Willie Walsh reiterates that he will fight Heathrow runway, due to cost; content with 3 hub system for IAG instead

Willie Walsh has reiterated his determination not to pay the exorbitant costs of a new Heathrow runway (and that’s without the costs that the taxpayer would have to pick up for surface access improvements – which could be £20 billion).  He said the current proposal to build a 3rd Heathrow runway is “indefensible” from a cost point of view and he will fight it.  BA holds over 50% of Heathrow’s slots. Walsh said he was worried about the current Heathrow proposal because there was now “desperation by the airport to get a third runway and they are willing to do anything to get it.”  He commented: “So the airport is incentivised to spend money while I am incentivised to save money.”  Because the coalition government blocked a 3rd runway in 2010, in January 2011 BA and Iberia were merged to form IAG.  Then IAG bought UK airline BMI, to get hold of its Heathrow slots, gaining an extra 42 pairs.  That  ensured IAG  had enough Heathrow slots to secure its ability to compete from its hub base.  Since then Walsh has made his plans to use  a 3 hub strategy – with Madrid and Dublin as its two others, not depending so much on Heathrow.  IAG also owns Iberia, Vueling and Aer Lingus. Dublin will be adding a new runway – probably by 2020.
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IAG’s Walsh: ‘I will fight’ current Heathrow third runway plan

By Karen Walker (Air Transport World)
May 11, 2016

The current proposal to build a third runway at London Heathrow Airport is “indefensible” from a cost point of view and the head of British Airways’ parent company will fight it.

International Airlines Group (IAG) CEO Willie Walsh, speaking as a panelist  on May 11 at the Phoenix Sky Harbor International Aviation Symposium, said he was worried about the current Heathrow proposal because there was now “desperation by the airport to get a third runway and they are willing to do anything to get it.”

Walsh said that has led to a proposal that would cost £18 billion ($26 billion), but just 1% of that would go to building the runway. The rest of the money, he said, would go to all other things at the airport.

“So the airport is incentivized to spend money while I am incentivized to save money,” Walsh said. “I will not support what would be the world’s most expensive runway. I will fight against it and I refuse to pay for it because the cost will be passed on to me and my customers.”

Walsh added, “The proposal that’s on the table now is completely indefensible from a cost point of view.”

Building a third runway at Heathrow was declared the best option for extra runway capacity in the crowded southeast of England after a two-year investigation by a government-backed commission.

Walsh explained that when he first joined British Airways in 2005, the company campaigned for an additional runway at Heathrow, but the new UK government that came into power in 2010 had made denying permission for the third runway a platform of its election campaign.

As a result, IAG acquired UK airline BMI so that it could secure that airline’s Heathrow’s slots and ensure its ability to compete from its hub base.

“Since then, there has been a realization by politicians that there was no magic solution [as an alternative to a third runway] and when they asked me what we were going to do, I said the alternative was to grow somewhere else,” Walsh said.

IAG, which owns Spanish carriers Iberia and Vueling and Irish airline Aer Lingus, operates a three-hub strategy—Heathrow, Dublin and Madrid.

http://m.atwonline.com/airports-routes/iag-s-walsh-i-will-fight-current-heathrow-third-runway-plan

 


“Alternatively, there is a respectable case for deferring this difficult political decision, to see how a very competitive aviation sector copes with the growth of demand for air travel.

“As I have suggested previously, market forces could mean that priority would be given to business travellers at Heathrow, displacing leisure travellers to other airports – such as Stansted – which have plenty of spare capacity.”

David Metz,  honorary professor of Transport Studies at UCL


See also

 

2nd runway at Dublin airport threatens Heathrow’s position as main IAG hub

Heathrow may face more competition for hub traffic from Dublin, if there is a 2nd runway in 2020 – and airlines prefer using Dublin rather than Heathrow.  This might mean Heathrow being partly sidelined.  In May 2015 Aer Lingus, the Irish flag carrier, was bought by IAG (International Airlines Group) – which owns British Airways.  As part of IAG’s takeover there was the benefit of new routes and more long-haul flights from Dublin, where Aer Lingus is one of the two main airline customers, along with Ryanair. Willie Walsh, IAG’s CEO, said in 2015 that owning Aer Lingus would allow IAG “to develop our network using Dublin as a hub between the UK, continental Europe and North America, generating additional financial value for our shareholders”. Willie Walsh believed that buying Aer Lingus was a wise move, as it was “inevitable” that Dublin would get a 2nd runway in the next few years.  IAG believes that it can expand the group’s flights via Dublin or Madrid – especially if there is no new runway at Heathrow.  It could have the impact of removing business from Heathrow – British Airways is the largest airline there with around 50% of the slots.   

http://www.airportwatch.org.uk/2016/04/2nd-runway-at-dublin-airport-threatens-heathrows-position-as-main-iag-hub/