MIAMI – London Heathrow Airport (LHR) and British Airways (BA) are in a dispute over a proposed charge of £500m for abandoned expansion plans at the airport.
In February of this year, cityam.com reports that plans to construct a third runway at LHR were halted after a legal challenge. Now, a consultation recommends that the airport bill airlines up to that month for costs incurred related to the runway.
Comments from Both Parties
British Airways CEO and IAG owner Willie Walsh said the regulations, which allow LHR to raise charges in line with costs, allowed the airport to “spend recklessly.” Additionally, according to the Sunday Telegraph, an IAG representative said that the airport should, as any other private business, meet its own sunk costs.
The spokesperson went on to tell the British outlet that LHR was “a monopoly that will simply pass the bill to the airlines, further damaging UK aviation as it struggles to survive the COVID crisis.”
While IAG says regulators must step in, a spokesperson for LHR said that the CAA had established an approach to expansion-related costs that was approved and agreed by airlines, including IAG. “We believe this approach should remain.”
London Heathrow, British Airways Woes
For the month of July, LHR passenger numbers plummeted by a staggering 88%. According to cityam.com, the airport has opened negotiations with unions over a round of wage cuts that will affect approximately half of its 4,700 frontline staff as a result of said decline.
In addition, because of the pandemic, LHR has lost over £1bn since March, and is now looking to make pay cuts of 15 to 20%.
On its part, BA said at the start of August that it had reached the halfway point of job cuts, with 6,000 already axed. The airline wanted a total of 12,000 jobs cut in the wake of the COVID-19 pandemic.
Featured image: London Heathrow, British Airways Heritage BEA livery on an Airbus A319, to celebrate BA centenary celebrations, March 2019.