BA boss refuses to pay for a third runway

A third Heathrow runway is “an outrageous vanity project” says British Airways boss Willie Walsh.

On Friday 31st July, Willie Walsh launched a scathing attack on plans for a third runway at Heathrow, dismissing it as a 'vanity' project whose costs would be 'outrageous'. bay_1522322c

Mr Walsh, chief executive of International Airlines Group (IAG) which owns BA, also pointed out that David Cameron would have to do a 'U-turn' on Heathrow expansion, having opposed another runway before the 2010 election.

'Even if you can get past those political issues the costs associated with building the third runway as proposed by Davies are outrageous.” Mr Walsh told The Evening Standard.

'It is based on inefficient infrastructure which is not fit for purpose. Airlines and consumers are looking for lower costs when it comes to flying but airports only seem to be looking at higher costs.'

He argued that Heathrow was already one of the most expensive airports in the world and was now 'talking about raising costs by 50 per cent to build the extra runway'.

'At the moment this is a vanity project by the management of Heathrow who are driven to build a monument to themselves.'

It has also been reported that Walsh told journalists,'We think the costs associated with the third runway are outrageous and certainly from an IAG point of view we will not be supporting it and we will not be paying for it.'

'We're not going to support something that increases our costs,' Walsh added.

The Evening Standard reports that aviation industry insiders believe Mr Walsh's tough words may be the start of negotiations to ensure BA is not landed with a huge bill to fund Heathrow expansion. Perhaps Walsh's wording indicates he is hedging his bets but this may not be the case.

Willie Walsh is an aviation man through and through. He is passionate about the industry and knows more about the business than many of the people he has to work with. Take for example John Holland Kaye, Heathrow's CEO who joined the airport from construction company Taylor Wimpey in 2009.

Holland Kaye was brought in to see oversee the rebuilding of Terminal 2 and increased income from retail in the process. It was hardly surprising that he found himself taking over from Colin Matthews, who couldn't face another battle for a third runway and quit suddenly after 6 years – while he was ahead.

Matthews, by the way, had joined British Airways in 1997 and was promoted to director of technical operations in 1999. However, by 2001 he was off to gas distribution company Lattice to manage subsidiary Transco and just 10 months later he took off again to Hays distribution group. Then in 2005 he joined water company Severn Trent. He took up his post as CEO at Heathrow in the wake of the catastrophic opening of Terminal 5 having replaced Stephen Nelson, who had a variety of jobs before being CEO including Marketing Director at J Sainsbury, before joining BAA as Retail Director.

It's hard to imagine Willie Walsh moving to a job in a utilities company or supermarket, whatever the financial perks.

Willie Walsh is a different breed. He was flying aircraft at 17 and has been in the aviation industry ever since.

When the going gets tough, Walsh is renown for getting tough and facing the consequences.

It seems unlikely that Walsh would be so scathing about a project if he actually wanted it. Surely it would then be Walsh who has to justify the U-turn. As far back as 2010 Walsh accepted that there would never be a third runway at Heathrow. If there ever was a time for another runway in this densely populated area (and all of the previous plans had eventually been binned) that time had passed.

Walsh, with his experience of aviation, decided that rather than waste time, effort and money on a dead duck he would look to a future with a two-runway Heathrow.

Having made his own plans and achieved dominance at Heathrow, why would Walsh now want to pay for that third runway? The only fools who want to spend money on a dead duck are the foreign owners of Heathrow. They are using their money to gain support but none of the supporters want to put their money where their mouths are. They prefer to lobby the British government and hope it will commit the taxpayer to years of subsidising their business.

Heathrow's third runway certainly looks like a vanity project but it is perhaps Chancellor Osborne who aims to take the credit and not Heathrow management, as Walsh has suggested.

John Stewart, chairman of anti-expansion group HACAN, said: 'Willie Walsh is saying that a third runway won't deliver benefits for the aviation industry that are worth paying for. This could turn out to be curtains for the third runway unless this is no more than clever negotiating tactics by one of the sharpest operators in the business.'

Gatwick chief executive Stewart Wingate said: 'One month on and the Davies Report is unravelling fast.'