BA boss shocked to find out that third Heathrow runway will raze his HQ says:

The boss of Heathrow’s biggest customer, British Airways, only discovered that building the airport’s planned third runway would require the demolition of his airline’s head office after looking at a map.

Willie Walsh, the chief executive of BA’s parent company IAG, claimed that despite the group being responsible for about half of all flights at the London hub, he received no formal warning of the proposed demolition.

Always the last to know... Perhaps he should spend more time reading a.net?

“The first I saw of it was when the Airport Commission report came out and I saw a map and I thought, that looks very close to Waterside,” Walsh said. “Then I discovered it actually went right through Waterside.”

Walsh’s grievance over his doomed HQ has been compounded by the prospect of being effectively charged for the compensation bill.

Seems BA will be compensated for 125% of the fair market value of Waterworld, which cost £200m to build. However, BA will pay increased fees to pay for the 3rd runway, so WW says:

“We can’t have a situation where I end up paying for the destruction of my own head office.”

Yet tearing down Waterworld would be progress, and one must not stand in the way of progress, must one?

Since the fact that the 3rd runway goes through BA HQ is so obvious, he could not have been "shocked", IMHO. He's just posturing, and IMHO that's part of his job.

Revelation wrote:

He's just posturing, and IMHO that's part of his job.

No, he's not posturing. That is not fair, as it implies that his grievance is not legitimate. His grievance is legitimate enough.

However, the purpose of the public statement is to put pressure on Heathrow Airport to renegotiate the terms of the redevelopment contribution with BA. You cannot blame WW (or BA) for wanting Heathrow to renegotiate the terms of the redevelopment, given that BA will lose their HQ.

Perhaps he assumed it would never get the go-ahead and didn't bother to check a map?

Everyone at Waterside was well aware where runway 3 was planned to go.

vhtje wrote:

No, he's not posturing. That is not fair, as it implies that his grievance is not legitimate. His grievance is legitimate enough.

His grievance is legitimate but it's also incredibly obvious. The fact he's pointing it out now to me reeks of posturing. He waited for the initial buzz on the topic to die down, and now he's getting his grievances their own airing in a fresh news cycle.

vhtje wrote:

However, the purpose of the public statement is to put pressure on Heathrow Airport to renegotiate the terms of the redevelopment contribution with BA. You cannot blame WW (or BA) for wanting Heathrow to renegotiate the terms of the redevelopment, given that BA will lose their HQ.

Of course he's trying to get the best terms possible for BA, and using his public stature and that of his company and title to do so, and as I said above, it's all part of his job.

LoL. WW knew this

Release the Vogon fleet!

Lightsaber

lightsaber wrote:

LoL. WW knew this

Release the Vogon fleet!

Lightsaber

I have a mental image of WW laying on the ground in front of a bulldozer.

"Do you know how much damage this bulldozer would sustain if I just let it roll over you?"

David

This year will be remembered as the year in which The Onion headlines became reality.

Around Heathrow it is a lot easier to knock down a BA building than a couple of old Tudor houses. Bring the bulldozers on!

WW, how shallow, surrounded by all those highly paid people you just found out?

Yes WW knew this, but maybe the third runway needs to demolish some building beside the existing runway to make a new runway.
By far BA doesn't like it, so I presume there maybe a lot of traffic increase in this airport.

Aside from the humor of this, isn't BA/IAG against the new runway due to increased costs/fees?

It's Waterside, not Waterworld. And BA never wanted a third runway, so you can hardly blame WW for not being thrilled about any of this.

I thought the third runway was to be further north and just to the south of the M4? While that would put the headquarters building within the east-west extent of the three runways it doesn't seem like it would need to be torn down.

My guess is that WW will threaten to move HQ to Dublin in order to take advantage of Ireland's much lower corporate tax rates. Kind of a Brexit play as well as signifying displeasure with UK airport policy.

If BA never wanted a 3rd runway, how would they deal with future growth?

BA have a monopoly at LHR, a third runway would increase competition significantly. That is why BA are against a third runway.

fcogafa wrote:

BA have a monopoly at LHR, a third runway would increase competition significantly. That is why BA are against a third runway.

Indeed, the greedy monopolists, and that's why there should be a 3rd runway, and their HQ should be razed, and they should have to pay for it too!

So far, everything's working to plan!

Maybe WW is feeling homesick and this is the excuse to move IAG HQ to Ireland. There is no place like Dublin, WW hometown.

