processes, where the term Q5 is used, please assume that this is referring to the now extended Q5. CONSULTATIVE STRUCTURE FOR GATWICK FOR Q5 AND ANNEX G As stated in our previous CIP s, the consultative structure at Gatwick has been developed with input from the airline community. This input was initially fed in through the process of Constructive Engagement as detailed above, however the consultative dialogue continues as an on going process at Gatwick. This informed dialogue continually helps us to assess the high-level options for the development of the airport, including details of costs for each option, impact on user charges, constructability, future-proofing, operational efficiency and, where possible, future airline costs.

34 34 Consultation on the Capital Investment Programme Consultative structure The following diagram represents the current consultative structure at Gatwick : CE Joint Working Groups Recommendations, escalations & feedback Capital Programme Board Plus working groups - set up to fact find for specific issues/ projects - scheduled throughout year Joint Steering Group Joint Working Structure Decisions, guidance, recommendations & feedback Finance Performance & Regulatory Charges Group Plus specified charges subgroup and other sub-groups are required Communications and feedback Input through membership groups and comms /feedback ACC ACC consultative structure eg. ACC airport charges annual meeting, ACC members will also be represented at CE Groups AOC AOC consultative structure AOC members will also be represented at CE Groups AOC/IATA Structure There is a five step approach that is been taken at Gatwick to formulate the strategic choices that are made at Gatwick. This process is an iterative process that is regularly reviewed. The CAA published the final agreement, namely Annex G, incorporating its verdict on the outstanding issues of disagreement in its March 2008 Decision Document. A copy of Annex G can be seen herewith in Appendix G. As part of the CAA s mid term assessment of capital expenditure and consultation at Heathrow and Gatwick airports the CAA invited views on whether it would also be beneficial to update Annex G at Gatwick. In response to this invitation Gatwick is confident that it s current consultative structure is robust enough not to warrant a pressing need to update Annex G before the end of Q5. Gatwick feels that a review at this stage in the regulatory cycle would prove to be unduly resource intensive and therefore not efficient. The process steps are: Step 1 Agree the traffic drivers Step 2 Agree the service level inputs Step 3 Agree the capacity assessments Step 4 Agree the development options Step 5 Agree recommended options The strategic choice options were formulated as a result of the traffic drivers, service level agreements and capacity drivers which were discussed with the Gatwick airline community through the process of CE and continue to be further developed in collaboration with the airline community through the consultative structure shown above. Annex G Prior to the commencement of Q5, Heathrow and Gatwick airports and their airlines were invited by the CAA to consult on updating the existing agreement on information disclosure and consultation on investment plans. The outputs of this consultative process were passed over to the CAA for final adjudication. The consultative structure set up at Gatwick is the framework around which the consultation in accordance with Annex G is being undertaken. Gatwick considers that through this governance structure and processes outlined in this document that it is compliant with Annex G. A summary of the findings of the mid-quinquennium review and some changes to process are outlined at the end of this chapter. Also attached in Appendix E is a summary of airline consultation at Gatwick since the publication of CIP2010. This summary includes details of meetings and working groups relating to the development of Gatwick. The agenda items and topics of discussion between Gatwick and the airline community are listed by date and forum. You will also find a list of the agreements and disagreements in Appendix F for the same period.

35 GATWICK CAPITAL INVESTMENT PROGRAMME DEVELOPMENT UNDER NEW OWNERSHIP () After Gatwick came under new ownership in December 2009, new processes and practices have been implemented at Gatwick with the specific aim of driving value, efficiency and continuous improvement through its capital investment. An example of these new processes and practices is Design For Six Sigma (), which is the process for design, development and delivery of capital projects that is now used at Gatwick. The Design For Six Sigma () process is characterised by a series of reviews with various tollgates serving as the milestones for the various phases of each major project s development. These reviews, gateways and processes provide assurance that plans are in place to efficiently and effectively deliver the Capital Investment Programme enabling Gatwick to measure against the outcomes below: Improved safety, security and sustainability Enhanced customer and business need analysis Better quality of service Improved capacity Appropriate solutions Reduced cost to operate Increased income The process is summarised below: As part of the Design for Six Sigma Tollgate process reviews of the project status, its readiness to progress to the next stage and authorisation of funds is carried out at one of three review meetings according to project stage and the value of funds requested. It can be seen above that the new process closely follows the requirements set out in Annex G, reviewing projects at the following stages: Tollgate 0 Initiate - Approval to start the Tollgate Process Tollgate 1 Scope - Approving the Start Up of the Project Tollgate 2 Requirements - Approval of Brief, procurement plan, authority to appoint Prime Designer & release of funds to Tollgate 3. Tollgate 3 Options - Option Approval, Budget Update, Procurement Plan Update, release of funds to Tollgate 4 Tollgate 4 Build - Authority to Appoint Prime Contractor, Release of full funds Tollgate 5 Handover - Readiness for Handover & start of Airport Operational Readiness Tollgate 6 Operate - Airport Operational Readiness Complete, ready to Go Live Tollgate 7 Close Out - Project Close Down Consultation and the Design For Six Sigma () Process In order to adhere to Annex G consultation between the airport and airlines must take place: prior to Tollgate 2 (Brief) and prior to Tollgate 3 (Options) and prior to Tollgate 4 (Construction Decision) A summary business case for the South Terminal Security project, including a cost benefit analysis was provided to the airline community through the consultative forum of the Joint Steering Group (JSG). Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Project & Design, Airport Commercial Customer & Design & Award Process Re- Pre- Operational Completion Business Scope quire- ments Construction, Readiness Close Out Out Development Options Build Contract, Handover Operate Close Specification Requirements (Options) Construction (Brief) Procurement Go Live Project TG 0 TG 1 TG 2 TG 3 TG 4 TG 5 TG 6 TG 7 TG = Tollgate Review Meeting

36 36 Consultation on the Capital Investment Programme This format was well received by the JSG and looking ahead, it has been agreed that summary business cases will be provided at Tollgate 4 as a method of articulating business case and cost benefit analysis. The actual business case has evolved through consultation and it has also been agreed that for major or complex projects a draft business case be provided at Tollgate 3. Business case summaries are a clear and concise summary including details of costs for each option, impact on user charges, constructability, future-proofing, operational efficiency and, where possible, future airline costs. Business case summaries that have been agreed at the JSG include: South Terminal Security Main Runway Rehabilitation Taxiways Papa and November North Terminal Additional Pier Service (Pier 5) ENGAGEMENT WITH OUR PASSENGERS AND THE WIDER GATWICK COMMUNITY The established formal structure for the collection of feedback and recommendations from Gatwick s passengers and the wider Gatwick community can be seen next: GATCOM GATCOM was established in It is a statutory advisory body constituted by Gatwick in accordance with the Civil Aviation Act 1982 (as amended by the Airports Act 1986). It has 28 appointed representatives from a wide range of interests including local authorities, civil aviation, passenger, business and community and environmental groups. A Government representative is also present at the main Committee meetings, together with Gatwick s Chief Executive Officer (CEO) and his senior management team. GATCOM meets quarterly to consider any question in connection with the operation and development of Gatwick and its effect on local communities, passengers, airlines and other users of the airport. As can be seen from the diagram above GATCOM has two Sub-Groups, the GATCOM Steering Group and the Passenger Advisory Group (PAG). The role of the Steering Group is to give preliminary consideration to new or detailed matters to be dealt with by the Consultative Committee and to identify the facts and major issues, and make recommendations thereon. Dialogue with the airport community will continue as we shape our future and build Gatwick s reputation as London s airport of choice. The key functions of the Passenger Advisory Group are: To monitor the procedures and facilities available to passengers and to make recommendations for their improvement. Decisions, guidance, recommendations & feedback GATCOM Steering Group Decisions, guidance, recommendations & feedback PAG To identify any issues arising from passenger experiences and make recommendations. To identify any gaps in services available to passengers. To consider procedures for handling and responding to passenger complaints. To provide a passenger overview on airport developments at the design stage. To establish and maintain a positive working relationship with relevant Gatwick managers and airline contacts, including consultation in respect of key developments for passenger services and facilities. To report regularly to GATCOM and to make recommendations in respect of its conclusions and concerns about the provision of passenger facilities and service quality at Gatwick.

