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IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 8:17 am

http://www.travelweekly.co.uk/Articl...k+switch+in+heathrow+fees+row.html

Hmmm....about time airlines made a stance against LHR's ever-increasing fees.
 
RIXrat
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 8:29 am

I read the article three times, but nowhere do I see Walsh threatening to move BA flights to LGW. The headline should have a backup quote if such a move is contemplated.

[Edited 2013-04-22 01:32:00]
 
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SKAirbus
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 8:43 am

Quoting RIXrat (Reply 1):
I read the article three times, but nowhere do I see Walsh threatening to move BA flights to LGW. The headline should have a backup quote if such a move is contemplated.

"He (Willie Walsh) warned that subsidiary British Airways would have little flexibility but to move flights to Gatwick if the increases were agreed at Heathrow".

Try reading it again...
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IndianicWorld
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 8:47 am

I can't see them moving too many flights, given the value of slots at LHR and the fact it is their main hub.

Moving some lower yield destinations might be on the cards but its mainly going to be a threat that goes nowhere fast. BA have far too much invested in their LHR ops to move too many flights.
 
Eagleboy
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 9:02 am

Quoting SKAirbus (Reply 2):
"He (Willie Walsh) warned that subsidiary British Airways would have little flexibility but to move flights to Gatwick if the increases were agreed at Heathrow".
Quoting IndianicWorld (Reply 3):
Moving some lower yield destinations might be on the cards but its mainly going to be a threat that goes nowhere fast. BA have far too much invested in their LHR ops to move too many flights.

Brilliant, so T5 will be up for rent then Willie?
Not to mention that LGW with its single runway may be a bit tight for IAG to move BA ops to there.....
 
skipness1E
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 9:08 am

It's hot air. If BA move out flights they need to surrender slots to Emirates, Qatar, Delta, United etc. There's only so many slots you can sell to Oneworld partners. LHR wouldn't mind too much if BA moves out x flights as they'd have x+y airlines fighting to get them!
 
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atcsundevil
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 9:38 am

I believe this is from chapter four of Michael O'Leary's guide to running an airline. It's sort of like a self-help book in that you can't really help yourself when yourself sucks, but I suppose it doesn't hurt to try. MOL has proved his threats should sometimes be taken seriously, but this threat is fairly laughable. I could see SOME flights being moved to free-up slots to be replaced by more lucrative routes, but that's it.
 
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SKAirbus
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 9:40 am

Quoting skipness1E (Reply 5):
It's hot air. If BA move out flights they need to surrender slots to Emirates, Qatar, Delta, United etc. There's only so many slots you can sell to Oneworld partners. LHR wouldn't mind too much if BA moves out x flights as they'd have x+y airlines fighting to get them!

It's true. I think in order to fight the fee increases there needs to be some kind of united front against BAA, with all airlines submitting a joint complaint.
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LHRFlyer
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 9:45 am

Indeed. It's the same as IAG saying they'll grow Madrid at the expense of Heathrow if the latter doesn't expand. If there's a market for a direct flight from Heathrow IAG/BA will serve it. Though I can understand the frustration that every one makes money out of air travel apart from the airlines.
 
cornishsimon
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 10:03 am

WW is just doing what he's good at !

However, what you might see eventually is some of the slot sitting routes at LHR moving down the road to LGW, or some of the rotations, to free up more LHR slots for BA Longhaul expansion at LHR.

For instance, extra GIB flights were recently added at LHR, some of these might well head back to LGW, leaving daily LHR-GIB but the other GIB flights down to LGW

Certain routes like LBA, RTM etc would seem to be sitting slots at LHR, however if they do prove popular you might see a gradual reduction in the daily rotations and them replaced with Longhaul routes @ LHR, however theres nothing to say that LGW couldnt add domestic and shorthaul rotations to ease things.

LBA & RTM are both 3 daily into LHR, i can see that BA might keep twice daily on each, but the 3rd could be moved to allow expansion at LHR, either that or binned totally.

