Heathrow and BA's owner IAG in new spat over passenger charges

5 February 2018, 16:43

The owners of Heathrow Airport and British Airways have clashed after the latter called for the former's "monopoly" to be broken up.

International Airlines Group (IAG), which apart from BA also owns carriers Iberian and Aer Lingus, said other operators should be allowed to design, build and run commercial facilities like terminals at the airport.

Its demand comes ahead of an appearance by John Holland-Kaye, Heathrow's chief executive, before the Commons Transport Select Committee and ahead of a vote by MPs, expected this summer, on whether the airport should be allowed to expand with a third runway.

Airlines like BA - which accounts for 54% of all flights at Heathrow - are concerned that the cost of this expansion will be passed on to them and their passengers by Heathrow.

Willie Walsh, chief executive of IAG, said opening up competition would lead to better facilities being built at a more competitive price and would keep a lid on take-off and landing charges.

He told Sky News: "We can show models of where an alternative supplier does work and can be very effective in terms of introducing competition which will keep prices under control."

He cited Terminal 7 at New York's JFK airport, which AIG leases from the city's Port Authority and runs, as an example.

He said Munich Airport, which partnered with German flag carrier Lufthansa to build and open a new terminal, was another, as was Frankfurt Airport, in which Lufthansa is a shareholder.

Responding, Heathrow said JFK was "not a passenger experience" to be replicated at Heathrow while, at Munich and Frankfurt airports, "only one airline dominates".

Mr Holland-Kaye added: "This is a blatant attempt by Mr Walsh to maintain a dominant monopoly for BA at Heathrow and to frustrate the increased airline competition that should result from expansion."

Mr Walsh hit back: "There are 86 airlines operating at Heathrow. There is one Heathrow Airport. One supplier. Four terminals. One operator. What we want to do is introduce competition at the airport. Heathrow has the monopoly. British Airways does not.

"We're not afraid of competition, we face it every day, and we believe that Heathrow - if they are serious about keeping prices in check - should embrace this idea.

"We don't believe that Heathrow is capable of keeping their costs under control. The best way to do that is for Heathrow to face competition like everyone else."

Mr Walsh, who stressed BA was not necessarily looking to build and operate a new terminal at Heathrow itself, is expected to appear before the Transport Select Committee in coming weeks to press his case.

One likely candidate to build and run a new terminal at Heathrow is likely to be Surinder Arora, the hotels magnate, whose Arora Group already operates a number of hotels at Heathrow and Gatwick airports.

He has already tabled proposals to build the new runway at the airport and argues it can be built more cheaply than the £14bn Heathrow says it would cost.

Mr Arora today said he welcomed Mr Walsh's comments.

He went on: "The costs of expansion proposed by Heathrow Airport Limited are too expensive and threaten to make the entire project undeliverable if these costs lead to airline and, in turn, passenger charges making the airport unable to compete internationally."

Any decision to introduce more competition at Heathrow will ultimately reside with the Civil Aviation Authority, the regulator, which Mr Walsh has previously accused of letting down airline passengers.