37 GATWICK CAPITAL INVESTMENT PROGRAMME Change Control Record Sheet (CCRS) Project Name Description of Change Date Approved at JSG LGW/0035 LGW/0036 LGW/0037 GAL122: South Terminal Forecourt GAL155: South Terminal Security GAL140: Pier 2 Modifications R2 drawdown for additional scope 12 Jan 2011 Creation of new project 09 Mar 2011 R2 drawdown for project risk 09 Mar 2011 LGW/0038 A380 Creation of new project Not agreed LGW/0039 LGW/0040 LGW/0041 LGW/0042 GAL165 & GAL166: Papa & November Taxiways GAL116 & GAL117: North Terminal Extension (NTX) GAL125 & GAL005: South Terminal Baggage & Pier 1 GAL116 & GAL117: North Terminal Extension (NTX) Creation of new project 10 August 2011 Trigger date deferral (1 month) 06 April 2011 R2 drawdown for additional scope 11 May 2011 R2 drawdown for additional scope 11 May 2011 As well as the formal structure outlined above, more informal communications are commissioned through the company website and using posters and other media. LIST OF AGREED STRATEGIC CHANGES TO THE CIP The strategic change control process is well established at Gatwick as the agreed mechanism to facilitate changes to the CIP. Any significant changes to the CIP occur at a strategic level worked through at the working groups and Capital Programme Board (CPB) for submission to the JSG. LGW/0043 LGW/0044 LGW/0045 LGW/0046 LGW/0047 LGW/0048 LGW/0049 LGW/0050 LGW/0053 GAL134: North Terminal Additional Pier Service GAL159: IT Separation - SAP ERP Confirmation of scope & budget at TG2 Not agreed Creation of new project 07 July 2011 GAL159: IT Separation - HR Payroll and Admin Creation of new project 07 July 2011 GAL159: IT Separation - Car Park Booking Creation of new project 07 July 2011 GAL159: IT Separation - Document Management Creation of new project 07 July 2011 GAL159: IT Separation - IT Infra Server Services Creation of new project 07 July 2011 GAL159: IT Separation - IT Data Centre Creation of new project 07 July 2011 GAL159: IT Separation - Software Novation GAL159: IT Separation - Minor Separation Projects LGW/0054 GAL111: Pier 5 Creation of new project 07 July 2011 Creation of new project 07 July 2011 Confirmation of scope, option & budget at Tollgate3 10 August 2011 Tactical changes associated with the day to day project delivery continue to happen through the capital project change control process at project board and working group level. LGW/0055 LGW/0056 LGW/0057 GAL168: Snow Equipment GAL137: North Terminal Baggage Upgrade (NTB) GAL157: North Terminal Security Creation of new project In process Re-scope bag store scope of project 07 July 2011 Confirmation of scope, option & budget at Tollgate 3 07 July 2011 Strategic change control applies to projects that are identified in the CIP by a GAL Number. The criterion for listing a project in the CIP and, thus, allocation of a GAL Number is that the total Future Spend (including current year) or Anticipated Final Cost (AFC) is greater than 1 million. Any other projects that do not appear in the CIP as a separate line are included in the identified programme lines. Changes to CIP are tracked and submitted to the CPB and JSG for approval at milestone decision points in the development process. The triggers for evoking change control are: Spend in the year +/- 10% (or greater than 500k) Anticipated Final Cost (AFC) +/- 10% (or greater than 500k) Start/Finish +/- 1 year New projects\ Deleted projects LGW/0058 LGW/0059 LGW/0060 LGW/0061 LGW/0062 GAL096: Main Runway Rehabilitation GAL116 & GAL117: North Terminal Extension (NTX) GAL169: North Terminal Bag Store GAL170: North Terminal Baggage Voids GAL125 & GAL005: South Terminal Baggage & Pier 1 Confirmation of scope, option & budget at Tollgate 3 R2 drawdown for additional scopescope, option & budget at Tollgate 3/4 07 July August 2011 Creation of new project 10 August 2011 Creation of new project 10 August 2011 Confirmation of scope 10 August 2011 LGW/0064 GAL149: ST Immigration R2 drawdown for additional scope 07 Sept 2011 LGW/0065 GAL149: ST Immigration R2 drawdown for additional scope 07 Sept 2011 LGW/0066 LGW/0068 LGW/0071 LGW/0072 LGW/0074 LGW/0080 GAL176: Facilities Asset Stewardship GAL174: South Terminal Domestic Arrivals GAL159: IT Server Rationalisation GAL159: IT Minor Projects GAL155: South Terminal Security GAL179: Airfield Operations Building (AOSU) Creation of new project 07 Sept 2011 Creation of new project 07 Dec 2011 Creation of new project 07 Dec 2011 Creation of new project 07 Dec 2011 R2 drawdown for additional scope 07 Dec 2011 Creation of new project 07 Dec 2011 The following changes have been agreed through the Joint Steering Group (JSG) since the circulation of the Draft CIP 2011 for consultation. LGW/0073 GAL155: South Terminal Security R2 drawdown for additional scope 09 Nov 2011 The process for making changes to triggers, as outlined in the CAA s decision paper on trigger definition can be seen in the following section. LGW/0068 LGW/0063 LGW/0071 GAL174: South Terminal Domestic Arrivals GAL173: South Terminal Crew Reporting GAL159: IT Server Rationalisation Creation of new project 07 Dec 2011 Creation of new project 07 Dec 2011 Creation of new project 07 Dec 2011 Since the publication of the Gatwick CIP 2010 a number LGW/0072 GAL159: IT Minor Projects Creation of new project 07 Dec 2011 of strategic changes to the Capital Investment Programme have been agreed through the Joint Steering Group (JSG). These changes are summarised in the following table: LGW/0080 GAL179: Airfield Operations Building (AOSU) Creation of new project 07 Dec 2011

38 Consultation on the Capital Investment Programme 38 Risk Management (R2 Drawdown Process) TRIGGERS New processes and practices have been implemented at Gatwick regarding the management of risk at a portfolio level. These new processes and practices demonstrate a clear view of remaining risk allowances and where it has been allocated, driving project performance to deliver within their budgets and holding CIP funds outside of the projects for unforeseen portfolio risks. The portfolio risk (R2) / contingency procedures that have been implemented: Recognise the requirements of Annex G Remove exposure by projects to uncontrolled allocation/ expenditure. Demonstrate improved reporting, managed within Project Controls. All portfolio risk (R2) / contingency drawdown greater than 250k is consulted prior to draw down with the airlines. If a portfolio risk (R2) / contingency drawdown is less than 250k, but a previous drawdown has been made for a particular project then this is also consulted prior to draw down with the airlines. The drawdown of risk from the portfolio fund uses the already agreed change control process, as outlined previously in this chapter. Since the publication of CIP2010 the following R2 draw-downs have been made: LGW/0035, GAL122: South Terminal Forecourt, R2 drawdown for additional scope LGW/0037, GAL140: Pier 2 Modifications, R2 drawdown for project risk LGW/0041 GAL125 & GAL005: South Terminal Baggage & Pier 1, R2 drawdown for additional scope LGW/0042, GAL116 & GAL117: North Terminal Extension (NTX), R2 drawdown for additional scope LGW/0059, GAL116 & GAL117: North Terminal Extension (NTX), R2 drawdown for additional scope LGW0064, GAL149: ST Immigration, R2 drawdown for project risk LGW0065, GAL149: ST Immigration, R2 drawdown for additional scope Capital investment triggers have been a feature at Gatwick since the beginning of the five-year price control period Q5 that commenced on 1 April Looking ahead to the now extended Q5, triggers remain an ever present part of the price control within this regulatory cycle. The approach to triggering capital projects in the extension year will be discussed in greater detail later in this chapter. In the broadest sense the trigger projects specify a reduction to the level of the revenues that the airport can recover in airport charges if certain milestones are not reached in respect of relevant capital projects by defined dates. The CAA considers capital investment triggers to be an important aspect of the financial incentives placed on Gatwick, to encourage timely and efficient delivery of the investment projects that airline users have discussed in constructive engagement and for which they are paying through airport charges. The CAA published its final decision regarding trigger definition at Gatwick on 25 March It establishes a baseline specification against which any proposed changes could be measured and assessed. The CAA has confirmed the link between the scale of the capital investment for each relevant project and airport charges revenue that would be at risk in Q5. The definitions included in the CAA publication relate to the scope and phasing of projects consistent with the capital programme underpinning the price determination decision in March The CAA outlined the incentive to encourage efficient project management as: In respect of each relevant project, the allowable revenue from airport charges will be reduced by a specified monthly sum (defined in cash terms) for every month that the project milestone remains undelivered. With the exception of relatively small projects, the specified monthly sum will be determined based on one 12th of the return on the completed value of the asset as projected in the capital investment plan on which the price cap is based, re-valued to the money value of the day. LGW0073, GAL155: ST Security, R2 drawdown for additional scope

39 GATWICK CAPITAL INVESTMENT PROGRAMME Project Monthly Penalty m Trigger Month 2008/ / / / /13 Q5 Total 1 Total1North West Zone - NEW SECOND DATE 0.25 Jun Nov-10 2 North Terminal Check-in Extension 0.30 Nov North terminal Reclaim Extension 0.14 Nov Pier Jan South Terminal Baggage 0.53 Jan South terminal Check-in Environment 0.10 Jun North Terminal Short Term Parking 0.14 Apr Inter terminal Transit System 0.19 Oct South Terminal Forecourt - REPLACED 0.26 Jun a South Terminal Forecourt - Completion - NEW 0.30 Mar Pier 1 - TURNED OFF 0.10 Jun a Pier 2 (South Side) - NEW 0.19 Mar b Pier 2 (North Side) - NEW 0.10 Nov a South Terminal Security - Security Facility - NEW 0.20 Dec b South Terminal Security - Vertical Circulation - NEW 0.20 Apr Relatively small projects will be subject to a minimum monthly payment of 100,000. The CAA s decision for legal interpretation is set out in the price control condition for each airport. The following is for illustration only and the tables below provide an indication of the amounts of airport charges revenue that would be at risk in each year of Q5 at Gatwick under an extreme assumption that all the currently proposed trigger projects missed their milestone dates completely and were thus not delivered at all during Q5. The full list of triggers that are associated with capital projects at Gatwick can be seen in the table above: Process for testing whether triggers have been met As laid out in the CAA decision March 2008 the process for testing whether triggers have been met is: the airport will send certification of completed works to the CAA for confirmation of successful performance against the triggered project milestone(s); and the CAA will then consult the airline community (by means of a letter to the AOC) and investigate if any concerns are raised. Process for making changes to triggers As laid out in the CAA triggers decision March 2009, changes to triggers can occur in the following 2 scenarios: 1. Airport & Airlines agree regarding changes to the CIP - A joint agreement is sent to CAA including: Changes to the triggers (including substitute or new triggers), any other agreements such as pricing below the cap and evidence of airline support. The process is as follows: CAA then allows 28 days for any objections CAA would expect to approve the agreement within 14 days of the end of the consultation period. 2. Airport does not have sufficient support from airlines - A proposal from the airport can be submitted including changes to the triggers (including substitute or new triggers), any other agreements such as pricing below the cap and evidence of airline support. The process is as follows: Airport submission to CAA CAA would publish proposals for consultation and invite interested parties to respond. Period for written submissions which would not be less than 12 weeks. Depending on the significance of the changes the CAA might then decide to hold meetings with some of the respondents.

40 Consultation on the Capital Investment Programme 40 The CAA would publish a decision with reasoning together with any revision to the price control to reflect the new triggers. The CAA, however, would expect to withhold approval regarding changes to triggers where such agreements: Did not give adequate weight to the interests of passengers as users. On the basis of objections made, the agreement did not seem to the CAA to represent the interests of users generally or appeared unreasonably to discriminate against any user or class of user. The CAA has also emphasised that it expects the process of change control applied to triggers, as highlighted above, to enable an airport and its users to adapt to circumstances where priorities change. Capital expenditure originally projected on one project may be diverted to extend the scope of, or bring forward, some other project. Although, whilst the CAA would be prepared to approve changes, which either added to, or reduced the amounts at risk, it did not anticipate that this would be likely and would normally seek to limit changes to the price control under these arrangements to triggers and would not seek to make other changes. Changes to Gatwick triggers Since the publication of the Gatwick 2010 CIP, there have been some changes to the trigger projects defined at Gatwick that have been approved by the CAA. These approved changes can be summarised as: South Terminal Security project: Creation of two triggers associated with the South Terminal Security project. It was jointly agreed that two new triggers were created and associated with the delivery of the South Terminal Security project. North Terminal Extension (NTX): Deferral of the two triggers associated with the North Terminal Extension (NTX). This change has allowed the airline moves associated with this trigger project to occur in September rather than during summer, thus minimising passenger disruption in check-in during the planned busy month of August. Following consultation and agreement at the airport and airlines consultative forum, the JSG, joint statements were submitted for both of these changes to the CAA, these were subsequently approved in May Triggers that have been met The following triggers have been confirmed as being achieved by the CAA on the dates below: 8 - Inter Terminal Shuttle, November South Terminal Check-in Environment, September b - North West Zone, March a - North West Zone, April a - Pier 2 (South Side), May North Terminal Short Term Parking (MSCP6), July b - Pier 2 (North Side), November & 3 - North Terminal Extension (NTX), January 2012 Pier 7 trigger There was an operational requirement for additional pier service when the airport went into Q5, which at that time it was thought would be solved by the Pier 7 on Tower Stands project. It has been quite clearly articulated through the JSG that the Pier 7 solution and subsequent trigger was a major concern. Gatwick has challenged itself to provide the right Pier Service solution which has been identified as the remodelling of Pier 5, in addition to other pier service options which are currently under development. Gatwick believes that this is a more cost effective way to provide additional pier service than the original Pier 7 on Tower stands scheme while providing a better level of service to the passengers. Gatwick has subsequently reviewed its position, in light of the trigger documentation and Annex G, and anticipates paying the Pier 7 trigger.

