Virgin Atlantic and British Airways seek expanded influence over Heathrow terminal, potentially impacting operations, as Sir Richard Branson ponders the implications.
It looks like billionaire tycoon Sir Richard Branson might just shake things up at London's Heathrow Airport, all thanks to a growing frustration from airlines, including his own Virgin Atlantic, and IAG (British Airways' parent company). They're fed up with Heathrow's high landing charges and monopoly control over its terminals.
In an effort to change the status quo, these airlines are pushing for third parties to be allowed to take charge, like they've done at New York's John F Kennedy Airport. Virgin Atlantic's CEO, Shai Weiss, himself has hinted that Sir Richard Branson would be interested in managing one of Heathrow's terminals as part of an independent consortium.
Weiss and IAG's boss, Luis Gallego, put their thoughts out in a joint interview for the Sunday Times, advocating for reforms that would give them a say in investment decisions at the airport. Gallego went as far as suggesting a committee to control capital expenditure, aiming to bring competition and efficiency to Heathrow.
All eyes are on Heathrow as the government has agreed to a third runway, which could potentially cost between £20bn and £64bn. The airlines fear this mammoth bill could fall on their shoulders under the current model.
Heathrow's opposition argues it has misused its monopoly power, leading to exorbitant prices while failing to invest in crucial infrastructure upgrades. Weiss agrees, stating that the existing monopoly structure has resulted in Heathrow being the most expensive airport in the world.
Heathrow spokesperson, however, argues that an adjustment in the regulatory model would be necessary to deliver a third runway and enabling much-needed private investment. According to them, around £12bn of private investment over the past decade has transformed the airport already.
Despite ongoing discussions for improving Heathrow's competitiveness, specifics about third-party terminal control as proposed by Virgin Atlantic and IAG are yet to be clearly outlined. There are broader calls for regulatory reform, and concerns about the airport's financial challenges as it works towards expanding, with S&P Global pointing out that equity support from shareholders might be crucial for successful financing of the project.
- The push for third-party control at Heathrow Airport, as advocated by Virgin Atlantic and IAG, is inspired by the success of third-party management at New York's John F Kennedy Airport in the transport industry.
- In the financial realm, the current model at Heathrow Airport could impose a mammoth bill on airlines under the existing fee structure for the upcoming third runway, a concern shared by both Virgin Atlantic and IAG.
- As part of their business strategy, Virgin Atlantic's CEO, Shai Weiss, and IAG's boss, Luis Gallego, endorse reforms aimed at introducing competition and efficiency in capital expenditure decisions at Heathrow Airport, an essential step towards a more financially viable and competitive aviation industry at Heathrow.