DCAfan wrote:

My guess is that WW will threaten to move HQ to Dublin in order to take advantage of Ireland's much lower corporate tax rates. Kind of a Brexit play as well as signifying displeasure with UK airport policy.

It would be hard to move IAG from LHR, seeing its already in Spain! As you would normally expect with a Spanish company.

Gemuser

Revelation wrote:

“We can’t have a situation where I end up paying for the destruction of my own head office.”

Yet tearing down Waterworld would be progress, and one must not stand in the way of progress, must one?

Who'd have thought? Willy Walsh a NIMBY.

And what does he have against the good folk in Cornwall?

But Walsh stated that his airlines would not operate routes to airports such as Newquay in Cornwall, “even if [Heathrow chief executive] John Holland-Kaye got down and begged me”.

I'm sure that must be comforting to flybe and Ryanair.

fcogafa wrote:

BA have a monopoly at LHR, a third runway would increase competition significantly. That is why BA are against a third runway.

There is no right answer to the monopoly question, which may trip up the present LHR expansion plan.

No Heathrow expansion = BA Monopoly
Heathrow only expansion = de facto Heathrow Monopoly (contrary to break up of BAA)
Heathrow and Gatwick expansion = no London monopoly for BA or LHR, but an almost certainly successful legal challenge taking the project back to square 1.

The UK needs a national aviation policy of some shape or form, and the ability to follow through with the recommendations.

DobboDobbo wrote:

fcogafa wrote:

BA have a monopoly at LHR, a third runway would increase competition significantly. That is why BA are against a third runway.

There is no right answer to the monopoly question, which may trip up the present LHR expansion plan.

No Heathrow expansion = BA Monopoly
Heathrow only expansion = de facto Heathrow Monopoly (contrary to break up of BAA)
Heathrow and Gatwick expansion = no London monopoly for BA or LHR, but an almost certainly successful legal challenge taking the project back to square 1.

The UK needs a national aviation policy of some shape or form, and the ability to follow through with the recommendations.

That will be one interesting policy discussion when the biggest player in the nation's aviation space says "please don't build more capacity, we want to keep packing more and more customers into less and less space and keep gauging them for as much as we can ring out of them, and we like that we don't have to add services to places we can't be arsed to serve".

They will also have to demolish some hotels along the Bath Rd, as well as the Europcar and Hertz car rental locations. Anyway, they'll get compensated and they can rebuild somewhere else. It's not the end of the world. I'd say it's pretty normal that when an airport expands, things get moved around.

Of course he knew where the new runway would be built. It's been common knowledge for ten years now, since the original short runway was extended.

If he really didn't know, then the guy is a bit of an idiot for not checking sooner. A new head office can be knocked up in ten months and leased, so no penalty there.

BA will benefit most from a new runway in terms of lower fuel bills (less delays on the ground and in the air), more stands, and better public transport and road access to Heathrow.

All of this nonsense to get a 3rd runway at an airport where at least 4 are needed. An incredible lack of planning ages ago that has effectively rendered prudent expansion impossible while costing billions of pounds in lost jobs and economic opportunity for the entire country. Is it a wonder the British Empire is no more?

If I were him, I would not worry myself. He will probably be in an old folks home long before it is built.

mi5flyer wrote:

All of this nonsense to get a 3rd runway at an airport where at least 4 are needed. An incredible lack of planning ages ago that has effectively rendered prudent expansion impossible while costing billions of pounds in lost jobs and economic opportunity for the entire country. Is it a wonder the British Empire is no more?

the North of England will get 6 times as much benefit from MAN achieving it's aims than from LHR getting a 3rd runway. I daresay an expanded EDI or GLA will also generate multiple more times benefit for Scotland than from LHR getting a 3rd runway.

Glasgow and Edinburgh aren't at capacity and Manchester doesn't need a third runway.

peterinlisbon wrote:

They will also have to demolish some hotels along the Bath Rd, as well as the Europcar and Hertz car rental locations.

That's no bad thing, some of them were old when I worked there in the 80's.

Revelation wrote:

fcogafa wrote:

BA have a monopoly at LHR, a third runway would increase competition significantly. That is why BA are against a third runway.

Indeed, the greedy monopolists, and that's why there should be a 3rd runway, and their HQ should be razed, and they should have to pay for it too!

So far, everything's working to plan!

This sounds like a Trump campaign rhetoric

Willie Walsh's statements are nothing to do with monopolies, everything to do with costs.