41 GATWICK CAPITAL INVESTMENT PROGRAMME Work continues on the development of a pier service solution for the North Terminal. Triggers for the extension year (Q5+1) As previously stated Gatwick and its airlines, through its JSG, have agreed that the existing capital expenditure triggers will cease to operate as at 31 March Gatwick will consult on and seek to agree revised triggers applicable for 2013/14 with respect to 60 per cent of the 2013/14 capital expenditure programme. Gatwick believes that whilst adhering to this agreement that the triggers wherever possible should be applied the key strategic projects. At the Q5 + 1 Capital Programme Launch, 21st July 2011, Gatwick proposed the following three projects for triggering in the extension year: Main runway rehabilitation North Terminal Additional Pier Service (Pier 5) South Terminal Baggage / Pier 1 These three projects are arguably the key strategic choice projects being delivered and/or constructed in the extension year at Gatwick. In addition to which they also represent an even distribution across the airport campus with one North Terminal project, one South Terminal Project and one Airfield Project. Gatwick believes that it is reasonable to expect trigger definition agreement by May 2012, however any subsequent failure by Gatwick to agree triggers with its airlines by June 2012 will lead to the parties seeking a binding determination from the CAA. MID-QUINQUENNIUM REVIEW LEARNING In March 2010, the CAA commissioned Currie and Brown (C&B) to conduct the assessment of capital expenditure, supported by Steer Davies Gleave (SDG) to lead on the assessment of consultation. Findings were based on information provided up to and including summer 2010 and focused on the first two years only of Q5. The scope of the review for Gatwick was: Development and application of cost benchmarks to the Q5 capital investment plan and, prospectively, to the initial development of capital plans for the future The impact of selected capital projects on operating costs Application and evolution of risk allowances for projects Progress in management of certain risks at airport investment portfolio, rather than individual project, level and implications for setting future risk allowances Summary findings The CAA stated that its intention in carrying out this assessment would not be to reach regulatory judgments and/or decisions at this stage affecting either the price cap regime in Q5 or the Q6 period. Rather it would be to inform the Q6 review and help to identify issues to be addressed during that review. Furthermore, the assessment would provide a useful independent scrutiny for each airport s management and offer pointers for improvements that could be made during the remainder of Q5. Summary of the Currie & Brown Findings The following is extracted from the CAA document UK Civil Aviation Authority Assessment of capital expenditure and consultation at Heathrow and Gatwick airports during the first two years of Q5, February 2011 : 1.10 In summary, C&B found that: shortcomings at both airports in the pre-q5 planning process had impacted on the robustness of the development strategy in the first two years; Heathrow had developed comprehensive processes for managing risk at project and portfolio level but similar progress had not yet occurred at Gatwick; there was insufficient clarity at both airports on the treatment of inflation and the calculation of allowances used; although both airports approach to benchmarking processes and procedures were well formalised, further work would be required in the approach to benchmarking against external

42 Consultation on the Capital Investment Programme 42 reference points; and at both airports there was very limited application of whole life value modelling techniques with business cases to appraise the impact of capex on opex. Summary of the Steer Davies Gleave Findings The following is extracted from the CAA document UK Civil Aviation Authority Assessment of capital expenditure and consultation at Heathrow and Gatwick airports during the first two years of Q5, February 2011 : 1.13 The assessment found that: both airports largely conformed with the consultation process in Annex G including the consultation at Heathrow regarding PSDH expenditure; both airports did not conform with requirements in relation to the provision of an Airport Master Plan and long-term land use plan; the Capital Investment Plan (CIP) largely conformed with the requirements of Annex G but there was often a lack of a clear linkage between the CIP projects and the Master Plan; and change control processes generally conformed to the requirements of Annex G. Gatwick Response to the Currie & Brown (C&B) findings Much of this section follows closely to Gatwick s response to the assessment of capital expenditure and consultation at Gatwick airport during the first two years of Q5, as published on the CAA website 5 April Where specific reference has already been made to subjects earlier in this document this will be indicated below. Since the start of Q5, the project process at Gatwick had been followed in accordance with BAA s procedures. After Gatwick came under new ownership in December 2009, new processes and practices have been implemented with the specific aim of driving value, efficiency and continuous improvement through its capital investment. Gatwick has welcomed the assessment of Capital Expenditure and consultation in the first two years of Q5 and as an indicator of where improvements will be made during the remainder of Q5 and subsequent years. The Pre-Q5 Planning Process - Gatwick would agree that there have been significant shortcomings with the pre-q5 planning process at the airport. Since the start of Q5 the project process had been followed in accordance with BAA s procedures. In examining only the first two years of Q5 this assessment has focussed only on the approach taken under previous ownership. As previously stated after Gatwick came under new ownership in December 2009, new processes and practices have been implemented at Gatwick. Examples of these new processes and practices are the Design For Six Sigma () process and a move towards prime contracting for the procurement of construction services. Design For Six Sigma () is the process for design, development and delivery of capital projects that is now used at Gatwick. Details of which have been outlined earlier in this chapter. The prime contracting approach is more suited for a single airport and is a fundamental shift in project delivery whereby a general or prime contractor is awarded a contract and is responsible for coordinating and managing all trade contractors under his contract with Gatwick Airport. This approach takes advantage of the contractors core competencies and allows Gatwick to manage the works more efficiently. Risk management - Details of the new processes and practices that have been implemented at Gatwick regarding the management of risk at a portfolio level are detailed previously in this chapter. Inflation - Inflation assumptions, and any subsequent changes to the inflation assumptions, that have been employed in relation to capital planning at Gatwick Airport from the beginning of Q5 were shared with the JSG on 1st September 2010, and are also included in the published CIP2010. Gatwick conducted a one day workshop discussion exploring future UK construction industry trends on 9th November This workshop brought together commercial consultants for an open discussion and sharing of information and insight. The delegates present included representatives from EC Harris, Doig & Smith, Davis Langdon, Turner & Townsend and Cyril Sweett. This workshop and similar workshops in the future will enable Gatwick to form an outlook on future trends of

43 GATWICK CAPITAL INVESTMENT PROGRAMME the construction industry and a broader approach to our benchmarking and approach to inflation. In order to carry out their review Davis Langdon have been provided with: Gatwick s previous and current inflation forecasts used for capital planning can be seen below: 2010: Inflation forecasts for capital planning (previous) Year 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 COPI (%) : Inflation forecasts for capital planning (current) Early estimating sheets (CAS). Monthly project reports. Cost plans. Schedules. Final Accounts (where available). In addition to the documentation listed above, Davis Langdon have held individual meetings with Gatwick project teams. This exercise has so far highlighted: Year 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 COPI (%) In order to achieve the base cost the 2009 inflation forecast assumptions were reversed out of all project cost plans and the revised 2010 assumptions have been applied to this base cost. Please note: The phased Capital Investment Programme included as Appendix A is presented in 2011/12 constant prices without COPI included. External Cost Benchmarking - In response to the suggestion of further work being required in the approach to benchmarking against external reference points Gatwick has appointed Davis Langdon to carry out an exercise to determine Gatwick s performance compared with the external market. The approach they have taken is to analyse key projects within the CIP at relevant tollgate stages and where applicable, for out turn costs. davis Langdon are measuring Gatwick s performance against the international aviation market. This analysis will provide external benchmarks for use with early stage cost setting. Positive performance within specific areas. Areas where attention needs to be focussed. Provision of learning to implement within future project delivery. It is Gatwick s intention is to use the results of Davis Langdon s analysis to enable improved external cost benchmarking. For example, when examining the construction base costs for in the MSCP-6 (multi-storey car park) project it was seen that the unit cost per car parking space is at the bottom of the range of external benchmarks. Gatwick will continue to robustly set performance targets using both internal and external benchmarks. Gatwick Response to the Steer Davies Gleave (SDG) Findings: Much of this section follows closely to Gatwick s response to the assessment of capital expenditure and consultation at Gatwick airport during the first two years of Q5, as published on the CAA website 5 April Where specific reference has already been made to subjects earlier in this document this will be indicated below. Airport Master Plan and Long-term Land Use Plan - SDG concluded in paragraph 3.15 of the CAA document UK Civil Aviation Authority Assessment of capital expenditure and consultation at Heathrow and Gatwick airports during the first two years of Q5, February 2011 that

44 Consultation on the Capital Investment Programme 44 GAL does not conform to this aspect of Annex G as it only has an interim plan in place. It is the view of Gatwick, however that although the 2006 Master Plan was titled as interim it is Gatwick s current Master Plan, and by definition is therefore a Master Plan. The 2006 Master Plan is complete and was the subject of a public consultation. It was only called interim because the expectation at the time was that it would be updated more quickly than the usual 5 year cycle. The airport continues to safeguard land in accordance with that Master Plan further demonstrating its validity. Linkage Between the CIP Projects and the Master Plan - We are now in the process of publishing a new Master Plan and activity is currently underway at Gatwick to clearly articulate the linkage between the CIP Projects and this new Master plan. This linkage will be fully explored with the airlines. The working title of this link is the Gatwick Development Strategy. Gatwick is confident that it s current consultative structure is robust enough not to warrant a pressing need to update Annex G. FUTURE ENGAGEMENT PLAN Although the formal consultation process of Constructive Engagement (CE) doesn t officially commence until April 2012, Gatwick has every intention of continuing with the consultation process. Following on from the Q5+1 discussions of 21 July 2011 there has been a number of bi-lateral meetings with major airlines at Gatwick. In addition a series of meetings have been planned to move forward with consultation regarding the development of Gatwick. The intention of the Gatwick Development Strategy is to focus on the following aspects of Gatwick s future development as a preamble to the project specific CIP: Ambition Service levels Forecasts Constraints Capacity assessments Infrastructure requirements Development options Land use plans At this point in time the review period of the Development Strategy is expected to be 12 months. Annex G - In addition the summary of SDG findings it was also queried in paragraph 3.25 of the CAA document UK Civil Aviation Authority Assessment of capital expenditure and consultation at Heathrow and Gatwick airports during the first two years of Q5, February 2011 that In light of CAA and CC activities to improve Annex G at Heathrow, the CAA invites stakeholder views on whether it would also be beneficial to update Annex G at Gatwick.

