British Airways’ owner brands Heathrow a monopoly, wants terminals run by multiple firms in competition

British Airways’ owner has called on government to break up Heathrow airport’s “monopoly” of infrastructure, suggesting that other companies could run the different terminals to create competition and cheaper flights for consumers.

IAG said the airport’s planned expansion could allow independent firms to create and run new terminals more effectively than Heathrow’s current owners, with lower costs to airlines.

The proposal from IAG, Heathrow’s dominant customer, to the regulator, the Civil Aviation Authority, is the latest salvo in its battle to ensure that charges remain low when a third runway is built. IAG argues that fares could be driven up by escalating expenses, but that breaking up Heathrow could lower this risk.

“Heathrow’s had it too good for too long and the government must confirm the CAA’s powers to introduce this type of competition,” said Willie Walsh, IAG chief executive. “This would cut costs, diversify funding and ensure developments are completed on time, leading to a win-win for customers.”

BA runs a terminal at JFK airport in New York, and Walsh said the proposal would ensure that Heathrow focused on cost control. “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.”

The airline has urged the UK government to make explicit in its national policy statement approving a third runway that airport charges will be capped at current prices. While the transport secretary, Chris Grayling, has said landing charges “should be kept as close as possible to current levels”, the Airports Commission envisioned a steep rise in charges to pay for new infrastructure. Heathrow has since pledged to deliver its runway for £14.3 billion (US$20.2 billion).