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.”
Third Heathrow runway is ‘an outrageous vanity project’ says BA boss Willie Walsh
By NICK GOODWAY and NICHOLAS CECIL (Evening Standard)
31 July 2015
British Airways boss Willie Walsh today launched a scathing attack on plans for a third runway at Heathrow, dismissing it as a “vanity” project whose costs would be “outrageous”.
Mr Walsh, chief executive of International Airlines Group which owns BA, also stressed that David Cameron would have to do a “U-turn” on Heathrow expansion, having opposed another runway before the 2010 election.
He added that even if the airport gained another runway it would be lagging behind Dubai as a global hub by the time it is built.
The Airports Commission, chaired by Sir Howard Davies, strongly backed Heathrow expansion earlier this month. But Mr Walsh, highlighting opposition to a bigger Heathrow from Boris Johnson and other Cabinet ministers, told the Standard: “Even if you can get past those political issues the costs associated with building the third runway as proposed by Davies are outrageous.
“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.”
He argued that Heathrow was already one of the most expensive airports in the world and was now “talking about raising costs by 50 per cent to build the extra runway”.
“At the moment this is a vanity project by the management of Heathrow who are driven to build a monument to themselves.”
Aviation industry insiders believe Mr Walsh’s tough words may be the start of negotiations to ensure BA is not landed with a huge bill to fund Heathrow expansion. The commission said the new runway would cost around £16 billion. Up to £5 billion more would be needed for improved road and rail links, including tunnelling part of the M25.
A second runway at Gatwick would be far cheaper, costing between £7 billion and £8 billion. The commission believes both schemes would be funded by private finance.
Heathrow says it would contribute £1 billion towards better transport links, with a further £1 billion of public money needed, rather than a total of £5 billion. Gatwick has said it would meet the costs of improving road and rail access to the Sussex airport.
Mr Walsh’s criticisms were seized on by opponents of a bigger Heathrow.John Stewart, chairman of anti-expansion group HACAN, said: “Willie Walsh is saying that a third 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.”
Gatwick chief executive Stewart Wingate said: “One month on and the Davies Report is unravelling fast.”
But a Heathrow spokesman said: “With low-cost airlines such as easyJet already committing to provide routes from Heathrow, it is clear tha operating costs from the airport will be competitive.”
Meanwhile, Boris Johnson stepped up his attack by claiming a bigger Heathrow would serve fewer domestic routes than currently.
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.”
Flying in the face of the wishes of the vast majority of British business bosses, Mr Walsh said: “There’s a belief that we will be willing to pay. That’s nonsense.”
It is reckoned that a third runway at Heathrow would cost about £22 billion — £17 billion to be financed by Heathrow and its Spanish and other international investor owners, and £5 billion that it has been assumed the government would fund to pay for land access, including reconfiguration of the M25.
Mr Walsh said that Heathrow would try to pass on the cost of that £17 billion to its customers — the airlines, of which BA is by far the most dominant. He calculated that the cost passed on by Heathrow would cause IAG’s bill in air charges for operating at the airport to rise by about 50 per cent to £1.3 billion a year from £800 million to £900 million today — costs that ultimately would be passed on to passengers in higher fares.
“It is excessive,” Mr Walsh said. “The infrastructure would be expensive, inefficient, not fit for purpose. We did not ask for it and we do not want it. I’d be surprised if other airlines were to stand idly by.”
He criticised the report delivered last month by Sir Howard Davies after a 2½-year inquiry into the best option for runway expansion in the southeast. “The funding issue has been glossed over,” he said. “The question that needed to be asked — over how this is going to be funded — has not been asked. It is a huge question. The debate over affordability has not even begun.”
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Airports Commission report shows fewer, not more, links to regional airports by 2030 with 3rd Heathrow runway
The Times reports that analysis by Transport for London (TfL) of the Airports Commission’s final report shows that, with a 3rd runway, Heathrow would only serve 4 domestic destinations by 2030, compared to the 7 is now serves. It would serve only 3 with no new runway by 2030. (The Gatwick figures are 7 domestic destinations by 2030 with a 2nd runway, compared to 10 now). Heathrow has been claiming that its runway will be important for better links to the regions, and improved domestic connectivity by air. The Heathrow runway has been backed by Peter Robinson, the first minister of Northern Ireland, Derek Mackay, the Scottish transport minister, and Louise Ellman, the chairwoman of the transport select committee – on the grounds that it would help the regions. The Commission’s report says: (Page 313) “15.8 ….without specific measures to support domestic connectivity even an expanded Heathrow may accommodate fewer domestic routes in future….” The Commission cannot see effective ways to ensure domestic links are not cut in future, as less profitable than long haul, but they suggest public subsidy by the taxpayer for these routes. This is by using PSO (Public Service Obligations) which could cost £ millions, is a bad use of public money, and may fall foul of EU law.
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.”