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Heathrow ‘must pay for costs overrun’ on new runway

Heathrow must pay for any overrun in the costs of building a third runway, Virgin Atlantic chief executive Craig Kreeger said yesterday as he urged ministers to guarantee an “independent” slot-allocation process at the airport.

Kreeger called on the government to confirm Heathrow as the site of a new London runway, saying: “There is no reason for Amsterdam to be the number-one hub for UK connecting flights to the US. Heathrow should be the choice – but not at any cost.”

Delivering the Airlines UK annual lecture in London, Kreeger said he assumed Heathrow’s forecast that a new runway would cost £14 billion was “reasonable and achievable”.

But he said carriers should not be “asked to endorse a plan where the costs of an overrun will be borne by airlines and our customers”.

Kreeger insisted: “Heathrow should bear the costs of any overrun and guarantee passenger charges will be no higher than today.”

Willie Walsh, chief executive of British Airways’ parent group IAG, denounced the £14-billion budget for the new runway as “ridiculous” last week, suggesting: “Heathrow’s costs are out of control.”

Kreeger said he did not share Walsh’s view, but he called on the government to ensure “an independent process for allocating slots”, as the existing system “would mean the largest distribution of slots [go] to the current largest holder of slots [IAG]”.

The current system, he said, would “limit any airline getting more than 4% of the slots other than the existing major group which already holds 55% of Heathrow slots”.

A third runway is expected to create 50% more slots at Heathrow than at present.

Speaking at an Airlines for Europe (A4E) summit in Brussels last week, Walsh said: “The price Heathrow is talking about [for a new runway] is ridiculous.

“First, they said £16 billion, now they are talking about £14 billion. If they thought they could get away with it, they would say £24 billion.”

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