IAG calls for independent review of Heathrow expansion costs

By Shalini Nagarajan

(Reuters) - British Airways parent company IAG <ICAG.L> urged Prime Minister Boris Johnson and his new government on Wednesday to conduct an independent assessment into Heathrow airport expansion plans.

Johnson himself has said he is opposed to expansion but parliament has approved the 14-billion-pound plans, which include building the first full-length new runway in the London area for 70 years, although they are being challenged in the courts.

Sector regulator, the Civil Aviation Authority (CAA), is scheduled to announce planning and early construction costs for the expansion this week.

Previous CAA figures have shown early construction costs have risen to 2.8 billion pounds in December from 1.6 billion in autumn 2018.

"The airport is set to get the green light from the CAA this week to spend hundreds of millions of pounds of airline customers’ money on early construction costs before any planning permission is granted or the scheme’s final costs are known," IAG chief executive Willie Walsh said in a statement.

"We need a fresh look at the environmental viability and total cost of expanding Heathrow," he added.

The expansion plans would depend on Britain changing how it allocates slots to airlines. Currently Heathrow is dominated by IAG but rules governing the allocation of slots are under review by the government.

Other airlines, notably Virgin Atlantic, plan to increase their flights from the expanded Heathrow, which they say has been been dominated by IAG for too long.

A Heathrow Airport spokesperson said: “Our costs have not changed, and the government already has an independent regulator who, alongside all of our airlines, closely scrutinises and approves all investment at Heathrow.

“Pushing this project back now only serves IAG, undermines private investment in major infrastructure projects in the UK and threatens Britain’s future on the global stage.”

(Editing by Stephen Addison)