Your never going to see BA move vast amounts of routes to LGW from LHR, however some routes could well move back to LGW over the coming years, some shorthaul are a good fit at Gatwick, some Longhaul can work at LGW along side the same routes at LHR, LAS is a good example of this



cs
 
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EK413
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 10:57 am

I am yet to read the article and been             & EK is moving to Sharjah International Airport in DXB fee spat!

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bthebest
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 11:25 am

I can see them moving some lower yield routes to LGW if it won't impact the loads too much.

Quick query though: If an airline has the slots - does it have to use them? Is there a minimum amount of movements it has to make to keep the slot? I know they're expensive to hold, but if the difference in fees between LHR and LGW covered the slot cost at LGW, could BA keep the LHR slots and have a bit of slack in their operations?
 
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 12:06 pm

Quoting Bthebest (Reply 11):
Quick query though: If an airline has the slots - does it have to use them? Is there a minimum amount of movements it has to make to keep the slot?

Yes......its use them or lose them. Not sure what the actual number is. But I do know that several years ago 1 airline used 1 slot pair in Winter only (October-March) in order to hold onto it.
 
gilesdavies
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 12:24 pm

Heathrow have BA bent over a barrel and are free to rape them at any time they like, as they know this will never happen and there is no other alternative airport in the London area capable of handling all of their ops in the UK!

The same must be said for other major European operators like KLM and Lufthansa whose bases are very focussed on one super hub airport and the operators of their airports doing something similar.

LGW does not have enough slots to allow BA to move all operations there, and if they were to move some operations to they would be extremely limited in which ones they can move.

Many long haul travellers have little interest in wanting to fly to LGW and want to fly to LHR as this is what they consider to be "London's" airport. This has been demonstrated by the US airlines, who jumped at the chance of moving ops from LGW to LHR...

If they were to move European Ops, easyJet will be there and waiting ready to steal even more customers away from BA, flying head to head from exactly the same London airports!

Then you also have the aspect of lower yields out of London's other airports, and even with LHR's increase in fees, I guarantee they will still make more money flying from there!

The only routes that are likely to be moved to LGW are possibly the routes which are nearly wholly O&D routes that have very limited number of passengers transferring on to other BA flights and the Leisure market routes, which I think are already flown mainly from Gatwick.

I just hope the CAA see sense here and enact their regulatory powers to stop these kind of increases... I do also wonder if LHR are using the 6% increase as a bargaining chip, knowing full well this increase will never be allowed and that the increase the CAA will allow is around 3-4%, which is what the airport are really after?
 
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 12:43 pm

Quoting gilesdavies (Reply 13):
The only routes that are likely to be moved to LGW are possibly the routes which are nearly wholly O&D routes that have very limited number of passengers transferring on to other BA flights and the Leisure market routes, which I think are already flown mainly from Gatwick.

I agree, I think BA should identify which routes are primarily O&D and move them to LGW. To be honest getting to LGW from central London takes almost exactly the same amount of time so it should not deter travellers and North Terminal should maybe become the "legacy hub" with all LCCs and charter airlines operating out of South Terminal; this will provide a much better opportunity to compete with Heathrow.
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 12:49 pm

Quoting Eagleboy (Reply 12):
its use them or lose them.

Yep - and slots must be used at least 80% of the time.
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skipness1E
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 12:56 pm

Quoting SKAirbus (Reply 14):
I agree, I think BA should identify which routes are primarily O&D and move them to LGW

This has already happened, BA at LGW is predicated on point to point with minimal feed.
 
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 12:57 pm

Quoting SKAirbus (Reply 14):
To be honest getting to LGW from central London takes almost exactly the same amount of time so it should not deter travellers and North Terminal should maybe become the "legacy hub" with all LCCs and charter airlines operating out of South Terminal; this will provide a much better opportunity to compete with Heathrow.

