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Britain's largest airlines called yesterday for the dismantling of the airports operator BAA and the Civil Aviation Authority, which regulates the country's skies.
In an unusual show of unity, the heads of bmi, easyJet, Ryanair and Virgin Atlantic publicly criticised the CAA and its decision to allow BAA to put up landing charges at Heathrow and Gatwick airports. British Airways also called for an overhaul of the regulatory system.
The carriers said that the CAA's price settlement would result in Heathrow and Gatwick landing charges increasing by 86 per cent and 49 per cent respectively over the next five years. The airline bosses want BAA, which controls all the main London airports, broken up and even individual terminals sold to new owners.
They also want a moratorium on the landing charge increases while they take their case to Ruth Kelly, the Transport Secretary. The airline heads are understood to have arranged a meeting with Mrs Kelly within the next two weeks. BAA has monopoly control of London's three most important airports - Heathrow, Gatwick and Stansted - and the CAA regulates how much passengers can be charged to use these facilities.
Per passenger landing charges are paid by airlines but passed on to customers in air fares. The CAA said that landing charges at Heathrow would rise by 23.5 per cent in the year from April 1. In the subsequent four years the charges would rise by 7.5 per cent plus inflation.
The airlines said that this would result in Heathrow landing charges rising from £10.36 per passenger now to £19.31, while Gatwick charges would increase from £5.61 to £8.36.
Andy Harrison, chief executive of easyJet, said: “Normally we are riven by such strong competitive rivalry that you could not bring us together. But we are coming together to fight these absurd price increases.”
BAA has come under sustained criticism for its poor facilities and poor service, including long security queues and lost baggage. It claimed that it needed higher landing charges to help to pay for improvements, including the rebuilding of Heathrow Terminals 1 and 2 in time for the London 2012 Olympics.
Mr Harrison said: “If BAA says that this is the start of a new beginning for the UK's airports, then what the hell have they been doing for the past ten years?”
Steve Ridgeway, chief executive of Virgin Atlantic, said: “It is clear to all passengers that London's airports are a mess. Airport regulation has failed in the UK and BAA has to be broken up.”
The CAA proposed lower provisional charges last year and Nigel Turner, bmi's chief executive, said he thought the regulator had “caved in” to pressure from the airports operator in applying a higher settlement.
The airlines were also concerned that the real reason BAA had sought such a large increase was to pay interest on debt after its acquisition by Ferrovial, the Spanish infrastructure company, two years ago.
Ferrovial's interest payments have doubled to €1.9 billion a year and it has spent the past six months attempting to refinance the £10 billion debt it took on to buy BAA. BAA said the regulatory settlement would allow it to conclude that refinancing.
Mr Harrison said: “UK air passengers are being asked to pay the price for Ferrovial's financial problems.”
Paul Ellis, British Airways' general manager for airport policy, said: “When BAA's new owners, Ferrovial, bought them, the CAA said they would not be influenced by Ferrovial's high debt levels. In practice, they have ignored their own policy and caved in to intense pressure from BAA by setting excessive price increases.”
Responding to the CAA announcement, BAA said that the settlement did not go far enough because it failed to recognise the scale of its future investments and the additional costs of new security arrangements.
Nelson column
— Stephen Nelson, BAA’s recently ousted chief executive, was paid £2.6 million last year despite long queues and poor service at the airports he ran. Mr Nelson, who was replaced by Colin Matthews as the head of BAA two weeks ago, will remain at the group until the end of this month
— BAA’s latest accounts show that its highest-paid director, which is most likely to be Mr Nelson, also received a bonus worth £1.5 million, although the company did not explain why
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Not pushing up landing charges at Stansted whilst doing so at Heathrow and Gatwick is an attempt to artificially increase demand at Stansted to generate a reason to expand Stansted. Airlines don't want Stansted expanded, but they may well change their mind when it becomes cheaper than the alternatives.
Sarah Baker, Essex, UK
Does anyone actually want to use Heathrow? It must be the worst airport in the UK.
If the carriers were to make more use the regional airports this would make BAA think more about their cost and apalling service. Personally I always use my regional airport to fly to Amsterdam for an onward connection - much more civilised!
Paul, Cardiff, Wales
I would suggest transfering the payment of landing fees
( airport passenger fees) from the price the airline charges and make it payable directly to the airport. Combine this with a system of fixed transparent penalties relating to the service the passenger receives.
With rebates if -
1.The time through security exceeds that which is acceptable.
2. If your departure is delayed due to disabled passenger handling.
3.If your bags are lost.
4.If you are late departing/arriving due to bussing to/from remote stands.
Thus you pay the airline to get you from A to B and the airport for the service you receive.
Peter, Hexham, uk
Can we illuminate the financial position of Ferovial further?
Are they having problems with this and other leveraged buy-outs?
The concern is that airline ticket buyers are financing, ultimately, Ferovial's acquisition spree, which it is now finding expensive in terms of servicing the debt.
Lee, Birmingham,