The chairman of Heathrow has hit back against airlines complaining about a proposed hike in fees by the London hub.
Lord Deighton defended Heathrow’s plan to invest £4 billion into passenger service, adding: “We will deliver what passengers want for the equivalent of less than a 2% increase in average ticket prices.
“A higher airport charge would deliver clear benefits for passengers but reduce airline profit margins slightly, and that is why they are arguing against it.
“The CAA [Civil Aviation Authority] will decide what is best from passengers, while ensuring Heathrow has the minimum cashflow required to deliver it.”
He insisted the transformation of the airport from being a “national embarrassment” when its private shareholders took over in 2006 had created a key driver to the UK’s prosperity.
Writing in The Telegraph today, he rounded on criticism levelled at Heathrow by British Airways owner IAG, Virgin Atlantic and Iata.
Heathrow came under fire from the trio last week for a proposed increased cap on passenger and airline charges from this summer which could see the hub rake in as much as £5 billion for its foreign shareholders by 2026.
“It is disappointing that in the airlines’ appeal to the CAA they did not mention passenger service and Heathrow’s financeability, the issues on which the CAA will base its decision,” Lord Deighton said.
“It is only through investment from our shareholders and the stability of the CAA’s regulation that Heathrow has been transformed into a world-class airport that Britain can be proud of,” he argued.
This has been achieved without a penny of taxpayer money, Lord Deighton insisted.
“It has been a hard road for the investors who have made this possible – shareholder returns have been negative in real terms since 2006 and most years we have not been able to pay dividends,” he pointed out.
At the same time airlines have grown profitable route networks, with six of the ten most valuable routes in the world starting from Heathrow. More than 30 airlines are also keen to start operating from the airport if there were spare slots.
“The best way to promote ‘global Britain’ is to deliver a great service to passengers and to expand the UK’s hub airport as soon as possible,” Lord Deighton added. “No surprise that some of these same airlines are against this too because more capacity means more competition, putting downward pressure on ticket prices they charge.
“Unlike airlines, Heathrow’s prices are set by the CAA – which means our profits are capped in the good times, though are losses are unlimited in the bad times.
“While Heathrow’s prices are controlled by the CAA, unregulated airlines have been able to benefit from the capacity constraints at the airport to generate £25 billion in extra air fares since 2012,” he claimed.
“The reality is that Heathrow delivers tremendous value for airlines which is why both IAG and Virgin have staked their future growth on it.”