Heathrow Third Runway Approved by Parliament
Aug 7, 2019, 1:06 pm
#196
Join Date: Apr 2009
Location: TLV
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I'm based in TLV and often fly to North America, other points in Europe and Asia and find that the passenger taxes at Heathrow keep me away from flying BA. I'd generally be happy to spend a layover in London for a few days but the high taxes at LHR for layovers of more than 24 hours usually mean that I end up flying another carrier. It's foolish as I'd be injecting more than that amount into the local economy with shopping, hotel, food etc.
Aug 7, 2019, 2:16 pm
#197
Join Date: Jul 2012
Location: London
Posts: 489
It is worth noting that Virgin Atlantic is in the process of lauching a major campaign to block BA's expansion with the 3rd runway. I was chatting to Shai Weiss about it a few weeks ago, and he already started dropping it in to every interview and speech he gives. At present, BA believes it is legally entitled to 50% of the new slots that will be created, which will simply mean BA closing Gatwick and moving everything across. Virgin believes there should be a different method of allocation.
There is an argument that all incumbants at Heathrow are getting a bit of a bad deal, as they will be pre-funding a lot of the expansion whilst it is being built, only for new entrants to then benefit when it opens.
Aug 7, 2019, 3:06 pm
#198
Join Date: Dec 2014
Location: UK
Programs: BA, U2+, SK, AF/KL, IHG, Hilton, others gathering dust...
Posts: 2,552
Now I understand the frustrations but this is way incorrect.
“Monopoly”, “Stranglehold”... have you ever checked places like FRA MUC AMS or CDG? LHR and London as a whole is a happy island of competition compared to any of the above...
London is the only market in Europe with two major intercontinental airlines based there. Three if we consider Norwegian at Gatters.
There’s at least one major competitor on every major market/city pair/route. NYC, Dubai, LA, Shanghai, Chicago, Jo’burg, Delhi, Mumbai, Tel Aviv, Toronto, Hong Kong, Singapore have three direct competitors.
There are, and have been historically, 5th freedom flights out of LHR. Air India, Kuwait are the last two examples.
There’s competition on every major UK route, if not from LHR at least from the London based airlines; and the UK regulators have forced BA to relinquish slots precisely to that purpose.
would also love to see a study on fares increasing... especially as every airline of recent is showing a reduction in yields due to over capacity.
This means there is lesser incentive and reward for entrants in trying to build a competitive position in those airports, but a great incentive at LHR, if the opportunity existed. IAG knows this, and has openly stated in capital markets day presentations the intention to continue exploiting its dominance at LHR (in slightly less transparent wording, obviously, but the message was clear). My guess is that Mr Walsh’s greatest fear for IAG would be true competition at LHR. He has shown no appetite for a third runway unless he gets it free along with the lion’s share of the slots. Actions speak louder than words.
The point about competition existing on all the routes is again factually correct, but contextually questionable. BA’s main business is corporate (and a lot of O&D), so as long as it is the only carrier offering a wide range of destinations from LHR (with the help of some JVs to top that up), that business is protected. Slot constraints are the barrier to entry, and 50% of slots in this scenario is plenty for dominance. Monopoly and stranglehold may be emotive terms, perhaps hegemony is more accurate, but the effect is much the same.
There is no reason for me to wish for the demise of BA, but London is easily a big enough market for LHR to support multiple network carriers (or even another short haul “network” carrier, as U2 could effectively be), so I believe a reduction in BA’s LHR dominance by providing this opportunity to others would be healthy for competition, and by extension better for consumers.
Aug 8, 2019, 12:01 am
#199
Join Date: May 2014
Posts: 7,238
Hmm, would question some of your reasoning here. While it’s true that home carrier dominance at the other main European airports is similar to LHR on a % basis, there are some significant differences. In particular, those airports are not slot constrained to the same extent as current LHR, and those cities have nowhere near the importance and volume of O&D / corporate business compared to LHR/London.
This means there is lesser incentive and reward for entrants in trying to build a competitive position in those airports, but a great incentive at LHR, if the opportunity existed. IAG knows this, and has openly stated in capital markets day presentations the intention to continue exploiting its dominance at LHR (in slightly less transparent wording, obviously, but the message was clear). My guess is that Mr Walsh’s greatest fear for IAG would be true competition at LHR. He has shown no appetite for a third runway unless he gets it free along with the lion’s share of the slots. Actions speak louder than words.
The point about competition existing on all the routes is again factually correct, but contextually questionable. BA’s main business is corporate (and a lot of O&D), so as long as it is the only carrier offering a wide range of destinations from LHR (with the help of some JVs to top that up), that business is protected. Slot constraints are the barrier to entry, and 50% of slots in this scenario is plenty for dominance. Monopoly and stranglehold may be emotive terms, perhaps hegemony is more accurate, but the effect is much the same.