I agree with you...

But many people will just not give LGW the time of day, I think I would be safe is saying this is primarily foreign travellers. They think travel into London is a pain and when it really isn't.

There just isn't space in either terminals to concentrate all LCC ops to one and Legacy to another. easyJet are so large now at LGW, they cannot be accommodated in a single Terminal at present. There is talk from around 2016 onwards they might try to move all of easyJet's ops to the South Terminal, but this will require a lot of work as they have at present over 50 aircraft based there!
 
vv701
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 1:13 pm

Quoting Bthebest (Reply 11):
Quick query though: If an airline has the slots - does it have to use them? Is there a minimum amount of movements it has to make to keep the slot?

If a slot is not used in a specific Winter or Summer Season for a minimum of 80 per cent of available occasions it will be confiscated and reallocated under the guidelines laid down by the EC.

Some while back TristarSteve reported that BA keep a log of cancelled flights to ensure that they did not loose slots in this way.. See his Reply 37 here:

Time For BA To Reassess Its Route Network? (by Skyhigh Mar 21 2009 in Civil Aviation)?threadid=4357762&searchid=4361102&s=tristarsteve+slots+ba#ID4361102

Before BMed was bought by BD there was quite an outcry when during Winter Season 2006-07 they ferried a 320 LHR-CWL to overnight six days a week purely as an LHR slot sitting exercise. Here is link to the resulting a-net discussion:

BMed Operating Empty Flights LHR-CWL (by Sean377 Mar 12 2007 in Civil Aviation)?threadid=3302451&searchid=3302622&s=cwl+320+lhr+slot#ID3302622
 
ytz
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 1:49 pm

Supply and demand. LHR authorities should call his bluff.
 
Quokkas
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 2:10 pm

I don't know if it is a threat (despite the dramatic headline) more than a reflection of a possible outcome. Like any business BA would have to consider the economics of each flight to see whether it is warranted or from where it can best be provided. Shifting some flights to LGW might make sense if increased fees make them less viable from LHR.

It may be a delicate balancing act depending on how much of the traffic is connecting. Travellers from MAN, GLA, etc would not particularly welcome being brought into LHR only to have to make an overland journey to LGW, particularly if there is a more convenient alternative.

Clearly Walsh is not talking about shifting a major part of BA operations to LGW because he would be aware of the limitations - one runway only, etc. But there may be a case for shifting some flights to offset any increase at LHR. If the slots that are unutilised are tradeable, BA might come out ahead.

But I have a question: BA and others want expansion at LHR. They apparently wish (in the absence of lifting the curfew but perhaps in addition to) an additional runway. Who do they think should fund that? Please note, that I do not believe that any increase in fees should simply result in an increase in share-value or dividends but that money should be available for the building of any additional facilities. These need not be funded by the taxpayer, particularly given the claims of subsidies given to foreign airlines because of support given to airport expansion in other countries. Do those who support Walsh (believing him to be making a threat) think the airlines should pay for any expansion at LHR or do they think the taxpayer should subsidise the industry?

[Edited 2013-04-22 08:06:41]
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cornishsimon
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 2:38 pm

Am I correct in thinking that LGW does not have the same night curfew restrictions that LHR has ?


cs
 
speedbird217
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 3:42 pm

That statement is ridiculous. BA has a very comfortable position in LHR. Yes, they have no room to grow, but neither does the competition. They certainly will not move away from LHR, and they are watching the whole UK airport capacity debate very closely. BA is not happy about a new airport in the Thames estuary that would open up the closed market in London/UK...

Quoting gilesdavies (Reply 13):
The same must be said for other major European operators like KLM and Lufthansa whose bases are very focussed on one super hub airport and the operators of their airports doing something similar.

Not quite true for LH. They have a huge operation at MUC which is similar to the multi-Hub system of US carriers. Originally they moved some of their ops to MUC because of capacity constraints in FRA, but soon they realized that it makes sense to establish a second hub - that gives them a good position to negotiate. I don't know the current figures but by the end of last year they were serving 165 destinations from MUC and 178 from FRA.