BA is by far and away Heathrow Airports largest customer. So what WW is saying is:

'Look. BA's HQ cost £200M to build in 1995-98. So if we allow for a five per cent per annum rise in London property prices/costs we are looking at a real cost at 2016 prices of £480M. If we look further out (because we are not talking about 2016 but optimistically 2021) we are talking around £600M, more if completion is later. If we add the 25 per cent compensation premium the payment for Waterside comes to a total of £750M.

'Heathrow Airport can in the end only recover all the costs of the third runway by charging its customers. Many of these costs, including all compensation payments will be incurred long before the new runway opens and starts to generate income for Heathrow Airport.

'IAG is Heathrow Airport's largest customer directly or indirectly accounting for about 57 per cent of their income (BA + EI + IB + their passengers). So of that £750M IAG will pay more than £425M. That will leave IAG with £325M to pay for a new facility suitable to house both BA's HQ and the operational HQ of IAG [that is at Waterside and not in Madrid even though IAG is a Spanish registered company]. To match Waterside (value £600M) IAG will pay out £275M for absolutely no gain.

'So it is clear that IAG or more specifically IAG customers are going to have to pay for most of all of any third runway's costs. Yet today Heathrow Airport has not talked to IAG about the implications of knocking down Waterside or the runway construction.'

course my numbers above will be wrong. However the story will be identical with the correct numbers but they will be somewhat smaller or, more likely, somewhat larger. Whatever, IAG will pay out a hundreds of millions to move to an equivalent office to Waterside that will almost certainly be less conveniently geographically located and yield no financial or operational benefit.

Where will IAG get the money to pay Heathrow Airport? Ticket prices of course. Here remember that IAG (but primarily BA) will not only be paying hundreds of millions for a new HQ, they will also be paying 57 per cent of all the costs associated with the construction of the runway until it is opened, somewhat less if they take up fewer than 57 per cent of the new slots that are created once it is opened.

Revelation wrote:

DobboDobbo wrote:

fcogafa wrote:

BA have a monopoly at LHR, a third runway would increase competition significantly. That is why BA are against a third runway.

There is no right answer to the monopoly question, which may trip up the present LHR expansion plan.

No Heathrow expansion = BA Monopoly
Heathrow only expansion = de facto Heathrow Monopoly (contrary to break up of BAA)
Heathrow and Gatwick expansion = no London monopoly for BA or LHR, but an almost certainly successful legal challenge taking the project back to square 1.

The UK needs a national aviation policy of some shape or form, and the ability to follow through with the recommendations.

That will be one interesting policy discussion when the biggest player in the nation's aviation space says "please don't build more capacity, we want to keep packing more and more customers into less and less space and keep gauging them for as much as we can ring out of them, and we like that we don't have to add services to places we can't be arsed to serve".

I agree.

However, it cuts both ways. BA and LHR are equally as likely to behave monopolistically in the scenarios of no new runway (BA) and R3 only (LHR).

It is a problem the UK government will have to address, and I think they missed a trick not setting out a clear policy framework for two or more new runways in the South East.

vv701 wrote:

Willie Walsh's statements are nothing to do with monopolies, everything to do with costs.

I think they are related: the reason he's most concerned about cost is because he is already operating a monopoly.

The only way he makes more money is to reduce costs whilst maintaining the monopoly.

And it should be no shock that the landlord and the tenant have different concerns.

The only way the landlord makes more money is to expand the property and get more tenants.

The tenant's rent is going to go up to cover the costs the landlord is taking on to expand the property, even though their own property is not being upgraded.

Regardless of the amount of complaining they do, the tenant's only real choices are to put up with it or move out.

It's interesting to read a linear 5% per-annum increase in construction and property costs every year since the mid 90s. It'd be nice to see some data that supports that.

BestWestern wrote:

Glasgow and Edinburgh aren't at capacity and Manchester doesn't need a third runway.

Yes, Manchester does not need a third runway and David_Itl was not arguing the case for one.

He can correct me if I am wrong, but I suspect he was making the point that the North of England benefits more by continued expansion of air services direct to Manchester as opposed to via an extended LHR.

What is stopping airlines flying to MAN/GLA/EDI.

In reality, nothing is stopping airlines flying to MAN/GLA/EDI, and in reality, nothing is.

There is more and more growing choice from outside London, and, with the Heathrow 'full' and LGW not far off for decent slots, now is the time for the UK regions to capitalise on that.

One could argue we are slowly starting to see airlines looking to other airports to grow, such as Virgin basing 2 more aircraft and moving away from its 'Mickey Mouse express' routes to the likes of San Fran and Boston, which could well have been LHR expansion if VS had the slots.

