BA chief, Willie Walsh, threatens to reduce Gatwick flights if it got a 2nd runway
The boss of International Airlines Group ( IAG), which owns British Airways, has threatened to reduce its flights at Gatwick if the airport is given permission to expand with another runway. Willie Walsh warned that the cost of building a second runway at would result in charges that are too high. He said: “We struggle to see any business case for the expansion of Gatwick and will consider our position at the airport if the Government backs expansion there, principally because the cost of that expansion when translated into airport charges would likely wipe out the profit we make.” He claimed Chancellor George Osborne and the Treasury are “clearly excited about a large infrastructure project that requires no Government spending”, but urged them to consider the options “as if it was funding the project”. He added: “If there is expensive, inefficient airport expansion at Gatwick or Heathrow, then we will expand through other airports and hubs.” Willie Walsh has repeatedly said he is not prepared to pay very high landing charges at an expanded Heathrow, and would instead move his IAG planes to Dublin and Madrid instead.
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BA chief threatens to reduce Gatwick flights over expansion plans
Thursday 23 June 2016
(Crawley & Horley Observer)
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The boss of the firm which owns British Airways has threatened to reduce its flights at Gatwick if the airport is given permission to expand.
Willie Walsh, chief executive of International Airlines Group, warned that the cost of building a second runway at the West Sussex airport would result in charges that are too high.
He said: “We struggle to see any business case for the expansion of Gatwick and will consider our position at the airport if the Government backs expansion there, principally because the cost of that expansion when translated into airport charges would likely wipe out the profit we make.”
The Government has said it is still considering giving the go ahead for the £9.3 billion project at Gatwick or to expand Heathrow. [That was before the referendum].
…….. and it continues on Heathrow ….
He claimed Chancellor George Osborne and the Treasury are “clearly excited about a large infrastructure project that requires no Government spending”, but urged them to consider the options “as if it was funding the project”.
He added: “If there is expensive, inefficient airport expansion at Gatwick or Heathrow, then we will expand through other airports and hubs.”
….. and it continues …..
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“Mr Walsh also warned that IAG might abandon Gatwick if the Sussex airport is awarded a new runway: “We struggle to see any business case for the expansion of Gatwick and will consider our position at the airport if the Government backs expansion there, principally because the cost of that expansion when translated into airport charges would likely wipe out the profit we make.” ”
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Earlier:
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?
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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.