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Heathrow accuses BA of acting against UK and consumer interests

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Via Yahoo Finance

Heathrow has accused British Airways of acting against “the consumer and national interest” by attempting to slow down expansion of the airport and depriving passengers of lower fares.

BA’s parent company, IAG, has complained to the regulator about the approximately £3.3bn Heathrow will spend on preparations for the third runway, accusing the airport of covering up costs that will affect airlines.

The airport’s chief executive hit back at IAG for keeping fares high and attempting to stave off competition. John Holland-Kaye said: “The affordability debate has been around the wrong thing, landing charges of £20 per passenger, rather than competition on fares.

“We’re getting on with building the third runway. What IAG would prefer to do is not spend money until after we’ve got planning permission, and delay by two or three years. That’s not in the consumer interest or national interest. In two years’ time Charles de Gaulle [in Paris] will overtake Heathrow as the biggest airport in Europe.”

Virgin Atlantic has been campaigning to gain up to a third of the new slots from the third runway, saying it would allow the airline to become the UK’s second flag carrier and target up to 84 new routes and lower fares by 10% on routes where there is currently no competition.

Sir Richard Branson, Virgin Atlantic’s founder and main shareholder, said BA “should have a competitor that has 35-40% [of slots] at least”. He added: “We ‘re going to show where BA has sole use on a [route], fares are higher – and by having a competitor we can keep them more honest.”

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Shai Weiss, Virgin Atlantic’s chief executive, said: “We have 5% of the slots and we want 15%. There are 18.5 million passengers at Heathrow flying on monopoly routes who could have lower fares.”

This month Willie Walsh, the IAG chief executive, said he believed the third runway would not get built and he called on the Civil Aviation Authority to prevent the cost being passed on through airline charges. “Ultimately this is money that is being spent – and in my opinion wasted – that gets passed through to consumers,” he said.

Holland-Kaye praised Virgin’s plans and said he thought a 10% reduction in fares was “a conservative estimate”. He said: “This is transformational. This is a massive opportunity to get real competition in check and lower ticket prices.”

He said slot allocation would need to be overhauled to ensure either easyJet or Virgin could build a network, including key short-haul routes. “They need that to be a credible scale player.”

Meanwhile Branson, speaking in Tel Aviv, revealed that the planned flotation of Virgin Galactic, his passenger spaceflight venture, was expected to take place on Monday on the New York stock exchange. He said he would be “floating in a different way on Monday, and in space next year”.

The IPO is expected to value the company at $1.5bn (£1.15bn). More than 600 prospective passengers have placed deposits on a $250,000 fare for the 90-minute flight out of the Earth’s atmosphere.

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