Heathrow should not get a third runway if the Airport Commission’s calculation of the cost of building it is correct, says Willie Walsh.
Walsh, chief executive of British Airways’ parent IAG, told the Airport Operators’ Association in London: “The commission got its figures wrong – they are over-inflated. If that is the cost [of a new runway], it won’t be a successful project.”
He described the assumption that airlines would pay for the new runway through increases in fares as “outrageous”.
The government is poised to announce its decision on whether to accept the conclusion of the Airport Commission, published this summer, which was that Heathrow should get a third runway.
BA is by far the biggest carrier at Heathrow, with 55% of the airport’s take-off and landing slots.
Walsh told the AOA: “The Commission produced an excellent report. Its recommendations were the obvious ones. But I have concerns about the level of cost associated with the main recommendation and the expectation that the industry can afford to pay for Heathrow’s expansion.
“We believe it’s outrageous and can’t believe it is justified. If the cost of using an expanded airport significantly exceeds the costs of competitor airports, people won’t use it.”
He insisted: “I don’t believe the figures in the Commission’s report are realistic. If the industry is to spend this money, it will want to see a return. You have to see it in terms of return on capital.”
Walsh pointed out Heathrow ‘s Terminal 5 cost about £5.2 billion to build and the Commission put the bill for a new Terminal 6 “at over £8 billion”. “The cost has gone up by almost £3 billion,” he said. “How many chandeliers can you have in an airport terminal?
“Either the figures are inflated or you are building inefficient infrastructure. I do not endorse the findings. I definitely don’t support the costs of building a runway. If those costs are real, we should not build it.”
He dismissed the idea of building new runways at Heathrow and Gatwick, saying: “There is a case for one new runway.
“The economic argument for Heathrow is much stronger than for Gatwick, but only if the the runway is built in an efficient manner. If you build runways at Heathrow and at Gatwick you will have wasted capacity.”
Walsh added: “There is a long way to go [on this].
“The economic argument is very much in favour of Heathrow. The political argument favours Gatwick, and I don’t believe we have brave politicians.
“Boris Johnson [who opposes Heathrow expansion] is a very influential figure in the Conservative Party. There is a lot to play out.”
Walsh said IAG would be expanding it’s transatlantic flights from Dublin following its takeover of Aer Lingus in July, arguing: “The Irish government has a progressive attitude to aviation tax and to developing infrastructure.”
He described UK Air Passenger Duty as “a disgrace”.
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