45 GATWICK CAPITAL INVESTMENT PROGRAMME Project Descriptions INTRODUCTION This chapter contains individual project or programme descriptions, including cost breakdowns for all projects or programmes over 5 million (out turn) within the 6 year period of Q5. We hope that by describing the main constituent projects and investment programme in this manner results in a greater understanding of the drivers for investment at project level, the cost breakdowns of the projects and the outputs that will be delivered, in terms of infrastructure and benefits to airlines and passengers. CRITERIA FOR PROVISION OF INFORMATION Criteria for provision of information are as follows: Project Descriptions for all projects or programmes over 5 million (out turn) within the 6 year period of Q5 provided Cost breakdowns provided for projects that are In delivery (but not programmes as they consist of various initiatives) All of the Q5+1 projects have an early Cost Advisory Sheet, except those that rolled over from the original Q5 period. No cost breakdowns are provided post Tollgate 5 following completion of construction, however a total cost is provided No project summaries are provided for GAL126: Commercial and Property Programme, GAL124: Asset Replacement Programme or GAL131: Airfield Asset as these are deemed to have been replaced by GAL176: Facilities Asset Stewardship, GAL177: Commercial Asset Stewardship and GAL178: Airfield Asset Stewardship. Where a Business Case Summary has been agreed through the JSG, or there is a current Trigger Definition sheet these have been included as other information with the Project Description Sheets. A table detailing the contents of Chapter 5 can be found on the following page:

46 Project Descriptions 46 TABLE OF INFORMATION PROVIDED GAL Number GAL165 & GAL166 Project / Programme Name Q5 (CIP10) Q5 (Extended) Project Summary Cost Breakdown Comment Page Number Taxiway Papa & November 47 & 48 GAL168 Snow Equipment 49 GAL157 North Terminal Security 50 & 51 GAL111 North Terminal Additional Pier Service (Pier 5) 52 & 53 GAL134 North Terminal Additional Pier Service 54 & 55 GAL160 Pond D Rehabilitation 56 & 57 GAL155 South Terminal Security 58 & 59 GAL125 & GAL005 South Terminal Baggage & Pier 1 60 & 61 GAL120 South Terminal Forecourt 62 & 63 GAL122 South Terminal Landside 64 & 65 GAL115 North Terminal Short Term Car Parking (MSCP6) 66 GAL137 North Terminal Baggage Upgrade 67 GAL116 & GAL117 North Terminal Extension (NTX) 68 GAL149 South Terminal Immigration 69 GAL140 Pier 2 Modifications 70 & 71 GAL150 North Terminal Forecourt (NTF) 72 GAL151 North Terminal Interchange (NTI) 73 GAL109 North West Zone 74 GAL027 Inter Terminal Transit System 75 GAL069 South Terminal Departure Lounge Capacity 76 GAL031b South Terminal Fire Protection System 77 GAL096 Airfield Programme including Runway Resurfacing 78 GAL128 Operational Efficiency Programme 79 GAL063 Security Development Programme 80 GAL159 & GAL135 IT Transformation & IT Programme 81 GAL126 Commercial and Property Programme GAL124 Asset Replacement Programme GAL131 Airfield Asset See GAL178 - Commercial Asset Stewardship See GAL177 - Facilities Asset Stewardship See GAL179 - Airfield Asset Stewardship GAL143 Clean, Working & Friendly 82 Minor Projects 83 GAL169 North Terminal Early Bag Store 84 & 85 GAL167 Railway Contribution 86 GAL171 A380 On Pier 87 & 88 GAL172 Airfield Peak Capacity Expansion 89 GAL173 Crew Reporting 90 & 91 GAL174 South Terminal Domestic Arrivals 92 GAL175a North Terminal IDL Reconfiguration 93 & 94 GAL175b South Terminal IDL Reconfiguration 95 & 96 GAL176 Facilities Asset Stewardship 97 GAL177 Commercial Asset Stewardship 98 GAL178 Airfield Asset Stewardship 99

47 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 165 & 166 Taxiways Papa & November Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Full rehabilitation to re-life the pavement: Resurfacing 100mm of existing bituminous surfacing & re-profile; Replacement of AGL luminaire, primary and secondary cabling and transformers; Rectification of full Code E taxiway non-conformances to CAP 168 Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Taxiways Papa and November are main arteries for the airport and are critical to maintaining airside operations, contributing to the airport achieving its targets on runway capacity and pier service for both the North Terminal and South Terminal. Full rehabilitation of the northern sections of Papa and November to re-life the pavement condition for a further 15 years for the bituminous pavements is required. As well as pavement, drainage and AGL repairs to the southern sections. Rehabilitating at this time will: prevent future deterioration of the pavement sub-layers; ensure maintenance of CAP168 compliance and the ability to operate safely; mitigate against high maintenance (planned and unplanned) costs; mitigate against unplanned closures and associated delays; mitigate against a reduction in capacity and service to the main and northern runways and service to piers 1 (during northern runway ops) 2, 3, 4, and 5. December 2011 August 2012 Q5-8m Q5+1-0m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. The main runway rehabilitation business case summary, as submitted to the JSG, highlighted the likely impact on operating costs Additional airport charges per total Gatwick passenger in Q Rehabilitation of taxiways Papa and November assures ongoing delivery of service for the airport s primary asset, thereby enabling airlines to operate and provide consistent levels of service for passengers. Required to maintain Gatwick s aerodrome license with options to improve performance and optimise capacity. Option evaluation has thus far focused on the location and size of the future developments as part of the master plan and Constructive Engagement work. Main Runway Rehabilitation A380 on Pier Airfield Peak Capacity Expansion Airfield Asset Stewardship 15 years

48 Project Descriptions 48 Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

49 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 168 Snow Equipment Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: The types of equipment purchased includes: tractor mounted brushes snow blowers/cutters high speed plough/brush/blower combinations snow ploughs de-icers Requirements Purchase of snow equipment that to ensure business continuity during severe weather conditions, as experienced during the winter periods of 2009 and Benefits the purchase of equipment and vehicles to: maintain operability of the airport s primary asset through extreme weather conditions, thereby enabling airlines to operate and provide consistent levels of service for passengers. protect and enhance the reputation of Gatwick Airport and its Airline business partners by maintaining business continuity during severe weather conditions Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) April 2011 (Equipment Purchase) April 2011 (Equipment Purchase) Q5-7.3m Q5+1-0m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. The snow equipment business case summary, as submitted to the JSG, highlighted the likely impact on operating costs Additional airport charges per total Gatwick passenger in Q For last two consecutive winters there has been significant snow fall and extreme cold weather conditions that have led to either partial or full closure of Gatwick. The purchase of this equipment will mitigate against further closures. Gatwick needs to be able to compete with other airports and local market offers, by ensuring that Gatwick remains open during such extreme weather. Required to maintain operability of the airport s primary asset through extreme weather conditions Linked projects / interdependencies N/A Asset lifecycle 8 years

50 Project Descriptions 50 GAL 157 North Terminal Security Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: This project aims to provide additional Security lanes for use during peak periods to maintain or improve the passenger experience. Failure to deliver this enhancement will degrade customer service levels and increase queue times as passenger numbers increase at peak operational times. Requirements Delivering of capacity of an additional 4 lanes within central search. It is assumed 17 lanes are delivered in Q5 with safeguarding for an eventual 24 lanes in the future. Delivery of a professional, efficient and courteous experience for passengers. Benefits Support s Gatwick s strategic priority to deliver the best passenger experience through the provision of infrastructure that provides resilience for our security product at peak times in the North Terminal. Supports Gatwick s strategic priority to help airlines grow by providing facilities to support on time departure by delivering appropriate capacity requirements. Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle October 2010 August 2015 Q5-12.8m Q5+1-0m This cost estimate is a preliminary estimate based upon a greater level of understanding of scope and granularity. The estimate is however still subject to change as options are developed and prioritised and more detailed information about the project is defined. Increases to utilities and rates. Operating costs may see reductions It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Fast, efficient and effective security search processes enhance Gatwick s ability to compete through provision of efficient passenger process facilitating the airlines ability to depart on time. The option evaluation focused on the development in the context of Gatwick s master plan and included non-build options. The conclusion recommended a consolidated area with sufficient flexibility to safeguard for future expansion. North Terminal Extension North Terminal Baggage North Terminal Forecourt North Terminal Interchange 20 years

51 GATWICK CAPITAL INVESTMENT PROGRAMME Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

52 Project Descriptions 52 GAL 111 North Terminal Additional Pier Service (Pier 5) Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: The Pier 5 project has the overall business objective of delivering improved Pier Service Levels to meet future growth in passenger numbers in the North Terminal and support the overall Pier Service Level target of 95%. This will be achieved by reconfiguring the stands, providing independent access to each aircraft parking position, dedicated gate rooms for each stand and removing passenger cross flows within the pier. Additional objectives include ensuring efficient operations, improving passenger experience and improving the quality of service. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Modernisation of outdated facility to improve passenger experience Reconfiguration of stands to accommodate Full Code C Removal of passenger cross flows within the Pier to allow simultaneous gate and stand operations Full Code C MARs capability to all parking positions Provision of dedicated gate rooms for MARs stands 0.8 million additional passengers rising to 1.1 million by 2024 will be Pier served (equivalent to 4% of North Terminal passengers rising to 5% by 2024) A greater number of people will walk less distance to gate, and spend more time in the IDL Improved PRM facilities Reduced dwell time at gate Flexible stands accommodate different aircraft types with independent and simultaneous embarkation/disembarkation on MARs stands Additional nodes allow simultaneous operations Provision of facilities for additional 3 x Full Code C and 1 x Code D/E Greater flexibility to respond to schedule change, positively impacting On Time Performance and Punctuality Removal of current stand planning constraints More efficient utilisation of space for servicing of aircraft Removal of passenger cross-flows and associated operations inefficiency Current segregation of arrivals and departures relies on adherence to operating procedures. Vertical segregation will mitigate risk of security breaches January 2011 May 2014 Q5-45.5m Q m This cost estimate is a preliminary estimate based upon a greater level of understanding of scope and granularity. The estimate is however still subject to change as options are developed and prioritised and more detailed information about the project is defined. Reduction in airline coaching costs of 1.00 per passenger (estimated benefit of 820k in 2015/16) Increased IDL dwell time of up to 5 mins per incremental pier served passenger (an estimated benefit of 170K in 2015/16) Indicative impact on airport charges in Q5 and/or Q6 Q6 Over Pier 5 Life (20 yrs) Additional airport charges per total Gatwick passenger Airline Cost per incremental Pier 5 served passenger (Includes airline pier coaching saving)

53 GATWICK CAPITAL INVESTMENT PROGRAMME Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle The project will give Gatwick improved facilities, bringing it in line with other airports in the South East. It provides additional flexibility for the forecast fleet mix and the increase in passenger numbers, and from a passenger experience perspective, gives shorter walking distances and increased time spent in the IDL. Do nothing implications of the do-nothing scenario include: Passenger Service Level will reduce from 94% (2011) to 87% by 2017 Remote stand coaching requirements will increase 17 Construction options identified North Terminal Interchange North Terminal Extension North Terminal Multi-storey Car Park North Terminal Early Bag Store Expansion North Terminal Security North Terminal IDL Capacity Expansion North Terminal Landside Arrivals/Onward Travel Check-in Hall Reconfiguration North Terminal Pier Service 20 years Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

54 Project Descriptions 54 GAL 134 North Terminal Additional Pier Service Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: To deliver the required Pier Service Levels to meet the future growth in passenger numbers and fleet mix in the North Terminal. This will ensure efficient operations, and an improved passenger experience. The purpose of the project is continue to maintain Pier Service Levels above 95%, and to safeguard operations and Pier Service Levels for future forecasts. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position To meet 95% Pier Service Levels in line with future forecasts To meet future fleet mix requirements including the provision for Code F Acceptable travelling time to gate and passenger journey quality New airbridges and MARS capable stands with independent aircraft parking positions serving short and long haul aircraft Maintain Pier Service Levels above 95% as passenger numbers increase Provision of A380/Code F and increased long haul capability Provision of IATA Level of Service C gate lounges Improved PRM facilities Greater flexibility to respond to schedule change, and improve On Time Performance More efficient utilisation of space for aircraft servicing Independent embarkation/disembarkation on MARS stands April 2008 To Be Confirmed - Dependant on chosen option Lower range : 50m Q Upper range : 400m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Impact on operating costs will depend on chosen option, however likely impacts include an increase to utilities and rates for the chosen Pier option, with a potential further increase to operational costs if the solution involves additional coaching. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating the business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Ensures Gatwick can compete with other airports in the South East by providing an improved passenger service and experience. In addition, the provision of increased long haul, together with Code F capability, will enable Gatwick to increase its passenger numbers within the constraints of the runway movements.

