EasyJet’s Carolyn McCall says it is “unfair” for airlines to have to pre-fund airport expansion – wants someone else to pay
Carolyn McCall, CEO of easyJet, has claimed it is “very unfair” to expect airlines to fund runway building and airport expansion before the work takes place. She said “quite a big negotiation” will have to take place, whether (if) Heathrow or Gatwick is chosen. The cost of the expansion at Heathrow would be about £18.6 billion; Heathrow Hub at £13.5 billion, or Gatwick at 9.3 billion. Ms McCall has a main base at Gatwick, but backs a runway at Heathrow, expecting easyJet could make more money there. Willie Walsh of IAG has often said that the cost of Heathrow expansion is “outrageous” and insisted “we wouldn’t be prepared to pay for or to support the development”. Carolyn McCall said the issue of pre-funding is a massive issue for airlines – and therefore for airline passengers – as it would mean more expensive air fares for perhaps up to 10 years before the runway was completed. She claimed it was “a very unfair way of funding infrastructure development which is to the benefit of the country.”… “There are lots of negotiations to be had between Heathrow and airlines, including us, as to how we would operate at Heathrow and at what cost and with what infrastructure.” She wants a runway.[But she wants someone else to pay for it, so flying for leisure can become even cheaper.]
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EasyJet boss criticises South East air expansion ‘pre-funding’
The boss of easyJet has claimed it is “very unfair” to expect airlines to fund airport expansion in the South East in advance of the work taking place.
Press Association
1 February 2016
The boss of easyJet has claimed it is “very unfair” to expect airlines to fund airport expansion in the South East in advance of the work taking place.
Carolyn McCall, chief executive of the no-frills airline, insisted that “quite a big negotiation” will have to take place whether Heathrow or Gatwick is chosen.
The Davies Commission recommend last July that a third runway should be built at Heathrow, at a cost of £18.6 billion.
But ministers have postponed a final decision pending new analysis of the environmental impacts.
Other shortlisted options are extension of the existing northern runway at Heathrow – costing £13.5 billion – or building a second runway at Gatwick, which would cost £9.3 billion.
Willie Walsh, chief executive of British Airways’ parent company IAG, has previously described the cost of Heathrow expansion as “outrageous” and insisted “we wouldn’t be prepared to pay for or to support the development”.
Ms McCall – who is backing a third runway at Heathrow despite having an existing base at Gatwick – echoed his comments.
Speaking at Italy’s Venice Marco Polo airport, where the airline launched its latest base, she told the Press Association: “There’s quite a big negotiation to be had between airlines and Heathrow before people assume how they’re going to be pre-funding.
“Wherever it’s built, pre-funding is a massive issue for airlines – and therefore for airline passengers – regardless of the airport. Heathrow and Gatwick are in the same boat on that.
“I completely understand BA’s point of view at Heathrow because we would have the same point of view at Gatwick, which is pre-funding doesn’t work.
“Basically you’re getting airlines to pay for your infrastructure development before anything is delivered and it can take you 10 years for it to be delivered.
“It’s a very unfair way of funding infrastructure development which is to the benefit of the country.”
She added: “There are lots of negotiations to be had between Heathrow and airlines, including us, as to how we would operate at Heathrow and at what cost and with what infrastructure.”
Ms McCall also expressed her frustration that a final decision over where expansion should take place was delayed in December. [So she definitely wants a new runway. She just doesn’t want to have to pay for it.]
She said the UK’s attitude to airport capacity is “frustrating” by comparison to the rest of Europe. [Meaning the state pays for runways elsewhere?]
“It’s not good for aviation because we’ve been waiting for a very long time for this decision,” she explained.
“Davies came out with a very clear-cut recommendation, and I think by delaying it’s got everybody going: ‘What’s that about, what does this mean?’. [She presumably has not read the comments by Andrew Tyrie on the inadequacy of the economics in the Airports Commission’s report. Link ].
“So it’s more uncertainty and I think it’s frustrating when you go to Europe and you see how clear their visions are about their primary airports.
“There’s none of this (uncertainty). They drive capacity and expansion. They do it with all the stakeholders. The key players are very aligned and it really works for them. It works for their economies and it works for the aviation industry.” [Meaning what exactly? Someone else pays? Who?]
Meanwhile Andrew Tyrie, chairman of the influential Commons Treasury select committee, has written to Chancellor George Osborne calling for more details of the calculations which led to the Davies Commission recommending Heathrow.
He said the Commission’s case was “opaque in a number of important respects” and that “a good deal more information is required” if the Government’s decision is to be properly scrutinised.
A Department for Transport spokesman said the Commission had provided “exhaustive detail”. [Actually, it did not provide exhaustive detail – there are a lot of omissions].
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See earlier:
Gatwick’s main airline, easyJet, questions Gatwick case for 2nd runway and does not want to pay higher landing charges
Carolyn McCall, CEO of EasyJet, the largest airline at Gatwick, has said passengers want expansion at Heathrow, not at Gatwick. Ms McCall said easyJet is “quite concerned” at the prospect that Gatwick’s landing charges would rise to pay for a 2nd runway. They are having confidential talks with the airports on future charges. EasyJet makes on average £8 profit per seat. If Gatwick’s charges doubled from the current £9 to an average of £15 to £18 (or even up to £23) as predicted by the Airports Commission, this would hit EasyJet’s economics. Ms McCAll said: “This whole issue of capacity should be about where the demand is. Airlines have to want to go into that airport, and the congestion we have is predominantly around the Heathrow hub. Passengers need to really value what this infrastructure brings, and if they don’t see any benefit it’s going to struggle.” A new runway risked emulating unpopular toll roads. “It will be years and years before [passengers] see any positive effect.” As one of the UK’s largest and fastest growing airlines, EasyJet’s opinion will need to be given careful consideration by the Commission.
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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%.
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EasyJet says it would fly from Heathrow, “if it was right for us” debunking Gatwick’s Heathrow myth
Gatwick airport, in its bid to try to persuade the powers-that-be of its suitability as the site of a new runway, has often said that the low cost airlines would not fly from Heathrow. However, easyJet has now said that it would consider flying from an expanded Heathrow. Carolyn McCall, the chief executive of easyJet, said it would look at flying from Heathrow in future “if it was right for us”, and it if wasn’t too expensive. Gatwick claims that the increase in demand for air travel will be for short haul flights, mainly to Europe or countries adjacent to Europe. Heathrow claims the demand for air travel in future will be long haul. According to Gatwick’s chief executive, Stewart Wingate, Heathrow is inaccessible for low-cost airlines and charter carriers due to its high landing charges. But Ms McCall points out that easyJet already flies to and from other hub airports in Europe, such as Schiphol, Rome Fiumicino and Paris Charles de Gaulle. Though Heathrow has high landing charges, so do the other European hub airports. Ms McCall made her comments shortly after easyJet announced a 7-year pricing deal with Gatwick and revealed it is in discussions to take over the airport’s north terminal, potentially forcing out British Airways. It made no mention of a 2nd Gatwick runway.
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