British Airways-owner CEO, Willie Walsh, opposes new Heathrow runway as too expensive to airlines

British Airways-owner IAG does not support the building of a 3rd Heathrow runway, its chief executive said, because the costs of the project does not make sense for the airline. Willie Walsh said: “We think the costs associated with the third runway are outrageous and certainly from an IAG point of view we will not be supporting it and we will not be paying for it.  …We’re not going to support something that increases our costs.” British Airways is the biggest airline at Heathrow [it has around 50% of the slots]. An expanded Heathrow with a new runway would be partly paid for by higher charges to airlines. In May this year he had said “the cost of all three [runway] options are excessive and would translate into an unacceptable increase in charges at the airports.”  Not to mention the problems of politics and unacceptability to the public.   The Airports Commission’s final report says, with a new runway at Heathrow, “The resulting impact on passenger aeronautical charges across the Commission’s four demand scenarios for Heathrow is an increase from c. £20 per passenger to a weighted average charge of c. £28-30 per passenger and a potential peak of up to c. £31.”
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British Airways-owner CEO opposes new Heathrow runway as too expensive

June 8, 2015 (REUTERS)
by JOE SKIPPER

British Airways-owner IAG (ICAG.L) does not support the building of a new runway at London’s Heathrow Airport, its chief executive said, because the costs of the project does not make sense for the airline.

“We think the costs associated with the third runway are outrageous and certainly from an IAG point of view we will not be supporting it and we will not be paying for it,” IAG chief executive Willie Walsh told reporters on a call on Friday.

British Airways is the biggest airline at Heathrow. The airport is operating at full capacity and wants to build a third runway but faces significant political challenges to do so.

An expanded airport would be partly paid for by higher charges to airlines.

“We’re not going to support something that increases our costs,” Walsh added.

(Reporting by Sarah Young, Editing by Paul Sandle)

http://uk.reuters.com/article/2015/07/31/uk-iag-heathrow-airport-idUKKCN0Q50MI20150731

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From the Times: 

1.8.2015

The owner of British Airways has promised to do everything in its power to prevent a third runway being built at Heathrow.

Indicating that International Airlines Group is prepared to go to the courts to prevent the expansion of Heathrow, Willie Walsh, its chief executive, said: “We will challenge it by any and every avenue open to us. We are not prepared to pay for it.”

… Full article at http://www.thetimes.co.uk/tto/business/industries/transport/article4514344.ece


 

Also:  (from the Guardian article )

“The questions that need to be asked haven’t been addressed,” said Walsh. “If it does receive political support, it still has a big challenge to be addressed in terms of financing.

“This issue of financing was glossed over and was put in there as if it was a done deal … The debate hasn’t really started yet.”

Walsh said IAG currently pays Heathrow around £800m to £900m annually and would not countenance higher charges that would raise that bill by 50%.

He said that if he was the chief executive of Heathrow, where BA alone now has 51% of the landing slots and the enlarged IAG will soon have 56%: “I’d be concerned about my ability to finance this project.”

…..Walsh labelled Gatwick as confused, adding: “They seem to think that some pot of money could fund a runway at either Heathrow or Gatwick. I’ve made clear that I see no business case for Gatwick … the case that they’ve put forward doesn’t stand up to any level of scrutiny.”

……… and it continues

http://www.theguardian.com/environment/2015/jul/31/heathrow-third-runway-unjustifiable-says-ba-parent-company-boss


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See also:

Gulliver in the Economist  “BA’s big bluff on a third runway at Heathrow”
http://www.economist.com/blogs/gulliver/2015/08/airport-expansion-london

It appears from the records of who the Airports Commission had meetings with that they only met IAG once.  (They met Virgin once, Emirates once, and EasyJet 4 times).

Airports Commission lists of meetings with stakeholders https://www.gov.uk/government/publications/airports-commission-meetings-with-stakeholders

Meetings:

29.4.2013 IAG. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/204223/airport-commission-meetings-visits-0912-0413.csv/preview

2.2.2015 EasyJet https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/446312/commission-meetings-dec14-july15.xls

10.11.2014 EasyJet https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/390004/airport-commission-meetings-visits-0614-1114.xls

23.5.2014 EasyJet https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323186/airport-commission-meetings-visits-0114-0514.csv/preview

14.6.2013 EasyJet https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/244219/airport-commission-meetings-visits-may-to-september-2013.csv/preview

1.7.2013 Emirates https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/244219/airport-commission-meetings-visits-may-to-september-2013.csv/preview

15.7.2013 Virgin https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/244219/airport-commission-meetings-visits-may-to-september-2013.csv/preview


 

See also:

Willie Walsh says Heathrow 3rd runway is a “vanity project” with outrageous costs

British Airways boss Willie Walsh has said that the costs of Heathrow’s plans for a 3rd runway would be “outrageous”. He said: “At the moment this is a vanity project by the management of Heathrow who are driven to build a monument to themselves.” Walsh said that even if Heathrow gained another runway it would be lagging behind Dubai as a global hub by the time it is built. “It is based on inefficient infrastructure which is not fit for purpose. Airlines and consumers are looking for lower costs when it comes to flying but airports only seem to be looking at higher costs.” Heathrow was already one of the most expensive airports in the world and was now “talking about raising costs by 50% to build the extra runway”. His criticism may be the start of negotiations to ensure BA is not landed with a huge bill to fund Heathrow expansion. John Stewart, chairman of HACAN, said: “Willie Walsh is saying that a 3rd runway won’t deliver benefits for the aviation industry that are worth paying for. This could turn out to be curtains for the third runway unless this is no more than clever negotiating tactics by one of the sharpest operators in the business.”