55 GATWICK CAPITAL INVESTMENT PROGRAMME Basis of decision (options) Linked projects / interdependencies Asset lifecycle Do nothing implications of the do-nothing scenario include: Passenger Service Level will reduce from 94% (2011) to 87% by 2018 Remote stand coaching requirements will increase The Strategic Options Viability Study has assessed the key options to facilitate the decision making process. The key options to compliment Pier 5 in providing additional North Terminal Pier Service include: Cargo Pier Tower Stands Shuttle Pier (single mode or mixed mode) Pier 6 South Extension Pier 6 Deepening The cost ranges stated above do not take into account whether an option provides for the future increase in passenger numbers and fleet mix. A combination of options may be required to meet the future forecasts. North Terminal Interchange North Terminal Extension North Terminal Multi-storey Car Park North Terminal Early Bag Store Expansion North Terminal Security North Terminal Pier Service (Pier 5) North Terminal IDL Capacity Expansion North Terminal Landside Arrivals/Onward Travel Check-in Hall Reconfiguration 25 years Drawing/Image showing location

56 Project Descriptions 56 GAL 160 Pond D Rehabilitation Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Refurbishment of Pond D and creation of a new m³ lagoon to contain dirty water Requirements Benefits Project Start Date To minimise as far as reasonably practicable the risk of pollution to adjoining water courses. Minimise the risk to personal safety and asset damage as a result of flooding. To verify the current surface water strategy which will ensure that the system can grow incrementally to accommodate new areas of surface run-off which would enable the airport to grow to 44 million passengers per annum. January 2012 Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 February 2013 Q5-8.3m Q m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. None anticipated It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Gatwick s reputation is safeguarded through prevention of sewage leaks and environmental incidents. Refurbishment of infrastructure Refurbishment of infrastructure followed by capital contribution to external agency to create more robust future filtration infrastructure Pond E Pumping station 24 refurbishment Asset lifecycle 30 years

57 GATWICK CAPITAL INVESTMENT PROGRAMME Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

58 Project Descriptions 58 GAL 155 South Terminal Consolidated Security Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Consolidation and upgrade of South Terminal Security facilities to make a positive step change in passenger experience and to reduce operating costs, maximising throughputs through standardisation with safeguarding for future changes in security regulations. Requirements To promote operational excellence for service and cost whilst complying with security requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Quality of service: improvement of passenger experience through consolidation and upgrade of facilities. Operational efficiency: Introduction of further standardization and automation for screening and boarding pass processes, providing a platform for further efficiency. Capacity: Provision of 19 security lanes and resilience for future expansion to 22. January 2010 December 2011 Q5-48.0m Q As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. The South Terminal Consolidated Security business case summary, as submitted to the JSG, highlighted likely impact on operating costs Additional airport charges per total Gatwick passenger in Q Consistent, reliable, compliant security area in a pleasant environment providing airlines and passengers with assurance that Gatwick s security product not only supports a secure environment, but also on time performance. The option evaluation focused on the development in the context of Gatwick s master plan and included non-build options. The conclusion recommended a consolidated area with sufficient flexibility to safeguard for future expansion. South Terminal IDL expansion reconfiguration Asset lifecycle 25 years

59 GATWICK CAPITAL INVESTMENT PROGRAMME Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

60 Project Descriptions 60 GAL 125 & GAL 005 South Terminal Baggage & Pier 1 Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Construction of a new South Terminal Baggage Factory and Pier 1, including delivery of an automated baggage storage facility. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) New South Terminal Baggage Factory with up to 100 make up positions and facilities for out of gauge and transfer baggage make up. New automated departures baggage store for up to 2600 bags. New Pier 1 with 5 gates and stands. Increase in hourly throughput from 3800 to 4250 bags per hour 5 fast turn stands with push-back conflicts eliminated will increase OTP, reducing delays to push backs due to the new design of the Apron/stands. New 2600 bag early bag store enabling early check in. Support for reduction in check-in transaction times Support for reduction in resource requirements at check-in and in baggage make-up areas Consistent, reliable baggage system performance: Reduction in short shipped bags due to system failure Operationally the solution will enable GAL to route around outages which will improve the upstairs experience and reduce the need to utilise cages. Improved passenger perception of pier, gate and stand facilities All departing South Terminal passengers and some arriving Pier 1 passengers will benefit. Support for reduction in aircraft turnaround times April 2008 March 2014 Q Q m Future Spend m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Operating costs will increase slightly due to increases in utilities and maintenance associated with the baggage store. Operating costs for airlines are expected to decrease due to potential for more efficient resourcing at check-in and baggage make up positions. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Provision of new baggage system required to enable Gatwick to compete with other European airports check-in and pier products. Option evaluation has reviewed: Option 1: HBS replacement only does not meet capacity/service requirements Option 2: Replacement of HBS in Q5 and partial construction of baggage factory in Q5 with the remaining construction beyond Q5 Option 3 (PREFERRED) Delivery of entire Baggage and Pier 1 project spanning Q5 and beyond

61 GATWICK CAPITAL INVESTMENT PROGRAMME Linked projects and prioritisation based on chronological requirement Asset lifecycle South Terminal IDL Reconfiguration Crew reporting improvement Domestic Arrivals Airfield projects 25 years Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

62 Project Descriptions 62 GAL 120 South Terminal Forecourt Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: New entrance to the South Terminal with public transport interchange New links, canopy, pedestrian crossings and vertical circulation New wayfinding Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Improved access and wayfinding to the South Terminal An improved entrance to the South Terminal with less congestion at the main entrance point Fewer road crossing points Coaches and taxis closer to the terminal and taxi passengers closer to terminal Fresh and modern environment New lifts Protection from inclement weather April 2008 April 2012 Q5-31.1m Q As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. Possible marginal increases in operating costs for rates, utilities, maintenance and cleaning. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. Positive passenger and airline perception of the main South Terminal entrance supports Gatwick s aspiration to be London s airport of choice. The evaluation of options included non-build solutions as well as more extensive construction options. South Terminal Baggage South Terminal Security 25 years

63 GATWICK CAPITAL INVESTMENT PROGRAMME Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

64 Project Descriptions 64 GAL 120 South Terminal Landside Trigger Met Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Replacement of flooring in all South Terminal concourse areas Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Improvement of ambience and upgrade of environment Improved passenger experience Lighter, brighter environment Positive passenger perception June 2008 August 2012 Q5-21.6m Q As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. None anticipated It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. Positive passenger and airline perception of landside areas supports Gatwick s aspiration to be London s airport of choice The evaluation of options included non-build solutions as well as more extensive refurbishments. The latter were discounted in favour of a solution with the greatest impact at a more reasonable cost. South Terminal Baggage South Terminal Security 25 years

65 GATWICK CAPITAL INVESTMENT PROGRAMME Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

66 Project Descriptions 66 GAL 115 North Terminal Short Term Car Parking (MSCP6) Project Complete & Trigger Met Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Short stay multi storey car park in the North Terminal with 1,177 spaces inclusive of 24 disabled, passenger pick up, rental car and premium parking. Also includes flood mitigation/ attenuation, entry/ exit plaza and Rental Car Onward Travel. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Deliver 1,177 short term car park spaces, 24 disabled bays inclusive A car park that consists of ground plus 6 floors Including car rental parking, passenger pick up and premium spaces Value for money solution Deliver a short term car park that ties into the North Terminal Extension, North Terminal Forecourt and North Terminal Interchange in a seamless way An enabler to allow capacity to grow in the North Terminal to meet peak demand Additional Retail income Provide 1st class short stay product with ease of access into the terminal Provide appropriate facilities for car rental customers Improved passenger experience April 2008 April 2011 (trigger date) Q5-16.9m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. As a result of this project operational costs are likely to be impacted with maintenance, rates and utilities expected to increase. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. This project will enable Gatwick to be able to compete with other airports and local market offers, by ensuring the provision of high quality commercial product in order to maintain airline operations, and to give passengers more choice and to meet peak demand by providing facilities on airport. Option evaluation focused on the location and size of the development as part of the master plan and Constructive Engagement work and the delivery of associated benefits to all airport users. Option evaluation reviewed all potential build and non-build options. North Terminal Extension (NTX) North Terminal Interchange (NTI) North Terminal Forecourt (NTF) 25 years Drawing/Image showing location

67 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 137 North Terminal Baggage (NTB) Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: The North Terminal Baggage Upgrade specifically supports the North Terminal extension, providing infrastructure in line with future passenger and fleet mix growth forecasts. Requirements Any input/ output. Direct bag processing Integrated transfer operation Intra-terminal transfer time within 15 minutes Baggage storage Benefits Safe traffic segregation in bag halls Manual Handling - compliance to latest HSE requirement. Security compliance to latest DfT requirements for baggage halls Full bag tracking through the system Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies April 2008 September 2012 Q5-39.6m Q5+1-0m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. Increases to utilities, operating costs and rates. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. To support the capacity increases in the North Terminal, in line with future growth forecasts, and providing a flexible efficient baggage system to support out airlines and passengers. Option evaluation focused on the location and size of the development as part of the master plan and Constructive Engagement work and the delivery of associated benefits to all airport users. The image shown is for illustrative purposes only. Option evaluation reviewed all potential build and non-build options. North Terminal Extension (NTX) Asset lifecycle 20 years Drawing/Image showing location

