Heathrow terminals should be opened up to competition says IAG

[ LONDON]Heathrow terminals should be run by companies other than the airport operator, the owner of British Airways said on Monday, continuing its long-standing call for lower costs at Europe's busiest airport.

IAG, which owns British Airways plus Iberia, Aer Lingus and other carriers, said in a submission to Britain's aviation regulator, the CAA, that bringing third parties such as airlines themselves in to run parts of Heathrow would create competition and keep costs down.

Britain backed a US$22 billion expansion of the London hub airport in October 2016 after decades of government indecision, but airlines including British Airways want the cost of a new runway to be minimised so they can keep their fares down.

British Airways is Heathrow's biggest airline, accounting for more than 50 per cent of its take-off and landing slots and IAG has in the past said it would look to expand elsewhere if building a new runway at Heathrow meant higher fees.

A 10-week public consultation on Heathrow's expansion is currently under way, allowing for views on a plan which has been controversial, due to its cost, as well as because of the impact on air quality and noise levels in the local community.

IAG's chief executive Willie Walsh said in a statement on Monday that the government should ensure the CAA is able to introduce competition into the running of the airport.

"Most major U.S. airports have terminals owned or leased by airlines and there are European examples at Frankfurt and Munich airports. There's absolutely no reason why this cannot happen at Heathrow," he said.

IAG itself leases terminal 7 at New York's JFK airport while at Germany's Munich airport, Terminal 2 is operated jointly by the airport operator and Lufthansa. Lufthansa also owns an 8.4 per cent stake in Fraport, which operates its main hub in Frankfurt.

Heathrow has pledged to keep costs down during the expansion, and said it had identified options to deliver the new airport for 2.5 billion pounds (S$4.61 billion) less than previous plans, including an option for a shorter runway.

Currently Heathrow Airport Holdings owns and runs all terminals at the airport. The company is in turn owned by Ferrovial, Qatar Investment Authority and China Investment Corporation amongst other shareholders.

REUTERS