But I agree that European carriers are usually heavily dependent on their hubs, as they generally only have one hub (KL, AF, BA, IB etc.). On the other side the respective airports are as much as dependent on their airline as the other way round. They could certainly fill some of the gap that a BA would leave behind at LHR, but overnight LHR would lose its status as the UK's main hub because they need BA as much as BA needs them.
 
DAL763ER
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 4:41 pm

Quoting SKAirbus (Reply 14):
To be honest getting to LGW from central London takes almost exactly the same amount of time so it should not deter travellers

It depends where you live really. I live at Paddington and hence it takes me roughly 45 minutes from my house to airside LHR. If I were to fly from LGW, it would take me more than an hour to even get to the airport. And the so called LGW express is expensive and slow.
 
skipness1E
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 5:48 pm

It's not "most people" who avoid Gatters, it's key revenue drivers in the forward cabins to who a modern network carrier must hang onto for dear life. If the Gold Cards bleed off to SQ and EK, BA lose massively. Moving a route to LGW for most of us is not the end of the world however lounge and premium facilities at LHR v LGW are not comparable.
 
Eljonno
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 5:51 pm

Quoting DAL763ER (Reply 23):
It depends where you live really.

Exactly.

Quoting DAL763ER (Reply 23):
If I were to fly from LGW, it would take me more than an hour to even get to the airport. And the so called LGW express is expensive and slow.

It takes the best part of two hours to get to LHR by public transport (or 50 minutes by car) from where I live. Gatwick on the other hand, is 10 minutes up the motorway and quite often the regular commuter trains are almost as fast to central London as the Gatwick Express.

Gatwick's problem aren't caused because it is cut off from transport infrastructure.
 
flylondon
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 6:06 pm

Ironic his complaints as BA have been the main beneficiary of investment at Heathrow, the very investment that increases the passenger charges. How much have their operating costs been reduced by the consolidation in terminal 5?

Heathrow is a regulated airport, the CAA determines the return the shareholders earn (a fairly low 6.2% at the moment), when they spend £1 on building a new terminal for BA, or building a new baggage transfer system for BA, they get to charge airlines collectively an extra 6p plus the annual depreciation of the asset. Having spent billions on new terminals recently the charges have naturally gone up.

The airlines behave like bratty teenagers, they all want the shiny new terminals and investment that lowers their operating costs, but then complain when it comes through in the regulated airport charges.
 
goosebayguy
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 6:17 pm

This is all about playing the game of negotiation. What it really could be though is a prelude to BA signing up to Boris Island. If Boris were to get BA on his side then you would be amazed how quickly it could begin construction. BA would naturally have first pick of terminal and gates done to their spec. Other airlines would have to follow because of the 24/7 operation which could lead BA to become the Emirates of Europe in one fell swoop. LHR would be left behind with BAA weakened and heavily in debt.
 
BD338
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 6:53 pm

Quoting goosebayguy (Reply 27):
What it really could be though is a prelude to BA signing up to Boris Island.

If BA don't want to pay the inflation +6% cost increase proposed by BAA they certainly won't want to pay the cost of building Boris Island, that will be catastrophically expensive.

The sidebar event in all this rate increase discussion is the LGW request to be removed from the regulated requirements. They want to be free to negotiate outside of the regulated prices, so they can negotiate lower and individual deals with each airline, that would be a game changer for the London market (Stansted want the same right), suddenly there is a real differentiator that might make LGW and STN genuine options for airlines that at the moment don't make sense.
 
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lightsaber
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 6:57 pm

Have slots at LHR suddenly become worthless?   
Thus:

Quoting goosebayguy (Reply 27):
This is all about playing the game of negotiation.

