Heathrow Airport has announced plans to invest £1.3bn in 2026 to upgrade Terminal 4 and construct a new baggage-handling system (BHS) for Terminal 2, following what it described as record growth in 2025.
The airport said the planned works will support its wider strategy to become an “extraordinary airport, fit for the future”, with the investment forming part of its five-year H7 programme, which runs until 2026.
Construction is expected to start next year on a phased refurbishment of Terminal 4, including a new multi-storey car park and an upgraded check-in area.
The scheme is scheduled to complete in 2031, but the project team has not yet been confirmed.
Heathrow also plans to begin work on a new dedicated BHS for Terminal 2, which will be capable of handling 31,000 bags per day.
It said the system will improve operational efficiency and reduce costs associated with misconnected baggage.
Costain is part of the H7 Framework Alliance selected to build the BHS.
The firm completed the design phase of the job earlier this year and has now been chosen to deliver the construction and build phase of the project.
Further upgrades planned for 2026 include the continued rollout of an AI-enabled camera network across Heathrow’s stands, which aims to improve turnaround times in collaboration with airlines and ground handlers.
Full coverage is expected by the end of the year.
Spending on the £1.3bn T4 upgrade will be channelled through Heathrow’s UK supply chain.
Chief executive Thomas Woldbye said the programme would make the hub airport “more user-friendly, more efficient and more resilient”.
The airport’s long-term expansion, including a proposed third runway, remains subject to government and regulatory decisions under the next five-year H8 investment period, which runs from 2027 to 2031.
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Ben Vogel