68 Project Descriptions 68 GAL 116 & GAL 117 North Terminal Extension (NTX) Trigger Met Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Provision of additional check-in and additional arrivals reclaim facilities in line with growth forecasts. Requirements Provide additional capacity to Check-In. A net 28 additional desks, to provide a total of 156 desks across the NT Check-In concourse Relieve congestion at peak hours associated with check-in functions by improving passenger queuing and circulation space Improve sight-lines / visibility of Check-In to assist in intuitive way finding Benefits Accommodation of future growth in passenger numbers NT passengers to experience a significantly improved level of service with better circulation and a refreshed appearance in Check-In, Reclaim Hall and Arrivals Concourse. Operational flexibility Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position April 2008 December 2011 (Trigger Date) Q5-75.5m Q5+1-0m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. It is likely that there will be an increase in maintenance costs, utilities and rates. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. North Terminal Extension is part of suite of projects that provide the required infrastructure to support the forecast passenger growth, providing an improved experience for our passengers. Basis of decision (options) Linked projects / interdependencies Asset lifecycle Option evaluation focused on the location and size of the development as part of the master plan and Constructive Engagement work and the delivery of associated benefits to all airport users. Option evaluation reviewed all potential build and non-build options. North Terminal Baggage North Terminal Forecourt North Terminal Interchange Inter Terminal Transit System 20 years Drawing/Image showing location

69 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 149 South Terminal Immigration Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Removal of asbestos from Immigration area Upgrade of mechanical and electrical services Installation of new ceiling and lighting Requirements Upgrade of immigration hall infrastructure Benefits Removal of risk associated with the presence of asbestos Enabling of installation of new fire system Enabling of effective maintenance protocols Enhanced perception of immigration area Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position April 2008 February 2011 Q5-6.4m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. None anticipated It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. Supports positive passenger perception and prevents negative impacts on reputation due to maintenance issues associated with the presence of asbestos. Basis of decision (options) Options considered included non-invasive upgrades of infrastructure in the area. Linked projects / interdependencies Asset replacements, including South Terminal Arrivals Reconfiguration Asset lifecycle 25 years Drawing/Image showing location

70 Project Descriptions 70 GAL 140 Pier 2 Modifications Trigger Met Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Reconfigurations of stands on the South side of pier 2 Upgrade of all pier 2 gaterooms, enlargements of gaterooms on the North side Upgrade of mechanical and electrical infrastructure Enhanced wayfinding Requirements Alignment of stand provision to latest fleet mix Improvement in passenger flows and passenger processing within the pier Improvement of general ambience and passenger perception Upgrade of life expired and non-compliant mechanical and electrical infrastructure Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Support for ongoing South Terminal pier service level Enhanced passenger perception and experience More effective and efficient processing of passengers Dedicated boarding processing for PRMs and premium passengers More efficient and compliant mechanical and electrical infrastructure February 2009 November 2011 Q5-40.3m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. None anticipated It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. Enhanced infrastructure and perception enhances Gatwick s reputation and ability to attract traffic. Basis of decision (options) Options evaluated included non-build options, stand reconfiguration only and the chosen option, a combination of stand reconfigurations with refurbishment of the pier. Linked projects / interdependencies Airfield projects Asset lifecycle 25 years

71 GATWICK CAPITAL INVESTMENT PROGRAMME Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

72 Project Descriptions 72 GAL 150 North Terminal Forecourt (NTF) Project Complete Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Relocate traffic from the front of the terminal on the upper & lower levels creating e a new forecourt along Northway s Road and new bus stops along Furlong Way. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position ASIAD Forecourt Security Compliance The DfT Aviation Security in Airport Development ( ASIAD ) document has advised on a number of requirements that a forecourt must adhere to. In meeting these stipulations, three of the existing forecourt roads are to be closed, and one will remain open to Controlled Traffic only, with all uncontrolled traffic maintaining a 30m distance from terminal. Reconfigure the existing forecourt roads and vehicle access routes to achieve compliance with the current ASIAD requirements Provide the additional forecourt roadways and parking bays necessary to support the redevelopment of the landside areas of NT. Maximises the operational value of both Furlong Way and Northway s Road. Minimises forecourt traffic congestion and provides an optimum forecourt layout with the appropriate forecourt facilities in the appropriate areas. Improves the security risk profile of the forecourt zone especially relating to the threat from a potential vehicular terrorist attack Supports access/egress for Jubilee House, Car Park J and Longbridge House. April 2008 June 2010 Q5-7.7m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. Minimal impacts to operational expenditure. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. This project protects and enhances our reputation by providing facilities that are safe for passengers. Basis of decision (options) Linked projects / interdependencies Asset lifecycle Do nothing Safety consequences Option had to link into MSCP 5 & 6, North Terminal Extension and North Terminal Interchange North Terminal Interchange (NTI) North Terminal Extension (NTX) 40 years Drawing/Image showing location

73 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 151 North Terminal Interchange (NTI) Project Complete Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Provide an inside/outside passenger interchange around the existing shuttle station to create a covered route for passengers to walk from the forecourt entrance and the short stay car parks into the terminal. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Construction of an inside/ outside passenger interchange space around the existing Shuttle station Create a route and orientation area for pedestrians approaching the front door of the NT from the new drop off area in Northways, the existing and new Multi Storey Car parks and the redeveloped Shuttle station. Allow passengers to orientate themselves before entering the North Terminal For arriving passengers provide the route to car parks, ITS and pick up. Long-term, passenger-centric solution, augmenting the benefits of the improved North Terminal Extension project following the forecourt traffic restrictions in the DfT Aviation Security in Airport Development (ASIAD) paper. Creates a space/link to access North Terminal via all modes of transport Covered walkway from forecourt to terminal Creates a new gateway into North Terminal which modernizes and simplify the passenger journey, speeding up access into the terminal. Ensures an exceptional passenger experience. April 2008 June 2010 Q5-24.6m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. There may potentially be an increase in maintenance costs, utilities and rates. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was past Tollgate 4 prior to this agreement. Supports positive passenger perception Option evaluation focused on the location and size of the development as part of the master plan and Constructive Engagement work and the delivery of associated benefits to all airport users. Option evaluation reviewed all potential build and non-build options. North Terminal Forecourt (NTF) North Terminal Extension (NTX) 40 years Drawing/Image showing location

74 Project Descriptions 74 GAL 109 North West Zone Project Complete & Trigger Met Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Additional remote stands Stands Balancing ponds Earth bund Requirements To provide additional remote and decant stand capacity Benefits Enables the delivery of infrastructure for the provision of pier service and the reconfiguration of stands to accommodate changing fleet sizes. Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position April 2008 Additional stands: June 2008 (trigger date) Balancing ponds and earth bund : November 2008 (trigger date) Q5-39.6m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. There will be an increase in maintenance costs, utilities and rates It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was completed prior to this agreement. The North West Zone supports service and growth projects that provide the required infrastructure to support the forecast passenger growth, providing an improved experience for our passengers. Basis of decision (options) Linked projects / interdependencies Asset lifecycle Option evaluation was focused on the location and size of the development as part of the master plan can Constructive Engagement work and the delivery associated benefits to all airport users. Option evaluation reviewed all potential build and non-build options. North Terminal Additional Pier Service (Pier 5) North Terminal Additional Pier Service 35 years Drawing/Image showing location

75 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 027 Inter Terminal Shuttle (ITS) Project Complete & Trigger Met Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Refurbished guide-way & stations with new transit cars and operating system. The new system shall be capable of providing sufficient inter terminal capacity and levels of service to the year Requirements Refurbished guide-way & stations with new transit cars and operating system. The new system shall be capable of providing sufficient inter terminal capacity and levels of service to the year Benefits The key driver for this project is to ensure that the link between North and South Terminal is protected and provides adequate levels of service and capacity to facilitate growth and alternative terminal occupancy strategies. Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or beyond April 2008 June 2010 Q5-36.0m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. Future revenue costs have been derived from industry standards for the operation of a renovated & expanded Automated People Mover (APM) system. It has been agreed that summary business cases will be provided at Tollgate 4 (Construction Decision) as a method of articulating business case and cost benefit analysis. This particular project was completed prior to this agreement. Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Ensures that Gatwick can Protect and enhance our reputation through ensuring availability of a critical asset. Option evaluation focused on the location and size of the development as part of the master plan and Constructive Engagement work and the delivery of associated benefits to all airport users. The option to replace the Automated People Mover (APM) whilst maximising the use of the existing infrastructure was adopted. The guide-way and stations have also been refurbished. Option evaluation reviewed all potential build and non-build options. North Terminal Extension (NTX) North Terminal Interchange (NTI) North Terminal Forecourt (NTF) 20 years Drawing/Image showing location

76 Project Descriptions 76 GAL 069 South Terminal Departure Lounge Capacity Project Complete Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Expansion of Departure Lounge through relocation of airside/landside boundary Reconfiguration of Village area Creation of new retail and passenger dwell areas in the Departure Lounge Additional toilets Requirements Increased airside retail space Increased airside passenger circulation Additional toilet provision Benefits Enhanced passenger perception and experience Increased retail income Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position September 2006 September 2010 Q5-19.8m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. Enhanced retail income It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was completed prior to this agreement. Enhanced passenger perception and experience with a wider retail and catering offer supports Gatwick s reputation. Basis of decision (options) Linked projects / interdependencies Build options included potential extension to the Departure Lounge as well as non-build options. The selected option moved the airside-landside boundary to utilise landside space no longer required and converted it to airside space. South Terminal Security project Asset lifecycle 25 years Drawing/Image showing location

77 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 031b South Terminal Departure Lounge Capacity Project Complete Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Replacement of South Terminal Fire Alarm System, including detection devices, call points, fire panels, graphical interfaces and PAVA Requirements Replacement of life expired fire alarm system in the South Terminal Benefits Mitigation of fire safety risks due to poor asset quality Enhancement of management capability in the event of fire alarms through provision of PAVA and graphical interfaces Reduction in the number of fire alarms Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position September 2006 February 2011 Q5-14.7m Q As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. None anticipated It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. This particular project was completed prior to this agreement. A compliant and high quality fire alarm system protects Gatwick s reputation. Basis of decision (options) Linked projects / interdependencies Options included a minimal replacement of detection capability without PAVA. The chosen option aligned capability for detection and management of fire safety to provide optimum value. South Terminal Programme Asset lifecycle 15 years

78 Project Descriptions 78 GAL 096 Airfield Programme including Runway Resurfacing Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Programme of airfield works incorporating a project to resurface the northern and main runways as well as other airfield works. Requirements Benefits Requirements of the main runway rehabilitation are as follows: The rehabilitation of block pavements and replacement of airfield ground lighting to assure compliance with CAP 683 and CAP 168 Potential provision of additional Rapid Exit Taxiways Targeted operational cost reductions Targeted reduction in CO² emissions Protecting and enhancing Gatwick s reputation and helping our airlines grow through rehabilitation of the airport s primary asset, meeting the requirements of the forecast fleet mix with potential opportunity to enhance value and efficiency. Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 November 2011 March 2013 Q5-58.3m Q m As this project has passed through Tollgate 4 this value represents a cost amount attributable to a defined scope and programme that will, or has been delivered. The main runway rehabilitation business case summary, as submitted to the JSG, is included as additional information and highlights the likely impact on operating costs Additional airport charges per total Gatwick passenger in Q6 (0.18) Impact on Gatwick s competitive position Rehabilitation of the main runway assures ongoing delivery of service for the airport s primary asset, thereby enabling airlines to operate and provide consistent levels of service for passengers. Basis of decision (options) Linked projects / interdependencies Asset lifecycle Required to maintain Gatwick s aerodrome license with options to improve performance and optimise capacity. Option evaluation has thus far focused on the location and size of the future developments as part of the master plan and Constructive Engagement work. Taxiways Papa & November A380 on Pier Airfield Peak Capacity Expansion Airfield Asset Stewardship 11 years Drawing/Image showing location

