London City Airport has put a major plan to quadruple the size of its terminal on ice as the coronavirus crisis cripples the aviation industry.
In a serious blow for Government hopes that major infrastructure projects will rally the economy, City Airport is shelving £170 million of expansion work in a move likely to take a heavy toll on jobs.
The Docklands airport, popular with business flyers, called the halt just a day after official data showed the UK in the steepest recession in history.
It had planned to do a significant terminal expansion that would be ready for customers by 2023 and capable of serving 6.5 million passengers a year.
The airport last year served 5.1 million passengers.
Foundations have already been laid for the project which would have created new shops and a departure lounge.
However, airlines and airports have seen customer demand plunge due to lockdowns, travel restrictions, quarantine concerns and worries about Covid.
London City Airport said: “While over the summer there has been a return to flying, the recovery of the UK aviation market has been slower than expected with demand well below normal levels, including at London City.
“Furthermore, it has become clearer that the recovery to previous levels will take longer than initially expected.”
The airport owned by a consortium of investors including AIMCo, OMERS, Ontario Teachers’ Pension Plan and Wren House Infrastructure Management, secured approval for its £500 million development programme in 2016. It is aimed at providing new infrastructure to serve more customers.
Around £330 million of improvements will be complete by the end of the year, including eight new aircraft stands and a new parallel taxiway that will allow more arrivals and departures. But the rest of the scheme, including the terminal, will be paused.
Robert Sinclair, chief executive of London City Airport, said the company is ready to restart work when demand returns.
He said: “The airport and our shareholders remain very confident about the long-term prospects of London City and the vital role we can play in reconnecting London and the British economy as we recover from the shock of Covid-19.”