That it is. WW is a good negotiator and he's stuck with a poor hand. I'm expecting his bluff to be called. Oh, it will make some routes non-profitable. Fine, move them with great fanfare to LGW. And watch a new frequency to another city added in that slot pair...

Quoting goosebayguy (Reply 27):
What it really could be though is a prelude to BA signing up to Boris Island.

Unlikely. The transportation links required would be enormous. However, BA consolidating *all* London operations to one airport would boost the LGW flights (there would be *some* connections).

Quoting IndianicWorld (Reply 3):

I can't see them moving too many flights, given the value of slots at LHR and the fact it is their main hub.

  

Quoting EK413 (Reply 10):
& EK is moving to Sharjah International Airport in DXB fee spat!

   Maybe that will be the excuse to move to DWC.  
Quoting skipness1E (Reply 16):
Quoting SKAirbus (Reply 14):
I agree, I think BA should identify which routes are primarily O&D and move them to LGW

This has already happened, BA at LGW is predicated on point to point with minimal feed.

And will continue... BA simply doesn't have enough slots at LHR. They must make room for more frequency and new destinations. Its a shame London doesn't have a 4 runway airport...

Quoting VV701 (Reply 18):
If a slot is not used in a specific Winter or Summer Season for a minimum of 80 per cent of available occasions it will be confiscated and reallocated under the guidelines laid down by the EC.

Interesting... and a valid rule.

Lightsaber
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EI564
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 9:47 pm

Quoting BD338 (Reply 28):
They want to be free to negotiate outside of the regulated prices, so they can negotiate lower and individual deals with each airline, that would be a game changer for the London market (Stansted want the same right),

The regulator only tells the airport the maximum charge it can apply. So, LGW is free to charge lower fees if it wants to right now.

Not sure about individual deals either. Wouldn't that break anti-competitive laws?
 
cornishsimon
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Mon Apr 22, 2013 10:42 pm

Quoting EI564 (Reply 30):
The regulator only tells the airport the maximum charge it can apply. So, LGW is free to charge lower fees if it wants to right now.

Not sure about individual deals either. Wouldn't that break anti-competitive laws?

Well i bet you that this already happens.

I very much doubt if IAG was paying the same as for example BMI pre merger ?

Each airline at any airport will be paying a different amount to the airport operator, fuel company, ground handler etc etc etc


cs
 
YLWbased
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Tue Apr 23, 2013 3:20 am

I'll pick an airlines to flies into Southend every time when I have to visit London, I had the pleasure to use SEN on 5 different occasion and let me tell you what a breeze it was to fly there.

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vv701
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RE: IAG Threaten To Move To LGW In LHR Fee Spat.

Tue Apr 23, 2013 11:28 am

Quoting cornishsimon (Reply 31):
I very much doubt if IAG was paying the same as for example BMI pre merger ?

Each airline at any airport will be paying a different amount to the airport operator, fuel company, ground handler etc etc etc

I think this is unlikely. Heathrow Airport Ltd publishes its detailed charges - see pages 27 to 30 here:

http://www.heathrowairport.com/stati..._Ltd-Conditions_of_Use_2012-13.pdf

If BA had obtained preferential rates outside of these published prices you could be pretty certain that Richard Branson would have been on the first plane to BRU to talk to the competition authorities about it.

Having said this BA does have one notable cost advantage at LHR over (all?) other airlines. It leases the large area occupied by its Maintenance Base at the east end of the airport. That area is on a 150 year lease that was relatively recently renewed. BA parks its non-operational aircraft there during the day - there are no over-night parking charges made by Heathrow Airport Ltd either for terminal or remote stand parking. BA also rents parking space on its maintenance ramps to the likes of SA and QF.

So recognising this lease and the BA investment in on-airport Engineering and Cargo facilities and in their Head Office just across the A40 from the airport, in the unlikely event of the threat being exercised with some flights being moved to LGW, we can be pretty sure of a long term significant BA presence at LHR.

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