79 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 128 Operational Efficiency Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: A range of initiatives maximising airport efficiencies undertaken in priority order. Requirements A range of initiatives that aim to: Reduce cost Utilise resources Increase efficiency Increase productivity Benefits The Operational Efficiency Programme is designed to maximise efficiency minimising costs and maximising service quality through the use of technological and service innovation. Project Start Date Project End Date April 2008 April 2011 Total Capital Expenditure millions (est.) Q5-12.1m Q m Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 We expect each project to support our focus on operational excellence and therefore make a contribution to reducing our total cost to operate or our airline partners total cost to operate. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Impact on Gatwick s competitive position Gatwick needs to be able to compete with other airports and local market offers, by reducing our total cost to operate or our airline partners total cost to operate. Basis of decision (options) Linked projects / interdependencies Portfolio of projects at various stages of development supporting our focus on operational excellence through investment in process and technology across the end-toend passenger journey, which in turn should support a reduction in our total cost to operate. Portfolio of projects that are linked with many other projects in the CIP by the location within which they are executed Asset lifecycle Various projects with varying asset lifecycles

80 Project Descriptions 80 GAL 063 Security Development Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Portfolio of projects designed to broaden the airport security footprint to constantly reduce vulnerability at our airport campus. Requirements Provision of a safe environment for travellers and other stakeholders by mitigating security risks. The types of protection provided by this programme provides and enhances can be physical, technological and process improvements. Benefits Security Development Programme ensuring the provision of a safe environment for travellers and other stakeholders by mitigating security risks. Project Start Date Project End Date April 2008 March 2013 Total Capital Expenditure millions (est.) Q5-6.7m Q m Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 It is unlikely there will be an impact on handling agent and airline costs. Airport impacts are expected to be minimal. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Impact on Gatwick s competitive position This programme will ensure that Gatwick can Protect and enhance our reputation through ensuring operational availability of its assets, and no H&S risk to our passengers. Basis of decision (options) Portfolio of projects at various development stages. Linked projects / interdependencies Portfolio of projects that are linked with many other projects in the CIP by the location within which they are executed Asset lifecycle Various projects with varying asset lifecycles

81 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 159 & GAL 135 IT Transformation & IT Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Continued transformation, and replacement of Gatwick s operational systems, infrastructure and processes Requirements Benefits Project Start Date Project End Date A range of initiatives designed to separate and transform Gatwick s systems, infrastructure and processes, maximising airport efficiencies, undertaken in priority order. The primary strategic driver of the IT Programme is to Deliver the best passenger experience by improving our operational systems and thereby facilitating operational efficiencies. April 2008 March 2013 Total Capital Expenditure millions (est.) Q5-48.1m Q m Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) This programme seeks to facilitate operational efficiencies and thereby improve the passenger journey. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Gatwick need to take advantage of technological advances in order to ensure it can provide the best passenger experience and thereby compete with other airports. Portfolio of projects at various development stages. Linked projects / interdependencies Various linked projects with interdependencies across the airport campus Asset lifecycle Various minor projects with varying asset lifecycles Drawing/Image showing location

82 Project Descriptions 82 GAL 143 Clean, Working and Friendly Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: The Clean, Working and Friendly programme demonstrates Gatwick s on-going commitment to invest in passenger-facing infrastructure such as flooring and seating, in order to fix the basics Requirements Benefits Project Start Date Project End Date A range of investments in passenger facing and core operational infrastructure in North and South Terminals, undertaken under prioritisation and in conjunction with other developments at Gatwick The Clean, Working and Friendly programme demonstrates Gatwick s on-going commitment to invest in passenger-facing infrastructure such as flooring and seating, in order to fix the basics. April 2008 March 2013 Total Capital Expenditure millions (est.) Q5-13.3m Q m Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Airport impacts are expected to be minimal. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Impact on Gatwick s competitive position The Clean, Working and friendly programme ensures that Gatwick can Protect and enhance our reputation. Basis of decision (options) Portfolio of projects at various development stages. Linked projects / interdependencies Portfolio of projects that are linked with many other projects in the CIP by the location within which they are executed Asset lifecycle Various projects with varying asset lifecycles

83 GATWICK CAPITAL INVESTMENT PROGRAMME Minor Projects Minor Projects Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: The Minor Projects programme is a range of investment, typically projects of a value less than 250k and of a tactical nature, undertaken in priority. Requirements Benefits The Minor Projects programme is a range of investments which supplements the asset replacement programme, typically projects of a value less than 250k and of a tactical nature, undertaken in priority order. The typical make-up of project is: 35-40% each year have Environmental Health and Safety, issues as the main driver with around 10-15% of these are unplanned, arising from recommendations following incidents, risk assessments & audits % of projects each year have Deliver the best passenger experience Infrastructure as main driver % of projects each year are related to investment in tenanted accommodation to protect existing income 5-10% of projects each year are related to investment in retail accommodation to protect existing income. The primary strategic drivers of the Minor Projects programme are to Deliver the best passenger experience and Maintain a strong EH&S culture. Project Start Date Project End Date April 2008 March 2013 Total Capital Expenditure millions (est.) Q5-8.5m Q m Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Airport impacts are expected to be minimal. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Impact on Gatwick s competitive position The Minor Projects programme will ensure that Gatwick can Protect and enhance our reputation through ensuring operational availability of its assets, and no H&S risk to our passengers. Basis of decision (options) Portfolio of projects at various development stages. Linked projects / interdependencies Portfolio of minor projects that are linked with many other projects in the CIP by the location within which they are executed Asset lifecycle Various minor projects with varying asset lifecycles

84 Project Descriptions 84 GAL 169 North Terminal Baggage Store Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Construction of an automated store for departures baggage, linked to existing baggage systems to enable more flexible check-in and baggage make-up. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Automated departures baggage store with space for up to 2500 bags Integration with the NTB baggage system. Supports passenger growth forecasts and capacity growth in the North Terminal with increased baggage system capacity. Service benefit to passengers & airlines through the ability to check in at any time. 770k to 1.1m passengers to benefit. Future potential for more flexible check-in products, e.g. fast/automated bag drop Potential reduction in resource requirements at check-in and baggage make-up areas (10-25%). Potential chute capacity increase (20-40%) April 2013 April 2014 Q5-0.0m Q m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Operating costs will increase slightly due to increases in utilities and maintenance associated with the baggage store. Reduction in airline costs for check in and make up. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Provision of new baggage system required to enable Gatwick to compete with other European airports check-in products. Basis of decision (options) Option evaluation has reviewed: 1) Creation of new baggage store within existing main baggage area. 2) Construction of new build. 3) Do nothing Linked projects / interdependencies Asset lifecycle Asset Stewardship (Baggage Systems) North Terminal Additional Pier Service North Terminal IDL Reconfiguration North Terminal Security 25 years

85 GATWICK CAPITAL INVESTMENT PROGRAMME Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

86 Project Descriptions 86 GAL 167 Railway Contribution SCOPE: Make a contribution towards the upgrade of the Gatwick Railway station, to enhance passenger experience and flow and to make a more economical sustainable future for Gatwick. Requirements Improvements to the main station concourse to update and its appearance. An additional seventh platform capable of handling trains of up to 12 carriages, with Vertical Circulation Core from a new walkway. Improvements to access and egress to and from platform 5 & 6. Renewal of existing signaling system in the Gatwick area. Benefits Project Start Date Project End Date Additional capacity at Gatwick stations. Improve passenger experience at Gatwick Station. Support Section 106 agreement. Improved access to platforms. Supports retention for Gatwick Express. January 2011 January 2014 Total Capital Expenditure millions (est.) Q5-1.1m Q m Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position None anticipated It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. Providing an improved Gatwick Station will increase Gatwick s competitiveness with other airports who have modern rail facilities. Basis of decision (options) Linked projects / interdependencies A formal agreement has been drawn up and executed between Network Rail and Gatwick Airport Limited, it is now a legal requirement to make the contribution provided Network Rail meet their obligations under the Deed of Contribution. South Terminal Forecourt South Terminal Landside Asset lifecycle Contribution to Network Rail Asset. Drawing/Image showing location

87 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 171 A380 On Pier Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Deliver a single Code F pier-serviced stand to the west end of Pier 6. In line with Gatwick s growth aspirations and projected passenger and aircraft fleet mix. Requirements To accommodate future fleet mix. It is currently proposed to create a Code F stand and associated facilities on Pier 6, by converting push and hold stand 125 and stand 110. The node and air-bridge on stand 110 will be demolished and a new node and air-bridge created to service the new stand. Benefits Earliest possible provision of A380 capable infrastructure Delivery of infrastructure to support future passenger and fleet mix forecasts Value solution providing good passenger proposition No loss of code C stands Provision of products meeting a wider mix of passenger types Flexible infrastructure accommodates various aircraft types Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) August 2011 May 2012 Q5-0.0m Q m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. It has been agreed that full cost and benefit information will be provided at Tollgate 4 (Construction Decision) and included in the Business Case Summary [Joint Steering Group, 1st September, 2010] At time of going to print this project was not at that stage. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Gatwick s growth aspirations, projected passengers and aircraft fleet mix projections together with its ability compete with other airports would be compromised without the delivery of one Code F pier served product facility. Further investigation into the various options for providing a facility for the A380 is underway to ensure the best value solution is developed. Linked projects / interdependencies North Terminal Additional Pier Service (option dependant) Runway & Taxiway projects Asset lifecycle 10 years

88 Project Descriptions 88 Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

89 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 172 Airfield Peak Capacity Expansion Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Aircraft movement processes, turn around (Ramp) processes and upgrade/new NATS, Gatwick, Airline, Ground-handlers systems Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Adherence to schedule, optimized aircraft movement and increase punctuality Stand Designation 2 hours prior to planned departure time Accurate Estimated In Block Time (EIBT) Target start up time (TSAT), optimized sequencing to maximize runway throughput Stand ready/safedock on arrival and accurate Target Off Block Time (TOBT) Ready to move at TSAT Reduced variance to enable reducing mean for ADA and ADDA spacing Full compliance Eurocontrol CDM requirements and maximize ATM flow rate +55 Airline and Ground handler cost minimize Increase peak hours throughput runway capacity to 55 on consistence basis Improve on time performance during busy period to maintain greater than 85% Maintain delays below average 10 minutes on arrivals and departures Reduced holding at runway departure queue and more efficient taxiing Reduce ground handler and service provider s costs Reduced Turnaround time variance Ability to prioritize late inbound or outbound flights to help get back on schedule Increase utilization of constrained assets to create incremental capacity Improved operational efficiency through improved analysis and reporting tools Improved analysis to support slot declaration process using more robust models March 2011 April 2014 Q5-0.0m Q m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Reduce airline fuel cost and costs associated with delays. Reduce ground handler cost through more predictable planning and minimization of people/asset movement Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Increase in airfield movements at critical peak times, generating further business and improving Gatwick s capability to cope with projected rises in service levels. Portfolio of projects at various development stages. Alpha Box Stands Replacement Taxiway Rehabilitation 10 years

