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BA boss warns MPs not to trust Heathrow over expansion plans

Bradley Gerrard
Airline boss Willie Walsh has said he has 'zero' confidence in Heathrow being able to expand without raising passenger charges - Geoff Pugh/Geoff Pugh

Airline boss Willie Walsh has told ministers they would be “foolish” to sign a blank cheque for Heathrow’s expansion as the regulator suggested the scheme could be delivered with flat passenger charges.

The chief executive of British Airways owner IAG gave both barrels to Heathrow when he appeared before Parliament’s Transport Select Committee with other airline bosses.

Mr Walsh said his confidence in Heathrow delivering expansion on time and on budget was “zero”, suggesting the airport had claimed in the past to have hit targets but had not actually done so.

“Heathrow is saying trust me, we can deliver something for about £14bn,” Mr Walsh told MPs.

“But we don’t know what it is, when it will be built or the constituent parts. They are saying trust us, give us approval and we will deliver on time and on budget but I don’t trust them and you shouldn’t either.”

An artist's impression of an expanded Heathrow airport Credit: Grimshaw Architects

Mr Walsh was giving testimony as part of the committee’s evidence gathering session into the National Policy Statement (NPS), a document which will provide the broad parameters of the expansion scheme. MPs are due to vote on this document in June, at which point Heathrow will be able to start putting together a Development Consent Order, effectively a definitive planning application for the scheme.

A key friction about the expansion is what exactly the costs will be given these will essentially be borne by passengers through higher ticket prices.

Mr Walsh added if Heathrow believes it could do the expansion without raising charges it should “give a guarantee that passenger charges will not increase”.

His counterpart at Virgin Atlantic, Craig Kreeger has previously called for a passenger cost guarantee and echoed this at the committee.

“We find ourselves in a position where endorsement is being sought for a plan where the consequence of overspend could be borne by airlines and customers,” he said.

“[Heathrow] should bare the risk of its estimate being grossly off target whereas today we, or our customers, would be holding the bag for any overspending on a very unpredictable outcome.”

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EasyJet's Sophie Dekkers added that effectively pre-funding the scheme "should not happen".

"It is against the principle at any airport," she said. "We want cost effective infrastructure – we don't want it to be gold-plated."

Andrew Haines, chief executive of the Civil Aviation Authority said modelling his agency had done suggested it was “plausible to build the infrastructure and keep costs flat”.

But he warned against calls from the airlines urging ministers to write into the NPS a guarantee that charges would stay flat.

“If prices had to go up by 1p to deliver this then a flat charges cap would be absurd,” he said.

Mr Haines added the CAA could not require Heathrow to open up to competition at the airport, such as forcing it to allow a third party to run a terminal, but he “strongly expects them to look at working with alternative parties and to look at who can deliver the scheme”.

“It would be disingenuous for them to say only they can build a car park and only they can operate one, so to speak,” he said.

Former Concorde pilot Jock Lowe, pictured, and hotelier Surinder Arora have both put forward rival expansion schemes Credit: Heathcliff O'Malley/Telegraph

A scheme fronted by hotelier Surinder Arora and another by former Concorde pilot Jock Lowe have been submitted as potential ways to expand the airport, with the proponents of both claiming to be able to do so for far less than Heathrow can.

Heathrow’s chairman Lord Deighton wrote in The Daily Telegraph this week that the airport would deliver the expansion “while keeping airline charges as close to current levels as possible”, having already stripped out £2.5bn of costs from its initial proposals.