Britain gave the go-ahead for a third runway and another terminal at London's congested Heathrow airport as part of a £9 billion expansion, delighting the aviation industry but enraging environmentalists.
Transport Minister Geoff Hoon told Parliament yesterday that Heathrow, the world's busiest international airport, was running at 99 per cent capacity.
"This makes the UK a less attractive place for mobile international business... the airport is critical to this country's long-term economic prosperity," Mr Hoon said yesterday.
The new runway will take about 10 years to build, expand traffic to 600,000 flights a year from 480,000 and create new flightpaths across London.
Heathrow, owned by Spain's Ferrovial, handles 65 million passengers a year. Ferrovial shares ticked higher on the announcement - a rare piece of good news for the operator following an order to sell three of its British airports given earlier this year by country's competition regulator.
Mr Hoon's long-awaited statement came less than a year after Heathrow opened its fifth terminal after much delay due to opposition from campaigners.
"This decision opens the door to Heathrow becoming a truly world class hub airport," said Colin Matthews, Chief Executive of Ferrovial UK arm BAA.
"Meeting the environmental targets will be demanding, but... we are determined to work with the rest of the aviation industry to achieve them," Mr Matthews said. The next phase will be to submit a planning application which will take at least a year to put together, BAA said.
Environmental campaigner Greenpeace, concerned about increased carbon emissions, has bought land on the site of the planned runway and hopes to frustrate the process by dividing it into tiny plots under separate owners.
Heathrow's expansion will force the demolition of a village, Sipson, which has more than 700 homes. "My whole family heritage is going to be wiped out by the third runway," said Jackie Hand, 36, a hairdresser who works in the village. "What can we do when the government takes a decision? We are just a cog in a very big wheel."
Mr Hoon said the government was also setting up a new company to look at the potential for building a high-speed rail link from London to Scotland via a Heathrow hub station.
The opposition Conservatives said last year that if they win the next general election, due by mid-2010, they would scrap any Heathrow expansion and invest in high-speed rail.
"We will cancel these (Heathrow expansion) plans," Conservative transport spokes-man Theresa Villiers told BBC radio earlier.
Business leaders, who have often criticised the airport's congestion, long queues and delays, welcomed the expansion.