Yahoo Finance BA chief accuses Heathrow of being on third runway 'gravy train'
The boss of British Airways’ parent company has claimed Heathrow is “trying to deceive everyone” over the cost of building a third runway.
Willie Walsh, the chief executive of IAG, accused airport bosses of being untrustworthy and said they were on a “gravy train”, in an escalation of a war of words between Heathrow and its largest customer.
Heathrow responded by saying Walsh was using “misleading rhetoric” and was motivated by a desire to maintain BA’s dominance at the airport.
Some of Walsh’s criticisms were contained in a submission to the Civil Aviation Authority (CAA). He criticised plans by the airport’s management to spend £3.3bn on preparations for a third runway before planning permission has been granted and said he had no confidence in Heathrow’s ability to rein in expansion costs.
“Advance costs are spiralling out of control and total expansion costs are being covered up,” said Walsh, who has repeatedly warned about the costs of a third runway. “This latest development [increased preparation costs] proves beyond doubt that Heathrow can’t be trusted.”
An increase in the cost of expansion would affect BA because Heathrow would be likely to pass some of it on by raising landing charges.
The allegation that Heathrow executives are deliberately concealing the true cost of a third runway and its supporting infrastructure is Walsh’s strongest rhetoric yet.
“Heathrow’s on a massive gravy train and will do everything to protect that. We have absolutely no confidence in its ability to deliver cost-effective expansion,” Walsh said. “The total bill for expansion is already running at £32bn and yet they are trying to deceive everyone by continuing to claim that it can be done for £14bn.”
IAG said its submission to the CAA urged the aviation regulator to oversee Heathrow effectively and prevent the airport from “steamrolling” through massive cost increases.
Walsh said: “Heathrow told the CAA that pre-planning permission costs were £915m. They’ve now been ramped up to £3.3bn. The airport is treating customers with contempt and the CAA like puppets.
“The airport’s chief executive [John Holland-Kaye] thinks expansion is a fait accompli but with judicial, environmental and political hurdles ahead there’s no guarantee. Spending £3.3bn before receiving planning permission is irresponsible and it’s completely unacceptable to expect passengers to pick up the tab.”
A spokesperson for Heathrow said its estimate of the cost of expansion had not changed. “The costs for developing Heathrow out to 2050 are exactly the same as we submitted to the Airports Commission. IAG’s misleading rhetoric won’t change history,” they said.
“What will change in the future is the huge increase in competition among airlines and choice for passengers that we will deliver by expanding Heathrow. We can’t be held up by IAG simply looking to protect their dominant position and record profits.”