The man knew Heathrow was an airport when he moved there. And he knew it was in the need of expansion. If he doesn't like society advancing or the aviation business, too bad.

David_itl wrote:

mi5flyer wrote:

All of this nonsense to get a 3rd runway at an airport where at least 4 are needed. An incredible lack of planning ages ago that has effectively rendered prudent expansion impossible while costing billions of pounds in lost jobs and economic opportunity for the entire country. Is it a wonder the British Empire is no more?

the North of England will get 6 times as much benefit from MAN achieving it's aims than from LHR getting a 3rd runway. I daresay an expanded EDI or GLA will also generate multiple more times benefit for Scotland than from LHR getting a 3rd runway.

You may indeed be correct. I would extend my point to include the need for additional aviation capacity wherever appropriate to keep pace with economic and population growth, not just 1 runway in 1 place. MAN already has 2 runways in an arguably better configuration for handling traffic than LHR. If the needs of the region warrant it they should be planning for another. The thought of tossing about for years upon years over the placement and construction of 1 runway just seems nuts! It's a runway not the construction of a 2nd planet.

Always the last to know... Perhaps he should spend more time reading a.net?

[quote]“The first I saw of it was when the Airport Commission report came out and I saw a map and I thought, that looks very close to Waterside,” Walsh said. “Then I discovered it actually went right through Waterside.”

Wherever I go -and I have been around the block a bit- I am constantly amazed at how management is generally the last carriage of the train to actually know and realize what the big changes [normally advocated by them!] actually mean in practical terms for people, staff, human-beings, etc... Management generally sits dormant on plush chairs signing off paperwork in a sterile environment and is as far removed from reality as the political cast can be.

incitatus wrote:

Around Heathrow it is a lot easier to knock down a BA building than a couple of old Tudor houses. Bring the bulldozers on!

True, and all those old pubs, I remember a place where they had a sign over the door leading to the bathrooms which said "Duck Yee nut"

aviationaware wrote:

It's Waterside, not Waterworld. And BA never wanted a third runway, so you can hardly blame WW for not being thrilled about any of this.

For many at BA, Waterworld is one of the more polite names for that piece of corporate excess of it's time, 'Alying Island' (there is a 'Hayling Island' in SE England), being another since it opened under Bob Alying's term as CEO.
It cost a lot of money, when the frontline operation was being starved, it also was about the same time as those awful 'World Tails', in short Watershite became a symbol of an unhappy time at BA.

Walsh I think gave up on the 3rd runway and UK government transport policy in general when the Coalition scrapped it in 2010, ramped up APD, he came to see that time spent speaking to ministers as wasted, given that early on one of those was the dullard Teresa Villiers and that Cameron had put anti LHR MP's in ministerial transport positions, you can see why he became so exasperated.

There was never a need for Waterside, or at least such a costly new HQ, it symbolised a lot of what was wrong at BA, no expense spared for the baord and senior managers, yet they never provided enough parking space for the occupants, made worse when more staff transferred there.

The Office for National Statistics (ONS) publishes data on property prices values on actual sale prices,

Nationally the published ONS house price inflation rate over the 12 months ending end-June 2016 was 10.2 per cent, They report that this figure was mainly driven by the London area where house price inflation was 19.3 per cent. They also reported that their end-May national figure of 10.5 per cent was the highest rate for four years. So I think an assumed rate of 5 per cent looks quite modest as an annualised rate over the last twenty years.

Of course houses are not corporate HQs. However if the price increase in one of these two construction groups was to get too far behind the other, construction companies would focus on the more profitable group.

Can I just say, wherever they do relocate the office to that they stick the Concorde currently doing now at TBA in the reception area. Just my 2 cents,

PanHAM wrote:

incitatus wrote:

Around Heathrow it is a lot easier to knock down a BA building than a couple of old Tudor houses. Bring the bulldozers on!

True, and all those old pubs, I remember a place where they had a sign over the door leading to the bathrooms which said "Duck Yee nut"

What does that mean?

Duck your head!!

ThReaTeN wrote:

PanHAM wrote:

incitatus wrote:

Around Heathrow it is a lot easier to knock down a BA building than a couple of old Tudor houses. Bring the bulldozers on!

True, and all those old pubs, I remember a place where they had a sign over the door leading to the bathrooms which said "Duck Yee nut"

What does that mean?

Nut = head

Duck your head!

Instead of grieving he should act more daring by challenging the government to ever build a 3rd runway at Heathrow by offering his HQ as a sacrifice