British Airways Owner Calls for Cost Cap on Heathrow Runway

The chief executive of International Airlines Group (IAG), the parent company of British Airways, has urged the government to limit the cost of the proposed third runway at Heathrow Airport to £30 billion. This figure is significantly lower than current estimates, which suggest that the project could exceed £49 billion. Luis Gallego expressed concerns that excessively rising costs would drive airlines away due to increased landing charges.

In an interview published in The Times, Gallego stated that if costs surpass the £30 billion threshold, additional public funding would be necessary, as private investment may not suffice. He emphasised the importance of avoiding the construction of a runway that would not be fully utilised. Gallego’s call comes as the government prepares to issue a new national policy statement, which is essential for granting planning permission for the expansion.

Heathrow Airport has plans to raise its passenger capacity from 84 million to 150 million annually. The project’s financial blueprint includes the new runway at £21 billion, new terminals and aircraft stands at £12 billion, and modernisation of existing infrastructure at £16 billion. There is an ongoing dispute between Heathrow and airlines over who should bear the financial burden of these extensive upgrades.

The Civil Aviation Authority regulates Heathrow’s landing charges, allowing the airport to pass on approved expenditure costs to airlines. The current fee per passenger stands at just under £29, with projections suggesting it may rise to as much as £60 if the full cost of the runway is implemented. Gallego has called for a reevaluation of the existing regulatory framework, which he believes incentivises inefficient spending.

Representatives from IAG have had several meetings with government officials regarding their financial analysis of the project. Gallego underscored the necessity of collaboration to ensure that passenger charges do not escalate. As discussions continue, the future of the third runway remains a crucial topic in the aviation sector, with significant implications for both airlines and passengers.