In This Article:
The owner of British Airways has ruled out funding a £20bn third runway at Heathrow under the airport’s existing charging scheme for carriers.
Luis Gallego, chief executive of BA owner International Airlines Group (IAG), said although the company favoured expanding Heathrow in principle, the hub was already too expensive even before increasing charges to fund the runway.
Heathrow has said that expansion plans being pushed by Rachel Reeves, the Chancellor, would need to be supported by an increased levy on airlines running for 10 or 15 years.
Mr Gallego said: “We support the mission of the Government for growth, but it cannot be done with the regulatory model that we have in place now.
“With the current conditions we cannot afford the investment that is needed to develop the new runway. It must be done in an affordable and sustainable way.
“Heathrow is the most expensive airport in the world. What you pay is double what you pay in Amsterdam, Paris or Madrid. The model is not working.”
BA has joined forces with Virgin Atlantic and American Airlines to seek a review of Heathrow’s current funding model, which is regulated by the Civil Aviation Authority.
Mr Gallego indicated his support for converting an emergency landing strip at Gatwick into a full-time runway to lift the airport’s annual passenger tally from 44m to as high as 80m.
However, he suggested there was little prospect of BA re-establishing Gatwick as a major interchange for flights, even with the additional capacity.
“We support the runway coming into use, I think it’s good for the development of the airport. But Gatwick is not a hub and we need to develop mainly at Heathrow,” he said.
Sean Doyle, chief executive of BA, said his airline experimented with running Gatwick as a hub alongside Heathrow before and the outcome was unsatisfactory.
Mr Doyle said: “The dual hub strategy has been tried before and it didn’t necessarily work. We would evaluate the opportunity to grow when the capacity came on, but it wouldn’t necessarily mean it would be in the form of a second hub.”
While Gatwick suffered a setback this week when the Government stopped short of approving the project amid concerns about aircraft noise and inadequate rail links, the repurposed runway is still expected years before the new strip at Heathrow.
Strong demand
IAG posted earnings of €4.44bn (£3.7bn) for 2024, with BA alone generating more than £2bn, buoyed by strong demand on routes to the US.
Premium bookings remained strong, supported by people choosing to pay more for better seats even while on leisure-related trips.