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IAG renews attack on Heathrow expansion costs

British Airways parent IAG has accused Heathrow Airport of "treating customers with contempt", citing a plan under which passengers will contribute £3.3 billion ($4 billion) in up-front costs for a third runway at the London hub.

Willie Walsh, IAG's chief executive, believes that the true cost of the expansion will likely be far greater than what Heathrow is currently estimating. "Advance costs are spiraling out of control," he complains.

In a submission to a UK Civil Aviation Authority consultation on the airport's plans, IAG asserts that it has absolutely no confidence in Heathrow's ability to deliver cost-effective expansion. The airline group estimates that initial construction and planning costs, originally forecast at £915 million, have more than doubled over the past two years.

IAG expects that the original £14 billion expansion bill – intended to covered the costs of the runway and additional terminal and aircraft stand capacity – will balloon to £32 billion.

Expansion is not a fait accompli, Walsh warns. "With judicial, environmental and political hurdles ahead, there's no guarantee. Spending £3.3 billion before receiving planning permission is irresponsible and it’s completely unacceptable to expect passengers to pick up the tab," Walsh says.

He adds: "Heathrow's on a massive gravy train and will do everything to protect that."

Heathrow argues that it is "misleading" to claim that expansion costs have increased, saying they are exactly the same as in the submission to the Airports Commission. Heathrow also says that expansion would result in increased competition among airlines and choice for passengers. "We can't be held up by IAG simply looking to protect their dominant position and record profits," says the airport.

IAG is urging the CAA to regulate Heathrow more effectively and prevent the airport from "steamrolling" cost increases through.

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