Image credit: Steve Dunlop
Proposals to increase landing charges at Heathrow by 6% above the rate of inflation have been condemned by International Airlines Group chief executive Willie Walsh.
He warned that subsidiary British Airways would have little flexibility to move flights to Gatwick if the increases were agreed at Heathrow.
Walsh said that the proposals by Heathrow Airport Holdings would be damaging for passengers and would only serve the interests of shareholders in the airport.
Heathrow submitted the application for the increase in landing charges as part of the regulatory review currently being undertaken by the Civil Aviation Authority.
“The last regulatory review awarded Heathrow ridiculous price increases – RPI +7.5% per annum at a time when the airline industry was going through significant change and cost reduction and cost control,” Walsh told the Sunday Telegraph.
“This time round we are looking to the CAA to stand up and fulfil their obligations.”
Heathrow has argued that it needs the increase despite completing the bulk of its major investment plan in new terminals. But Walsh the argued that the London hub could operate much more efficiently.
He called on CAA chairman Dame Deirdre Hutton to stand up for passengers and said that Heathrow should be facing a real-terms cut in landing charges. The last review had favoured investors, Walsh claimed.
“It was very much a carrot approach to provide incentives to the airports to spend money. In effect this was a licence to print money because the more the airport invested the higher the returns,” he said.
“Dame Deirdre Hutton has to ensure that the interests of the consumer are at the heart of what they do and clearly allowing increases way in excess of the rate of inflation cannot be seen to be in the interests of the consumer. The spotlight is firmly on her and the board.”
IAG has made a submission to the CAA review that argues Heathrow is a monopoly service provider that can lower its cost of capital, become more efficient and still invest in the airport.
Walsh said that the last round of CAA-agreed charges had meant Heathrow had become one of the most expensive hub airports in the world.
“It is a headwind against the UK economy. It is the UK’s only hub airport, connecting us to critical growth markets. And the UK needs to work out how we move from a period of austerity to a period of growth.
“We have to be conscious about the UK’s uncompetitive position globally. The UK is becoming very uncompetitive in terms of access and I think we are suffering. The shareholders of Heathrow have benefited significantly over the last few years and the consumers haven’t.”