After a long decision process of whether or not it will be Heathrow or Gatwick airport , the government finally announced it will be the Heathrow which gets the third runway (much to the relief of residents in the Gatwick area).

Such an announcement has got experts speculating as to which stocks could possibly benefit and in truth the names being mooted will have done well whatever the result; namely the airlines, construction companies and retailers.

However, before investors get ahead of themselves, Ian Forrest, investment research analyst at The Share Centre, says it is worth noting that construction is still a long way off as there will be a long consultation period and the development still needs parliamentary approval.

“Therefore there will not be any immediate beneficiaries apart from those involved in the consultation and planning process,” he says.

However, longer term Forest, and a number of other experts predict a number of UK companies could be set to benefit.

The airlines

“The decision to expand Heathrow may benefit airline owners such as International Consolidated Airlines Group (IAG), the owner of British Airways and Iberia,” says Forrest. “If the expansion leads to more long-haul routes, especially to major emerging markets such as China and India, then British Airways could be a winner as it focuses on business travel.”

While British Airways has about 55% of the current traffic at Heathrow, Forrest says investors should note the disruption caused by Heathrow’s expansion may present serious challenges for the airlines in the short-to-medium term. He adds there is a fear that landing fees will be increased to help pay for the development work.

“British Airways and Virgin Atlantic have both noted that landing charges at the London hub were already amongst the highest in the world – warning against a rise in fees to help fund the new runway,” says Garry White, chief investment commentator at Charles Stanley.

“So it is welcome news the airport plans to keep charges for airlines at close to current levels. If charges did expand rapidly, then these airlines would probably look to expand elsewhere. So, over the long term, they should benefit from more slots and routes. But it will be many years before any of these additional flights take off.”

The construction companies

“The obvious winners are construction companies, although it is probably far too soon to say which ones are likely to benefit and by how much,” says Adrian Lowcock, investment director at Architas.

Indeed he adds there is always the risks to the construction companies with big projects that costs tend to over-run and completion deadlines are an issue. “The devil is in the details of the contracts as they can determine a profit or loss for a company,” he says.

White adds that construction companies such as Balfour Beatty and WS Atkins wrote to then-Chancellor George Osborne in February this year urging him to call for expansion at the West London site.

“They are likely to benefit significantly when the multi-billion-pound project starts construction,” he says.

For Forrest, not only is the expansion of Heathrow airport good news for the construction sector, he adds that it supports their view that governments will focus more on infrastructure spending to pump up economies “as it is increasingly evident that monetary stimulus is showing diminishing returns”.

Lowcock agrees. He says: “Looking beyond the third runway, it could be a sign of further infrastructure projects being announced in the future. Infrastructure investing is already appealing to investors as they provide a stable upward only income.”

The retailers

Lowcock says the cost of building the runaway is likely to be passed onto the airlines and possibly the shops within Heathrow, and that these costs could be passed onto customers, meaning they could lose out with higher prices.

However, like the airlines, Lowcock says the shops in Heathrow will likely benefit as a result of the increased traffic when the runaway is built, of which he says AIG has a strong presence.

“John Menzies is a big player in Airline services and has recently completed an acquisition in this space from BBA (ASIG),” he adds. “They provide a range of airline services so will be looking to benefit from increase air traffic.

“In addition there will be a lot of support companies which may benefit from increased traffic to Heathrow.  Hotels, Restaurants and travel companies will all benefit, however given this is a highly competitive and fractured market, the potential benefits and risks of such a long term project will be factored into the share prices of companies long before the benefits are realised.”

With most of WH Smiths sales generated at airport and railway stations, Forrest says increased passenger numbers can only be a good thing for them.

Other opportunities

Outside of these three sectors, Forrest says the catering company Compass could benefit as more flights will equal more meals.

White meanwhile identifies the warehouse-owner Segro as a potential beneficiary.

“Segro has 16% of its properties close to UK airports,” he says. “Although it does not split out which UK airports, the vast majority of these are located around Heathrow. An expansion is likely to increase freight traffic and boost the attractiveness of these properties.”