British Airways CEO confirms his airline will not pay exorbitant Heathrow fees to build new runway scheme

Alex Cruz, the chief executive of British Airways, (which is part of IAG) said the airline would oppose any move by its main airport, Heathrow, to raise its charges if it gets permission to build a 3rd runway.  Mr Cruz said that although there was an “overwhelming case” for expanding capacity at Heathrow, this should not be at such high cost, and  “Any notion that the cost will be borne by airlines is not acceptable.”  He said that though IAG (BA produced about 75% of IAG’s 2015 profit), would not leave Heathrow altogether if costs were too high, it would look at expanding operations elsewhere.  IAG also has hubs in Dublin and Shannon for Aer Lingus, in Madrid for Iberia, and Barcelona for Vueling – so it has lots of possible options.  IAG does not want to pay in advance for the future runway and terminal, the extravagant design of which it has described as “gold plated.”  Alex Cruz, like IAG boss Willie Walsh, was critical of a 2nd Gatwick runway, saying there was “no business case” for it, and “There is simply not sufficient demand from either customers or airlines….Experience shows that the majority of long-haul airlines that start operations at Gatwick either quit and leave London altogether or go to Heathrow as soon as possible.”  Mr Cruz said that Heathrow’s shareholders should bear the cost of building a 3rd runway from the start. “Heathrow’s investors do pretty well out of its monopoly hub status.”
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British Airways opposed to any expansion-driven hike in Heathrow fees – CEO

October 11, 2016

By REUTERS

The chief executive of British Airways said the airline would oppose any move by its main airport, Heathrow [FERHT.UL], to raise its charges if the London hub is given permission to expand.

The British government will decide on whether to build new airport capacity at London’s Heathrow or Gatwick airports at some point this month, with the country’s busiest airport, Heathrow, in pole position to win the right to grow.

Alex Cruz, the CEO of British Airways, part of International Airlines Group, said that Heathrow should not hike its airport fees to pay for any new runway it builds, echoing comments made by his boss Willie Walsh, the CEO of IAG.

“If we were to get some sort of news that it was going ahead at Heathrow, and Heathrow Airport were to react very quickly saying from Jan. 1 we’re going to add 10 pounds (to airport charges), we wouldn’t react very well,” Cruz told an industry audience on Wednesday.

“We would very much oppose such a move.”

Some of the funding for expansion is expected to come from an increase in the per departing passenger fees Heathrow charges to airlines, meaning airlines and passengers operating over the coming years could have to pay for infrastructure that they won’t be able to use until 2025 at the earliest.

Walsh has previously said that IAG’s airlines will look to expand elsewhere if a bigger Heathrow increases its fees.

Cruz added that British Airways, which accounted for three-quarters of IAG’s 2015 profit, was not going to leave Heathrow but that the carrier wanted any new infrastructure to be done at a low cost as possible and without higher fees.

“What we would really like to do is work with the government and work with Heathrow Airport to really develop it into what it should be,” he said.

http://uk.reuters.com/article/uk-britain-airlines-ba-ceo-idUKKCN12C26P

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Airlines must not foot bill for Heathrow expansion, says BA chief

Leading carrier threatens to divert resources elsewhere if there were immediate price rises
12.10.2016

By Robert Wright, Transport Correspondent

The chief executive of British Airways, Heathrow’s biggest single customer, has launched the airline’s most forthright attack yet on the likely costs of expansion at the airport, threatening to divert resources elsewhere if there were immediate price rises.

Full FT article at

https://www.ft.com/content/4b1b905a-909f-11e6-8df8-d3778b55a923

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See earlier:

 

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.

http://www.airportwatch.org.uk/2016/05/willie-walsh-reiterates-that-he-will-fight-heathrow-runway-due-to-cost-content-with-3-hub-system-for-iag-instead/

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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/

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