Willie Walsh threatens to move BA to develop base in Dublin or Madrid to avoid paying for “gold plated” runway plans
Willie Walsh, CEO of British Airways’ parent company, IAG, has said BA might give up on Heathrow and move overseas, if Heathrow got a new “gold plated” runway and doubled its charges to airlines. He said BA could “develop our business” in Dublin or Madrid rather than pay for the expansion of Heathrow. The current landing charge of about £40 for a return trip would increase to at least £80 with the runway. That might deter passengers. “We won’t pay for it and we most certainly won’t pre-fund the construction of any new infrastructure.” Mr Walsh said that the £17.6 billion plan to expand Heathrow represented an attempt by a “monopoly airport” to build “gold-plated facilities and fleece its airlines and their customers”. Only about 1% of the estimated cost is for the runway itself. He indicated that Heathrow remained his preferred option for a runway, but not if it cost of £17.6 billion.” …“Heathrow is not IAG’s only hub. We can develop our business via Madrid, which has spare capacity, and Dublin, where there are plans for a cost-effective and efficient second runway.” Patrick McLoughlin, the transport secretary, was studiously neutral, saying that Gatwick and Heathrow both remained runway options. Mr Walsh also opposes a runway at Gatwick, as “no one would move there while Heathrow remains open.”
Heathrow expansion: British Airways threatens to move out of UK
By Kedar Grandhi (IBT – International Business Times)
December 11, 2015
British Airways could move its operations to Dublin or Madrid if the government decides to go ahead with its airport expansion plan
British Airways has threatened to end its operations at Heathrow if the government decides to go ahead with its proposed expansion plan, which includes adding a third runway. It would move its operations to Dublin or Madrid, the carrier’s parent company International Airlines Group (IAG) has warned.
Shortly after the government announced a further six-month delay on the decision to expand the airport, British Airways (BA) released a statement by IAG chief executive Willie Walsh who explained that the £17.6bn (€24.4bn, $26.7bn) plan to expand Heathrow would lead to an increase in charges for passengers flying in and out of UK’s busiest airport. If the plan is is implemented, passengers will end up paying double the approximate £40 they currently pay for a return trip.
The scale of airport charges will “turn Heathrow into a white elephant” and force passengers out of this airport, he said. A new runway would cost only about 1% of the entire budget, but these costs were being inflated by including a new terminal, an underground train link and an £800m car park into the proposed plan, Walsh added.
“We won’t pay for it and we most certainly won’t pre-fund the construction of any new infrastructure. Why should IAG’s customers pay today for tomorrow’s customers? Some people may say that we have no other option. Actually we do.
“Heathrow is not IAG’s only hub. We can develop our business via Madrid, which has spare capacity, and Dublin, where there are plans for a cost-effective and efficient second runway,” the chief executive said.
Response by Heathrow
The West London airport has assured that passenger charges will not double as stated by Walsh and would probably increase only by around 20%. A spokesman said that the expansion of this airport was critical to the British economy’s future and was the only way to connect the entire nation with global growth.
“The airports commission has confirmed that expansion can be financed and, with low-cost airlines such as easyJet already committing to provide routes from Heathrow, it is clear that operating costs from the airport will be competitive,” the spokesperson said.
Willie Walsh said that BA could “develop our business” in Dublin or Madrid instead of Heathrow
By Graeme Paton and Francis Elliott (The Times)
December 11 2015
The owner of British Airways has threatened to give up on Heathrow and move overseas after warning that passenger charges will double to pay for a “gold-plated” third runway.
Addressing the Aviation Club in London yesterday, Mr Walsh said that only £182 million — about 1 per cent of the construction cost — was for the runway itself. He added that costs were being inflated by the addition of a new terminal, a 6.5km Underground train link and an £800 million car park.
Mr Walsh said that the scale of airport charges would “turn Heathrow into a white elephant” that large numbers of airlines would refuse to use.
Full Times article (£) at
Willie Walsh tells AOA conference Heathrow’s runway is too expensive, and at that price, would fail
The Airport Operators Association is holding a two day conference on the runway issue, and Willie Walsh (CEO of IAG) was its key speaker. He said Heathrow should not get a 3rd runway, if the Airport Commission’s calculation of the cost of building it is correct. He said: “The Commission got its figures wrong – they are over-inflated. If that is the cost [of a new runway], it won’t be a successful project.” He described the assumption that airlines would pay for the new runway through increases in fares as “outrageous”. British Airways is by far the biggest airline at Heathrow, with 55% of the slots. He said of the Commission’s report: ” .. I have concerns about the level of cost associated with the main recommendation and the expectation that the industry can afford to pay for Heathrow’s expansion.” He does not believe the cost is justified, and “If the cost of using an expanded airport significantly exceeds the costs of competitor airports, people won’t use it.” It was not realistic for airlines: “You have to see it in terms of return on capital. ….Either the figures are inflated or you are building inefficient infrastructure. I do not endorse the findings. I definitely don’t support the costs of building a runway. If those costs are real, we should not build it.” On the cost of £8 billion to build a 6th terminal he commented: “How many chandeliers can you have in an airport terminal?
Other things Willie Walsh has said recently:
British Airways, in evidence to Transport Cttee, says that Heathrow runway is “unfinanceable” and a “white elephant”
British Airways has made its strongest attack yet on plans for a new Heathrow runway, saying its proposals are “unfinanceable” and a “white elephant”. The comments are in written evidence to the Commons Transport Select Cttee, dated 12th October, in its submission to its inquiry into surface access on October 27th. BA repeats its view that the cost of transport infrastructure for the runway scheme should not be funded by airlines and their customers. BA is the biggest airline (51%) at Heathrow. It says – dangerously – that because of the alleged “up to £147 billion” of benefits of a runway to the UK, new road and rail link for the airport should, like standalone transport schemes like M4 widening, be paid for by taxpayers. [That “ up to £147 billion” benefit figure is highly dubious, and the Airports Commission’s own expert economic advisors, Mackie and Pearce, warned that it includes double counting and should be treated with caution.] While avoiding any specific opposition in principle to expanding Heathrow, BA is not willing to pay – but it says the runway plan is is unaffordable and unfinanceable, and called into question the economic benefits. There has been speculation if Willie Walsh is just “browbeating aimed at cowing the CAA into lower charges” rather than stopping a Heathrow runway.
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.”
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.” The runway decision would be a political one, and with a coalition government looking to be inevitable, there would be huge political difficulties in pushing through an unpopular runway, with dubious benefits even to the airlines.
Willie Walsh says there is no business case for a 2nd Gatwick runway – BA has Gatwick’s 2nd largest number of passengers
Willie Walsh, the head of IAG, will not support a 2nd Gatwick runway, even if it is chosen by the Airports Commission or backed by the next government. He does not believe there is a business case to support its expansion, and there is insufficient demand from airlines for extra capacity at Gatwick. Mr Walsh campaigned heavily for a 3rd Heathrow runway before 2010, but has made frequent comments indicating he does not believe UK politicians will have the “courage” to build that. Willie Walsh says British Airways would resist higher landing charges, which would be necessary to fund a runway – either at Heathrow or Gatwick. (EasyJet has also said in the past they don’t want a new runway, if it means substantially higher charges – their model is low cost). BA would want lower costs, not higher costs, from a new runway. IAG’s shares have now risen as it has now made a profit at last, and will be paying its first dividend (and maybe some UK tax). Gatwick’s main airline is EasyJet with around 37% of passengers, and British Airways 2nd largest at around 14%.