Heathrow terminals should be opened up to competition, says IAG

LONDON (Reuters) - 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.

A general view of Terminal 5 at Heathrow Airport near London, Britain October 11, 2016. REUTERS/Stefan Wermuth/File Photo

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

In October 2016 Britain backed an expansion of the London hub airport that will cost more than 14 billion pounds. The green light followed decades of government indecision, but airlines including British Airways want the cost of a new runway to be minimised to keep a lid on their fares.

British Airways is Heathrow’s biggest airline customer, accounting for more than 50 percent of its take-off and landing slots, and IAG has previously said it would look to expand elsewhere if a new runway at Heathrow resulted in higher fees.

A 10-week public consultation on Heathrow’s expansion is under way, allowing for views on a plan that has generated fierce debate over both its cost and the impact on air quality and noise levels in the local community.

IAG Chief Executive Willie Walsh said in a statement on Monday that the government should ensure the CAA is able to introduce competition to 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.

Heathrow dismissed the idea.

“Anyone who has had the misfortune of connecting through JFK airport will know this is not a passenger experience we should seek to replicate at Heathrow,” the airport said.

IAG 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 percent stake in Fraport, which operates its main hub in Frankfurt.

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

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 among other shareholders.

Reporting by Sarah Young; Additional reporting by Victoria Bryan; Editing by Stephen Addison and David Goodman