British Airways has called on the Civil Aviation Authority to safeguard customer interests and increase airport efficiency.
The move by International Airlines Group CEO Willie Walsh comes in response to news that Heathrow Airport will be increasing charges and reducing investment in its facilities.
The CAA is currently publishing its final proposals for the airport charges that will be levied on airlines and their passengers from 2014 to 2019.
The initial proposal of Retail Price Index (RPI) -1.3 per cent means that charges at the airport will increase by £600 million (US$965 million) over the next five years. Heathrow is already one of the largest (see here) and most expensive hub airports in the world, and this would further extend the upward trajectory of charges levied by the airport.
Walsh has denounced the move, and called for Heathrow CEO Colin Matthews to be replaced.
He said: "Heathrow's management seem incapable of running their business efficiently within a routine cost control environment which is a day-to-day reality for most companies.
"If they can't introduce customer improvements in a cost effective way, then they should step aside and let someone else run the airport."
In addition, reports show that during the last regulatory period (from 2008), Heathrow invested £4.5 billion (US$7.2 billion) in new facilities at the airport, including the opening of Terminal 5 and construction of Terminal 2 (see here). However, the airport has announced that it plans to cut future spending by £1.5 billion (US$2.4 billion) even with the charges increase.
The RPI index is used as a measurement of inflation in the UK. Indeed, the airport owner has publicly stated that if the airport does not get a settlement of RPI +2 per cent, further cuts of £1 billion (US$1.6 billion) will be considered.
According to BA, the result of this would mean that, among other measures, the airport would only undertake "reactive maintenance" whereby facilities will be fixed only if faulty rather than maintained to standard or improved.
A Heathrow spokesman defended the move by emphasising that it was necessary, telling the Daily Mail: "We have put forward plans for more than £400 million (US$643 million) of cost savings over the next five years. We want to continue the investment that has been improving Heathrow for passengers."
For more information, visit britishairways.com and heathrowairport.com
Clement Huang
