September 25 2013

British Airways say that Heathrow’s passengers are set to lose out in what it calls a “Double Whammy of Price Hikes and Spending Cuts.”

The issues concerning British Airways are:

· Airport charges set to increase under Heathrow’s new pricing structure
· Investment in airport facilities to decrease
· Heathrow’s investors in line to reap the rewards
· British Airways calls on the CAA to safeguard customers’ interests and increase the airport’s efficiency

British Airways say that the owner of Heathrow Airport is gearing up to hit passengers with a double whammy of price increases coupled with a cut in spending on facilities, a move British Airways say is set to be sanctioned by the Civil Aviation Authority (CAA), which has a new statutory obligation to further the interests of customers.

The CAA is due to publish its final proposals next week for the airport charges that are levied on airlines and their customers for the period from 2014 to 2019.

British Airways argument is that the CAA’s initial proposal of RPI–1.3 per cent means that charges at the airport are set to increase by £600m over the five year period. This will maintain Heathrow’s position as the most expensive hub airport in the world and will continue the upward trajectory of charges levied by the airport.

Furthermore, British Airways argue that by its own admission, in the next five years Heathrow plans to cut spending at the airport by £1.5bn even as the charges increase and that the airport owner has publicly stated that if it does not get a settlement of RPI+2 per cent it will cut spending by a further £1bn, resulting in carrying out only “reactive maintenance” whereby facilities will be fixed only if faulty rather than maintained to standard or improved.

Willie Walsh, chief executive of IAG, said: “Heathrow’s management seem incapable of running their business efficiently within a routine cost control environment which is a day-to-day reality for most companies. If they can’t introduce customer improvements in a cost effective way, then they should step aside and let someone else run the airport.

Willie Walsh

Willie Walsh

“Rather than become more efficient, it appears that Heathrow’s priority is to further line its investors’ pockets. The airport already pays its shareholders a handsome dividend and has grown its profits throughout the period of global recession – a luxury not afforded to a large number of businesses.

“Heathrow has been protected from the harsh realities of the market place due to past over-generous regulated charges. The CAA has the responsibility to deliver a Heathrow that is efficiently run, fairly rewarded, and priced comparably with other hub airports.”