Click here to view full story…

Earlier Willie Walsh had said:

BA’s CEO, Willie Walsh, says post-election indecision will block building of any new south east runway

Willie Walsh, CEO of IAG, the parent company of British Airways, has again said that there will not be a new south east runway. He has often said this before, but this time he sees the likelihood of political indecision after the election as an additional issue. Willie Walsh thinks  that to build a runway, there would need to be “political consensus across all the parties – not just coalition partners.”  He also warned that the cost of each of the 3 runway proposals would all be prohibitive.  The expense would lead to higher landing costs, and airlines would not find that acceptable.  Willie Walsh reiterated his view that there was “no business case” for a 2nd Gatwick runway,  with not enough demand from airlines for it.   He has said in the past that Gatwick does not have the same international attraction as Heathrow.  He commented that Heathrow was already “the most expensive airport around.”  There would be huge political difficulties in pushing through an unpopular runway, with dubious benefits even to the airlines.

http://www.airportwatch.org.uk/2015/05/bas-ceo-willie-walsh-says-post-election-indecision-will-block-building-of-any-new-south-east-runway/

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And in 2014:

By  (Guardian)

Heathrow expansion is a “lost cause”, according to the airport’s largest airline, despite a cross-party pledge to make a quick decision on new runways in the next parliament.

Willie Walsh, chief executive of International Airlines Group, the owner of British Airways, said Britain’s political class lacks the character required to push through a policy as controversial as a third Heathrow runway.

“Historically, politicians have not been brave enough and I don’t think they will be brave enough going forward. You need a big shift in the politics of the country,” he said. However, Walsh warned a Conservative or Labour-led government against choosing Gatwick for an extra runway, adding that the case for growing the capital’s second-largest airport is “significantly weaker.”

He said: “The airport does have capacity. You could make a case to build a second runway. The case is significantly weaker – and I don’t care what scale you want to use – than the case you can make to expand Heathrow.” He added that Gatwick did not have the same international attraction. “You won’t find many airlines that say ‘God I’d love to be able to fly to Gatwick’. That’s why this isn’t a business issue, an economic argument. It’s a political argument and the politics of expanding Heathrow are significantly more difficult than the politics of expanding Gatwick.”

http://www.theguardian.com/environment/2014/oct/02/british-airways-heathrow-third-runway-lost-cause-willie-walsh

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Willie Walsh still wants 3rd runway – but “Heathrow is always going to be a 2-runway airport”

Interview in the Independent on Sunday with Willie Walsh. He wants a 3rd Heathrow runway, though he unwillingly accepts it will not happen. He says he stopped campaigning when “the Conservatives said they were not going to support it.” … “I accept it…. I’ve not done anything since.” Now, he says, there is “not sufficient political will – it’s seen as too risky to support a 3rd Heathrow runway. Even Labour, which did back the idea when in government, has changed. “Ed Miliband was the only member of the Labour Cabinet against the 3rd runway. Now he’s the leader”…. “It’s highly unlikely we will see a 3rd runway. Heathrow is always going to be a 2-runway airport.”  We can, Walsh says, dismiss Boris Island for a start. “There’s no support for Boris island other than from Boris.” As for Sir Howard, it does not matter what he concludes, because “whatever he does will be handed over to politicians, none of whom are bound by his recommendations”.  So with no new runways we just reach south east airport capacity and UK aviation stops growing? Yes, says Walsh.

http://www.airportwatch.org.uk/2014/05/willie-walsh-still-wants-3rd-runway-but-heathrow-is-always-going-to-be-a-2-runway-airport/

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Landing charges now and with a new runway:

The Airports Commission’s final report says:

Page 108 of

Business Case and Sustainability Assessment – Heathrow Airport Northwest Runway

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/440315/business-case-and-sustainability-assessment.pdf

Commercial Viability

4.25

The costs of the scheme, the ongoing costs of the airport and the financing required to support this (discussed in the next section) are met through a combination of aero and non-aero revenues. For a given demand scenario, the aero revenue can be used to determine the average per passenger charge that would be needed to meet the financing requirements. The resulting impact on passenger aeronautical charges across the Commission’s four demand scenarios for Heathrow is an increase from c. £20 per passenger to a weighted average charge of c. £28-30 per passenger and a potential peak of up to c. £31 as summarised in the table below.[ See P 108 for the table].

 

 


 

AEF says: “At Gatwick, passengers could be expected to pay an average of £15-18 for landing fees compared to £8 today.  link


 

Information on Heathrow’s charges:

http://www.heathrow.com/file_source/Company/Static/PDF/Partnersandsuppliers/HAL-Conditions-of-Use-Amendment-SCHEDULE5-Up_date-25April2014.pdf

 

 

Among many other charges, per plane for noise, emissions etc there are:

“2. Departing Passenger Charges

2.1 The charge per departing Passenger (other than Transfer Passengers or Transit Passengers) is:

European Destinations £31.63

Other Destinations £44.41

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2.2 The charge per departing Transfer Passenger or Transit Passenger is:

European Destinations £23.72

Other Destinations £33.31

See clause 17.1 for the meaning of European Destinations. Destinations not designated as European Destinations will be subject to the Other Destinations charge.”

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