IAG Seeks to Halt LHR Monopoly
Jackie Reddy February 05, 2018
Ending LHR’s monopoly at the facility would be a “win-win,” says IAG’s Willie Walsh; allowing third-party companies to operate at LHR would not only control costs, but would also create competition and offer travelers greater affordability. IAG has formally put this suggestion to the CAA.
International Airlines Group (IAG) has suggested that the British government should halt what it termed London Heathrow Airport’s (LHR) “monopoly” at the facility, The Guardian reports. IAG, the owner of British Airways – which has one of its hubs at LHR – said that allowing other companies to operate different terminals at the airport could bring about competition, thereby offering travelers more affordability in terms of flights.
IAG has formally put its suggestion to Britain’s Civil Aviation Authority (CAA), the regulatory body responsible for overseeing the nation’s civil aviation matters.
In an official statement regarding the matter, IAG also said that allowing third-party companies to step in “would also generate better financing options for new infrastructure providing greater transparency and, consequently, lower risk.” It also adds that, at present, “the airport’s investment is funded primarily through debt. Diverse sources of capital reduces risk while the participation of different developers leads to lower capital costs.”
IAG boss Willie Walsh said that this suggestion would help to keep costs low at LHR, and was quick to cite that this kind of diversification is already successfully in place at other airports around the world.
“This is not rocket science. Most major US 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. Heathrow’s already reassessed its expansion plans when faced with a new potential developer. Our proposal will ensure it continues to focus on cost control, something it has been reluctant to do in the past,” he said.
Walsh also added, “Heathrow’s had it too good for too long and the government must confirm the CAA’s powers to introduce this type of competition. This would cut costs, diversify funding and ensure developments are completed on time, leading to a win-win for customers.”
[Photo: Shutterstock]
It is a way for BA to take over Heathrow and keep discounters out and make life difficult for Virgin and foreign airlines. The real problem is the market share of BA out of Heathrow which verges on a monopoly on many routes. Making BA divest more slots for competitive reasons would be more beneficial for consumers.
Oh the irony......you couldn’t make it up.
@jonsg, That's how I read it at first, too, but I was a bit puzzled so I looked more carefully. What they're actually saying is that they want "Heathrow" (the airport management company) to no longer be the sole operator of Heathrow (the airport). Instead, they would like to bid for direct control of the terminals themselves, or open it up so that alternate 3rd parties can bid for contracts to run the airport. In other words, they want to reduce the monopoly of the management company they are constantly fighting against, not their own monopoly of slots at LHR.
It will probably make it easier for BA and other airlines to cheapen the hard & soft product if everyone competes with LCCs.
That's what the headline sounded like, but they're actually advocating for different companies to run different terminals at LHR. It's actually kind of ironic given BA's near-monopoly over LHR.