Yahoo Finance British Airways threatens to move Heathrow flights abroad in fees row
Heathrow's status as a long-haul travel hub is at risk after British Airways threatened to shift flights abroad unless the airport backs down in a row over passenger charges.
Luis Gallego, chief executive of BA's owner IAG, said that he would be forced to cut investment in Heathrow if it presses ahead with plans to hike fees by as much as 90pc.
A major shift of flights from London to the likes of Paris Charles de Gaulle and Amsterdam Schiphol airports would be a disaster for Heathrow, which has already been hammered by Covid restrictions and has lost its crown as Europe's busiest hub.
Mr Gallego said that moving away from Heathrow is “not something that we want”, but higher landing charges would eat into profits at the FTSE 100 airline business. IAG claims that Heathrow is already 44pc more expensive than its competitors on the Continent.
He said: “From a group point of view, what is very important is the concept of capital allocation. We are going to invest in the places where we are going to have the best return of capital.
“If we are going to have an inefficient hub, it's going to be difficult to invest in that hub. And I think that's going to be a problem for Heathrow, for the UK.”
Heathrow's plan to put up charges is being opposed by the Civil Aviation Authority (CAA), which is recommending a smaller rise of up to 56pc. Any increase would ultimately be passed on to customers through higher fares.
BA and other airlines say the charges should be going down, not up.
Meanwhile, Heathrow has urged the regulator to allow it to charge more. Last weekend The Sunday Telegraph reported that Ferrovial, the airport's biggest investor, was threatening to pull funding for its third runway if the airport did not get its way.
Despite paying its shareholders £4bn in dividends since being privatised a decade and a half ago, Heathrow said earlier this month that investors have suffered a negative return on their investment.
Mr Gallego’s comments came as IAG, which also owns Aer Lingus, Iberia and Vueling, warned it will lose billions of pounds this year despite a revival in passenger numbers.
Revenue for the nine months to September fell by a quarter to €4.9bn (£4.2bn), with pre-tax losses of €3bn.
Mr Gallego described the reopening of US borders to overseas visitors on Monday as a pivotal moment in the aviation industry’s recovery.
Transatlantic services have traditionally been the most profitable for British Airways over the years.
Delays by the Biden administration have held back hopes of a recovery at the airline and rivals such as Virgin Atlantic.
Mr Gallego said: “British Airways is serving more US destinations than any transatlantic carrier and we’re delighted that we can get our customers flying again.”
Meanwhile, departing finance chief Steve Gunning said that IAG had capitalised on port congestion and shortages on sea freight containers.
He said that its cargo business had performed strongly as a result and would continue to do so.
