Walsh hits out at runway costs and says Heathrow ‘rips off customers’

Walsh hits out at runway costs and says Heathrow ‘rips off customers’

Willie Walsh hit out at the cost of a proposed new Heathrow runway and called on the government to phase construction yesterday.

Addressing the Abta Travel Matters conference in London, Walsh – chief executive of British Airways’ parent IAG – said: “Heathrow is already the most-expensive hub airport in the world, with a history of inflating costs.”

He slammed the price of the proposed runway, now being considered by ministers, saying: “According to the Davies Commission, a new runway would cost £17.6 billion. Only £182 million is for the runway. The new car park would cost £800 million.”

The Government is poised to decide between Heathrow and Gatwick as the site of a new runway for the southeast.

But Walsh dismissed Gatwick saying: “We struggle to see any business case for expanding Gatwick.

“We will consider our position at the airport if the Government backs expansion there. The cost in airport charges would wipe out the profits we make at the airport.”

BA is the second largest operator at Gatwick and IAG carriers Aer Lingus and Vueling also operate from the airport.

Focusing on Heathrow, Walsh said: “You cannot trust Heathrow to deliver anything in a cost-effective manner. Customers have been ripped off by Heathrow for years and leopards don’t change their spots.”

He added: “I’ll give you one example. We expressed interest in installing self-service bag drop. The airport estimated the cost at just under £150,000 per unit. We’ve been able to price the same unit at less than £15,000. That is one hell of a mark-up.

“To make matters worse, Heathrow estimated it would take four years to complete when we believe we could complete this by September.”

Walsh claimed “the majority of the money” Heathrow raises from airport charges “doesn’t go towards upgrading facilities but straight into the pockets of the airport’s shareholders”.

He said: “Heathrow paid £1.4 billion to its shareholders in the last two years and only invested £1.3 billion in the airport.

“The average charge for each departing passenger is slightly more than £44. The airport’s investors get three times the financial returns of an average FTSE 100 company.”

Walsh called on the government to examine both options for expanding Heathrow – “a new runway or extension of the existing northern runway” – and said: “If the Government chooses Heathrow’s proposal [of a new runway], we want to see shareholders shoulder the risk and the burden.”

He also insisted Heathrow not be allowed to use “suppliers and parties related to the airport’s major shareholder and construction firm Ferrovial”.

Walsh argued: “Any new runway should be phased in to keep down costs. There is no need to build all the facilities at once.

“Construct the new runway first, using the existing terminal facilities. This would provide Heathrow with the resilience needed to recover from disruption, which everyone knows is the biggest problem.

“Extra flights should be introduced gradually, with growth only as aircraft become quieter.”

He said: “There is no justification for pre-funding investment in infrastructure. Today’s customers should not be expected to pay for a development that will not be operational for 10 years.”

Walsh added: “IAG will only support expansion where it is financially viable and where there is no increase in costs.

“If there is expensive expansion at Heathrow or Gatwick we will expand through our other hubs.”

Questioned by the Travel Matters audience, Walsh insisted: “I’m not against expansion. [But] I am vehemently opposed to expensive infrastructure that can’t be justified.”

And he told the conference: “Doing nothing is better than doing the wrong thing.”

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