IAG boss Walsh demands greater scrutiny of Heathrow by CAA

Heathrow should be more closely scrutinised by the aviation regulator if the UK gives the go-ahead to its £14 billion third runway expansion plan.

The call came from Willie Walsh, chief executive of British Airways parent, International Airlines Group.

He accused the Civil Aviation Authority of failing passengers by not demanding greater transparency and efficiency from one of the world’s busiest airports on investments.

Walsh, writing in the Financial Times, said: “For Heathrow’s expansion to succeed, there needs to be a relentless focus on controlling costs. But I have no confidence that the CAA is up to the task.”

Heathrow was already one of the most expensive airports in the world with charges 65% higher than any other major European hub, he said.

The IAG boss said airlines were being “forced to raise fares when they pay too much for the landing fees that mask Heathrow’s inefficiencies”, adding: “There is no benchmarking, no transparency and very little recourse.”

However, he said the CAA’s mandate needed to be changed if Heathrow was to remain globally competitive.

Walsh’s attack on the CAA comes as Heathrow embarks on a ten-week public consultation on Wednesday with its detailed plans for a new runway and terminal.

MPs are due to vote on expansion by the summer.

Walsh said he was “alarmed” at signs that the government “looks set to give its blessing to the £14 billion proposal”.

Yet many airlines have also criticised the failure to expand capacity at Heathrow where BA dominates with 51% of weekly take-off and landing slots.

However, many have also raised the alarm over the potential impact on airport charges, which are determined every five years after taking into account airport investment.

Walsh claimed the fault lay in part with the CAA, which “rewards the inefficient use of capital: the more it spends on capital projects, the cost of which can be passed on to airlines, the more it makes for its shareholders…By not regulating Heathrow firmly enough, the CAA is failing to protect the consumer.”

Heathrow rejected Walsh’s criticisms, saying estimated costs of expansion had already been cut by £2.5 billion after discussions with airlines and other stakeholders, and the government’s challenge to Heathrow was to keep charges “close to today’s levels”.

CAA chief executive Andrew Haines admitted that Heathrow’s expansion posed challenges for the regulator, but said plans were being put in place to ensure the investment did not lead to excessive charges.

The CAA had put forward proposals in December for a new approach to setting airport charges in light of Heathrow’s expansion.

“The CAA has been crystal clear for a number of years that the economic regulation of this expansion cannot be treated as business as usual and, moreover, that Heathrow’s airline customers have a critical role to play in judging the efficiency of the scheme design, procurement and delivery,” he told the newspaper.

*IAG is also reported to be calling for the Heathrow Express to be sold by the airport in a response to the consultation.

The airline group said the introduction of Crossrail would mean infrastructure costs were disproportionately heaped on to Heathrow Express at a time when its revenues were diluted – and would end up in higher landing charges, the Sunday Times reported.

“Consequently, it would be in passengers’ interests for Heathrow to divest Heathrow Express…to a rail operator and to instead focus on its core business of running and expanding an airport,” it said.

Heathrow said: “We are looking forward to the arrival of Crossrail in coming years as part of our plans to treble Heathrow’s rail capacity by 2040 and put the airport at the heart of an integrated transport network.

“Heathrow Express has carried more than 100 million passengers and will continue to play an important role in sustainable transport at Heathrow alongside Crossrail.”

A spokesman for Heathrow Hub, the independent proposal to expand the hub by extending its northern runway, said: “Willie Walsh is right to say the interests of passengers must be protected.

“Until now, the Department for Transport has paid no regard to passengers’ interests, yet it is ultimately they who will pay for the third runway.

“Our proposal is much cheaper, simpler and quicker and both Heathrow itself and Chris Grayling, the secretary of state for Transport, should admit they have made a mistake and adopt it instead.”

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