There is no reason for me to wish for the demise of BA, but London is easily a big enough market for LHR to support multiple network carriers (or even another short haul “network” carrier, as U2 could effectively be), so I believe a reduction in BA’s LHR dominance by providing this opportunity to others would be healthy for competition, and by extension better for consumers.
This means there is lesser incentive and reward for entrants in trying to build a competitive position in those airports, but a great incentive at LHR, if the opportunity existed. IAG knows this, and has openly stated in capital markets day presentations the intention to continue exploiting its dominance at LHR (in slightly less transparent wording, obviously, but the message was clear). My guess is that Mr Walsh’s greatest fear for IAG would be true competition at LHR. He has shown no appetite for a third runway unless he gets it free along with the lion’s share of the slots. Actions speak louder than words.
The point about competition existing on all the routes is again factually correct, but contextually questionable. BA’s main business is corporate (and a lot of O&D), so as long as it is the only carrier offering a wide range of destinations from LHR (with the help of some JVs to top that up), that business is protected. Slot constraints are the barrier to entry, and 50% of slots in this scenario is plenty for dominance. Monopoly and stranglehold may be emotive terms, perhaps hegemony is more accurate, but the effect is much the same.
There is no reason for me to wish for the demise of BA, but London is easily a big enough market for LHR to support multiple network carriers (or even another short haul “network” carrier, as U2 could effectively be), so I believe a reduction in BA’s LHR dominance by providing this opportunity to others would be healthy for competition, and by extension better for consumers.
I also disagree with you on Walsh. I don't know the man, but in my time in BA I dealt with senior management and with HAL on the topic of infrastructure related to the third runway. There is an acceptance that it will bring increased competition and, in fairness, BA has a largest exposure to competition than other carriers in Europe. Has anyone looked at the state of the German domestic market, for instance? Walsh himself, in his audition to the Brexit committee now a year and a bit ago, said that the uK should go for open skies agreement as much as possible.
The major issue seen with HAL is their pathological inability to be a) sensible about prices and b) on budget. I've worked on dozens of projects that were run by HAL, related to T5/T3 infrastructure. I haven't seen one on budget. HAL faces no monetary pressure. Their money comes from the airlines, and the airlines will pay because... it's either LHR or LHR. And airlines pay based on their % of traffic at LHR, so BA pays 52-53%. HAL is going to town with the third runway and already the costs are ballooning, see slide 26 of IAG's H2 presentation:
- HAL do not have the expertise to lead a project of this size
- HAL have demonstrated a lack of credibility in forecasting anticipated costs of expansion
- Planning costs have nearly doubled, from £265m to c.£500m
- Early construction costs have risen from £650m in April 2018, to £1,600m in the autumn of 2018 to £2,800m today
Aug 8, 2019, 12:57 am
#200
Join Date: Dec 2014
Location: UK
Programs: BA, U2+, SK, AF/KL, IHG, Hilton, others gathering dust...
Posts: 2,552
Frankfurt and AMS are slot-constrained. Not as much as LHR, granted, but they are.
I also disagree with you on Walsh. I don't know the man, but in my time in BA I dealt with senior management and with HAL on the topic of infrastructure related to the third runway. There is an acceptance that it will bring increased competition and, in fairness, BA has a largest exposure to competition than other carriers in Europe. Has anyone looked at the state of the German domestic market, for instance? Walsh himself, in his audition to the Brexit committee now a year and a bit ago, said that the uK should go for open skies agreement as much as possible.
The major issue seen with HAL is their pathological inability to be a) sensible about prices and b) on budget. I've worked on dozens of projects that were run by HAL, related to T5/T3 infrastructure. I haven't seen one on budget. HAL faces no monetary pressure. Their money comes from the airlines, and the airlines will pay because... it's either LHR or LHR. And airlines pay based on their % of traffic at LHR, so BA pays 52-53%. HAL is going to town with the third runway and already the costs are ballooning, see slide 26 of IAG's H2 presentation
...
I now no longer work in the industry, but before I left I attended a meeting where HAL provided the costs for the design and build of T2's baggage system (it still hasn't got one, relying instead on T1's). The turnkey costs proposed by HAL are about 4 times higher than the one of T5, 3.something adjusted for inflation. I've gone on the Internet and I found automatic metro lines, 16km long, that costed less to build.
I also disagree with you on Walsh. I don't know the man, but in my time in BA I dealt with senior management and with HAL on the topic of infrastructure related to the third runway. There is an acceptance that it will bring increased competition and, in fairness, BA has a largest exposure to competition than other carriers in Europe. Has anyone looked at the state of the German domestic market, for instance? Walsh himself, in his audition to the Brexit committee now a year and a bit ago, said that the uK should go for open skies agreement as much as possible.
The major issue seen with HAL is their pathological inability to be a) sensible about prices and b) on budget. I've worked on dozens of projects that were run by HAL, related to T5/T3 infrastructure. I haven't seen one on budget. HAL faces no monetary pressure. Their money comes from the airlines, and the airlines will pay because... it's either LHR or LHR. And airlines pay based on their % of traffic at LHR, so BA pays 52-53%. HAL is going to town with the third runway and already the costs are ballooning, see slide 26 of IAG's H2 presentation
...
