IAG threatens to pull out of London airports if government backs runway plans

British Airways and its sister IAG airlines might pull out of Gatwick and halt expansion at Heathrow if the government backs either airports’ proposed new runways, IAG chief executive Willie Walsh has warned.

He said the London airports’ rival expansion plans were both so expensive that if they tried to pass the cost on to airlines in the shape of higher passenger charges, flights would be uneconomic.

Heathrow wants to build a third runway at a cost of £17.6 billion while Gatwick is hoping for permission for a second runway, which it estimates will cost £7.4 billion.

The government is due to announce this summer if and where it will allow a new runway to be built in the southeast of England, having earlier commissioned a study led by Howard Davies which came out in favour of Heathrow but also claimed Gatwick was a viable option.

Speaking at ABTA’s Travel Matters conference in central London yesterday, Walsh slammed both proposals.

He said there was ‘no business case for expanding at Gatwick’ and a second runway could lead to a doubling of airline charges, from £7 per passenger to £14. "I don’t make £7 a passenger so I’m not going to pay an extra £7," he said. "Why should airlines pay this?"

If Gatwick tries to raise its landing charges, Walsh said IAG would look at moving flights to Stansted instead. "We will consider our position at Gatwick if there is a decision for it to expand," he said. "The cost of expansion at Gatwick would wipe out any profit we make there.

"We will definitely look to move flights to Stansted, if Stansted is cheaper," he said. "We would not be alone, a number of other airlines would look at doing this."

However, Walsh saved his most scathing attack for Heathrow, which he said ‘has a history of inflating costs’.

To back up his claim, Walsh said the airport recently quoted IAG £150,000 for each self-service bag drop machine, which IAG was able to source for £15,000 each. "That’s one hell of a mark-up," he said.

Also, he said the airport told IAG it would take three years to install the machines, which he claimed a third-party supplier could have operational by September. "You can’t trust Heathrow management to deliver anything," he said.

"Heathrow has been ripping off customers for years and a leopard doesn’t change its spots."

Walsh said Heathrow shareholders should bear the financial burden of building an additional runway ‘otherwise ticket prices will have to rise’.

"Customers today should not be expected to pay for a runway that won’t be operational for 10 years."

Walsh said that if the government backs Heathrow’s more expensive proposal, it would price short-haul flights out of the London airport. He is favouring a possible alternative of extending the existing northern runway instead, at a cost of £7.4 billion, but he said even this was too expensive.

He urged the government to ‘give serious consideration’ to the costs and said it should consider a phased expansion, allowing Heathrow to add capacity only when and where it was needed.

"If Heathrow comes up with a viable option we will consider it but if not we will consider other opportunities," he said. "As IAG, if I can make more money operating out of Dublin then I can assign more capital to Dublin.

"We are already growing faster at other airports than at Heathrow. BA is growing at 2.5% but Iberia is growing at 5%, Aer Lingus at 10% and Vueling at 15%."