BA sour on Heathrow plan
British Airways says third runway is likely to mean higher user charges
London Heathrow airport’s £16 billion ($30.8b) expansion plan may have cleared its last major political hurdle, but the project has yet to convince British Airways, the hub’s biggest customer.
After the British Parliament this week backed the construction of a third runway, BA owner IAG responded by saying the financing arrangements proposed by Heathrow are likely to increase user charges and effectively require present-day passengers to fund future flights.
“Parliament has approved Heathrow’s expansion without any idea of how much it will cost,” said IAG chief executive Willie Walsh.
“We have zero confidence in Heathrow management’s ability to deliver this project while keeping airport charges flat.”
After decades of delays, construction should finally begin in 2021, said Heathrow CEO John Holland-Kaye. The new runway is expected to open in 2025, lifting annual capacity to 135 million travellers from 78 million in 2017.
While Heathrow has pledged to keep charges close to today’s level, Walsh predicted “massive cost escalation” for the project. He called on the Civil Aviation Authority to stop Heathrow “rewarding its shareholders to the detriment of the UK.”
IAG has previously appealed to the Department for Transport to cap Heathrow’s charges, while lobbying to create competition within the airport by allowing terminals to be run by third parties. Heathrow says it has already shaved £2.5b from the cost of expansion by switching to a sloping runway over London’s M25 orbital motorway to minimise tunnelling work, and staggering the construction of terminal infrastructure as more flights are added. Transport Secretary Chris Grayling said at the start of the House of Commons debate that all five of London’s main airports will be full by the mid 2030s. Heathrow itself has been operating close to capacity since the start of the decade, though a switch to bigger planes has allowed it to squeeze in more passengers. The parliamentary vote removes the final political hurdle to Heathrow’s growth, three years after a stateappointed commission concluded that the plan offered greater benefits than a second runway at London Gatwick or an entirely new airport in the Thames estuary. Heathrow’s vision still faces further challenges, with London Mayor Sadiq Khan, who had backed expanding Gatwick, saying last week he would join with local councils to seek a judicial review if the parliamentary vote approved the new runway. While that could delay the project, it’s unlikely to block it, since the review mechanism weighs the lawfulness of how a government decision was reached rather than whether it’s right or wrong.
We have zero confidence in Heathrow management’s ability to deliver this project while keeping airport charges flat. Willie Walsh