90 Project Descriptions 90 GAL 173 Crew Reporting Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: South Terminal and North Terminal crew reporting solution, as well as a UKBA operations solution for the South Terminal. Requirements Benefits South Terminal and North Terminal crew report facilities Relocation of United Kingdom Border Agency Custody Suite and operations functions from Concorde House to Ashdown House Relocation of ST crew reporting from Concorde House to Atlantic House Jubilee House requirements: 1) Optimised layout for easy flow between bag drop and security search 2) Airside briefing facilities Maintain and potentially enhance crew report processes Supports on time departure performance Enhance security capability and compliant and effective UKBA operational facility Additional ST landside coach drop lane - reduced Concorde House traffic delays Elimination of vehicle / pedestrian conflict at airside coach pick up Consistent process and performance Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position April 2011 December 2012 Q5-0.0m Q m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Potential increase in operating costs for airport and airlines due to provision of compliant hold baggage screening for crew baggage. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Efficient and effective crew reporting supports on time performance for airlines and enhances Gatwick s reputation. Provision of safe and secure detention facilities for UKBA protects Gatwick s reputation. Basis of decision (options) Linked projects / interdependencies Options: 1) Provision of a crew reporting, hold baggage, coach and vehicle solution in an alternative location. 2) Walking routes for on site and off site crews operating from pier served stands with coaching solution for remote operations. South Terminal Baggage and Pier 1 Asset lifecycle Dependant upon final solution

91 GATWICK CAPITAL INVESTMENT PROGRAMME Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

92 Project Descriptions 92 GAL 174 South Terminal Domestic Arrivals Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: Reconfiguration of the South Terminal Arrivals area to enhance the Arrivals experience, facilitating seamless process whilst maximising commercial revenues. Requirements Benefits Project Start Date Project End Date Relocate selected retail outlets Reconfigure onward travel Reconfiguration of the South Terminal Arrivals area to create an enhanced passenger experience. Improved ground transportation, hotel, and baggage services. Reduced coaching costs. Improved stand operations. Consolidate arrivals April 2011 December 2012 (Temporary), March 2015 (Final) Total Capital Expenditure Q5-0.0m Q m (target value as agreed through CPB and JSG) millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Operating costs will increase marginally whilst income will be increased. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Reconfiguration required to ensure no degradation to passenger service levels, which could mean that passengers would choose to fly from other airports. Option evaluation: Do nothing implications of the do-nothing scenario include: No improvement in passenger experience remain at status quo. Limited retail income opportunities Limited improvement in participation of onward travel Reconfigure existing Reconfigure existing and install new retail units. South Terminal Landside Arrivals/Onward Travel Check in hall reconfigurations PRM & DDA Infrastructure South Terminal IDL Reconfiguration Railway Station 25 years

93 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 175a North Terminal IDL Reconfiguration Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: To reconfigure the North Terminal departures lounge in order to enhance the passenger experience and support commercial returns. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position The enhancement of the passenger experience through the reconfiguration of the existing lounge. Provision of additional Food and Beverage Provision of additional department store by re-use of underutilised space. This project will provide resilience to GAL s Business As Usual. To remedy the impact of prioritisation of security development on NT retail income. Improved passenger experience Retention of existing retail revenue, and expansion through new brands. Smoking area. Increased catering on offer (4,000 square feet). July 2013 April 2014 Q5-0.0m Q m This is a cost estimate which equates to a rough order of magnitude, based on the available scope definition at This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. There is no anticipated increase in operating costs associated with this reconfiguration as no new terminal gross floor area is added by way of this expenditure. It is anticipated that there will be an uplift in retail income. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Enhances Gatwick s reputation for Departures Lounge product. Basis of decision (options) Options: 1) Do all 2) Partial / Phased implementation. 3) Do nothing. Linked projects / interdependencies North Terminal Security Asset lifecycle 20 years

94 Project Descriptions 94 Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

95 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 175b South Terminal IDL Reconfiguration Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: To maximise the retail space available and to provide appropriate facilities to improve passenger experience and maximise revenue. New retail space in previous World Duty Free (WDF) space. Requirements Current retail space in South is 1/3 less per passenger than North. Prioritisation of security development impacts South Terminal IDL retail income. Offers and adjacencies in South inconsistent with segmentation. Re-configuration of lower level WDF to accommodate additional retail facilities. Remedy dated look and feel of IDL. Benefits Improved passenger experience Increased income driven by a reconfigured layout. Maximises passenger exposure to offers that are designed with Gatwick passengers in mind. Increased Retail footprint without compromise to passenger service (i.e. seating) Improve circulation space Project Start Date Project End Date Total Capital Expenditure millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position April 2013 April 2014 Q5-0.0m Q m This is a cost estimate which equates to a rough order of magnitude (ROM) estimate, based on the available scope definition at this preliminary conceptual design phase. As such it is subject to change and refinement aligned with a more detailed definition of the scope as options are clarified and prioritised throughout the development process. Potential slight increase in operating costs. It has been agreed that summary business cases will be provided at either Tollgate 4 (Construction Decision) or potentially at Tollgate 3 (Options Decision) for some projects as a method of articulating business case and cost benefit analysis [Joint Steering Group, 7th September, 2011]. At time of going to print this project was not at that stage. Enhances Gatwick s reputation for Departures Lounge product and thus enables the differentiation with other South East and other European airports Basis of decision (options) Linked projects / interdependencies Option evaluation will focus on the location and size of the development as part of the master plan and Constructive Engagement work and the delivery of associated benefits to all airport users. Option evaluation will review all potential build and non-build options. South Terminal Security South Terminal Baggage & Pier 1 Asset lifecycle 20 years

96 Project Descriptions 96 Drawing/Image showing location Current Stage Cost Breakdown Total M % of Total Cost Base Construction / Direct Costs Project Design / On-Costs Risks: Project Risk (R1) Overall Total

97 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 176 Facilities Asset Stewardship Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: A continuing programme of asset replacements / refurbishments across the whole asset base to support Gatwick s service levels. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure A range of investment in passenger facing and core operational infrastructure undertaken in priority order and in conjunction with other developments at Gatwick to ensure that maximum benefit is gained without duplication of efforts. Passenger service assets must be maintained to meet regulatory and service standards. Identified safety and environment risks must be mitigated. Provide fit for purpose facilities which enable consistent delivery of core services, such as the functionality of passenger facing equipment and infrastructure. This will enable Gatwick to meet service expectations, maintain a safe and reliable operation while improving business resilience. Less frequent disruptions Maintain ability of equipment performance Compliance with Publicly Available Specification (PAS) 55. Protect & maintain Service Quality Rebate measures across the airport estate. April 2013 March 2014 Q m millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 It is unlikely that there will be a significant impact on handling agent and airline costs. Airport impacts are expected to be minimal. Where CAPEX is spent in upgrading, improving or replacing existing infrastructure Gatwick may realise OPEX savings. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Gatwick s ability to compete would be compromised without the delivery of a comprehensive Facility Asset Stewardship Programme. The Facility Asset Stewardship Programme will ensure that Gatwick can Protect and enhance our reputation through ensuring availability of critical assets. Portfolio of projects at various development stages. Option evaluation has thus far focused on the location and size of the future developments as part of the master plan and Constructive Engagement work. Various Various Drawing/Image showing location

98 Project Descriptions 98 GAL 177 Commercial Asset Stewardship Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: A continuing programme to sustain airport facilities core to Gatwick s commercial operation. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure A range of investments to enable the continuing provision of commercial space within the airport campus. The product areas that benefit from the Commercial and Property Programme are retail space, CIP space, office space and industrial space. Replacement of Commercial, Property, and Staff Assets as prioritised by condition surveys and compliance requirements. Protect the current and future commercial income from revenue generating assets across the estate. Maintain commercially acceptable building standards across GAL s portfolio, thus protecting commercial propositions to the airlines, passengers and GAL customers including staff and statutory bodies. Environment, Health and Safety compliance. Operational reliability. Avoidance of excessive maintenance costs. Provide fit for purpose facilities that provide high quality commercial and property products in order to attract future Airline growth at Gatwick April 2013 March 2014 Q m millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle Indicative reduced OPEX costs of 0.2m per annum (indicative). Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions Gatwick needs to be able to compete with other airports and local market offers, by ensuring the provision of high quality commercial and property products in order to maintain airline operations, and to give passengers more choice. Portfolio of projects at pre-tollgate zero stage. Option evaluation has thus far focused on the location and size of the future developments as part of the master plan and Constructive Engagement work. Various Various Drawing/Image showing location

99 GATWICK CAPITAL INVESTMENT PROGRAMME GAL 177 Commercial Asset Stewardship Programme Current status within Gatwick project process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Initiate Scope Req ments Options Build Handover Operate Closeout Various projects at various stages TG0 TG1 TG2 TG3 TG4 TG5 TG6 TG7 SCOPE: A continuing programme of asset replacement / refurbishment across the airfield. Requirements Benefits Project Start Date Project End Date Total Capital Expenditure A range of investments in the airfield infrastructure, undertaken in priority order and in conjunction with other developments at Gatwick. The airfield emergency vehicle fleet must meet compliance and response requirements. Electrical systems must be maintained to ensure compliance, and to meet requirements of a high utilization runway. The primary strategic drivers of the Airfield Asset Stewardship Programme are to Deliver the best passenger experience and Maintain a strong Environment, Health and Safety culture. The Airfield Asset Stewardship Programme is to enable delivery of a reliable service from Gatwick s airfield. Provide a fit for purpose facility that enables consistent airport operations. Aerodrome and Environment, Health and Safety Compliance. Avoidance of increased basic maintenance costs. April 2013 March 2014 Q m millions (est.) Likely impact on operating costs Indicative impact on airport charges in Q5 and/or Q6 Impact on Gatwick s competitive position Basis of decision (options) Linked projects / interdependencies Asset lifecycle It is unlikely that there will be a significant impact on handling agent and airline costs. Airport impacts are expected to be minimal. Where CAPEX is upgrading, improving or replacing existing infrastructure Gatwick may realise OPEX savings. Not provided as this is a programme of works with various individual elements that attract different opex, revenue and asset life assumptions The Airfield Programme will ensure that Gatwick can Protect and enhance our reputation through ensuring availability of the airfield. Portfolio of projects at various development stages. Option evaluation has thus far focused on the location and size of the future developments as part of the master plan and Constructive Engagement work. Numerous projects and initiatives, therefore no early stage cost breakdown included. All other Airfield projects including: Pier 5, North Terminal Additional Pier Service, Papa November, Snow Vehicles, ST Baggage & Pier 1, Main Runway Rehabilitation, A380 on Pier and Airfield Peak Capacity Expansion Various Drawing/Image showing location