I now no longer work in the industry, but before I left I attended a meeting where HAL provided the costs for the design and build of T2's baggage system (it still hasn't got one, relying instead on T1's). The turnkey costs proposed by HAL are about 4 times higher than the one of T5, 3.something adjusted for inflation. I've gone on the Internet and I found automatic metro lines, 16km long, that costed less to build.
I don’t know Mr Walsh either (met him once, but it wasn’t exactly an occasion for this type of debate, even though the subject of the third runway did come up). It is, however, easy for him to say that he favours open skies, while taking action (or inaction) in the background to ensure that the impact of that is on others, not IAG. As you say, LHR is LHR, he only has to prevent true competition, or the kind that could threaten BA’s core business, there.
I guess we’ll agree to disagree, which is fine
Aug 8, 2019, 4:37 am
#201
Join Date: Sep 2001
Location: UK. BAEC AAdvantage
Programs: Mucci Des Oeufs Brouilles et des Canards
Posts: 3,671
Can’t disagree about the cost of the infrastructure project, though I wouldn’t limit this to HAL and this project. I am constantly baffled both by the incredible headline budgets relative to other countries, and the inability to keep to them/timelines, for such things in the UK (HS2 and Crossrail to name just two others). Somebody is making a ton of money on these things, not sure who.
I don’t know Mr Walsh either (met him once, but it wasn’t exactly an occasion for this type of debate, even though the subject of the third runway did come up). It is, however, easy for him to say that he favours open skies, while taking action (or inaction) in the background to ensure that the impact of that is on others, not IAG. As you say, LHR is LHR, he only has to prevent true competition, or the kind that could threaten BA’s core business, there.
I guess we’ll agree to disagree, which is fine
HAL is just profit and money mad. The soft PR campaigns I've come across always focus on: how much money you can spend at LHR; can we squeeze some more retail in at the expense of seating or public space; you don't mind paying extra for being at the airport do you? I try to spend nothing or very little at LHR, but my financial protest is just a drop in the ocean.
Aug 8, 2019, 5:20 am
#202
Join Date: Jul 2019
Posts: 458
[/left][/left][/left][/left]I now no longer work in the industry, but before I left I attended a meeting where HAL provided the costs for the design and build of T2's baggage system (it still hasn't got one, relying instead on T1's). The turnkey costs proposed by HAL are about 4 times higher than the one of T5, 3.something adjusted for inflation. I've gone on the Internet and I found automatic metro lines, 16km long, that costed less to build.
It's a shame that new Terminal 2 have old baggage system, and empty basement waiting for new system which I think they will install when they start building T2C
Aug 8, 2019, 6:38 am
#203
Join Date: May 2005
Location: Kyiv, Ukraine
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The point about competition existing on all the routes is again factually correct, but contextually questionable. BA’s main business is corporate (and a lot of O&D), so as long as it is the only carrier offering a wide range of destinations from LHR (with the help of some JVs to top that up), that business is protected. Slot constraints are the barrier to entry, and 50% of slots in this scenario is plenty for dominance. Monopoly and stranglehold may be emotive terms, perhaps hegemony is more accurate, but the effect is much the same.
Aug 21, 2019, 8:11 am
#204
FlyerTalk Evangelist
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https://www.theguardian.com/business...e_iOSApp_Other
nothing he hasn’t said before really but this time HAL is pushing back calling it
IAGs misleading rhetoric
we can’t be held up by IAG simply looking to protect their dominant position and record profits
Aug 21, 2019, 9:02 am
#206
FlyerTalk Evangelist
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If BA pulled out of LHR and IIRC Wiliie has threatened that before then I don’t think HAL would have to try too hard to find replacement airlines
perhaps HAL are fed up of Willie slagging them off?
perhaps HAL are fed up of Willie slagging them off?
Aug 21, 2019, 11:22 am
#208
Join Date: May 2014
Posts: 7,238
also having some realistic budgets wouldn’t hurt... How can HAL ask with a straight face for £1.8bn (as they did in May) for the T2 baggage system, when there are entire underground lines costing half that?
Dec 18, 2019, 8:19 am
#209
Join Date: Sep 2009
Location: Cambridge, UK
Programs: BAEC Silver, IHG Platinum
Posts: 1,370
Resurrecting this thread to wonder if last week's election result was good or bad news for Heathrow expansion?
My feeling is that is is good news. With a comfortable majority the government can push forward with some of their more controversial plans and the Prime Minister will conveniently forget his previous opposition to the scheme. Heathrow will need a lost of extra capacity so that those new northern Tory MPs can get to work.
My feeling is that is is good news. With a comfortable majority the government can push forward with some of their more controversial plans and the Prime Minister will conveniently forget his previous opposition to the scheme. Heathrow will need a lost of extra capacity so that those new northern Tory MPs can get to work.
