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Heathrow expansion faces risks of increased passenger fees

IAG warns that costs could double for passengers under Heathrow's plans.

August 1, 2025 at 01:05 PM

Heathrow’s third runway ‘is going to be empty’ if it means high fees, says BA owner

IAG warns of potential doubled passenger fees under Heathrow's expansion plans.

Heathrow third runway faces challenges amid concerns over high costs

Heathrow Airport's third runway could remain underused if proposed fees are imposed on airlines and passengers. This warning comes from British Airways' owner, International Airlines Group (IAG). The airport has announced a plan to invest nearly £50 billion in expansion, which includes the new runway and terminal upgrades. IAG's CEO, Luis Gallego, expressed concerns that the cost per passenger might double under the current regulatory model. By operating within the current fee structure, he said, any new runway risks becoming underutilized. Currently, airport charges are about £25 per passenger, controlled by the Civil Aviation Authority through five-yearly settlements with airlines. IAG has also submitted alternative runway proposals that prioritize cost-effectiveness to encourage competitiveness in passenger growth at Heathrow.

Key Takeaways

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Heathrow's third runway plans could lead to higher fees for passengers.

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IAG warns that increased charges may leave the runway underused.

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Luis Gallego emphasizes the risk of high costs under current regulations.

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Charges per passenger could double if the regulatory model remains unchanged.

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Alternative plans for shorter runways introduce competitive options.

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Recent profit growth at IAG contrasts sharply with potential passenger fee increases.

"The investment is going to be huge, and with the current regulatory model it is going to be very expensive for customers."

IAG CEO Luis Gallego warns about the financial impact of the runway expansion.

"If we build a new runway and don’t change the model, passengers are going to pay double."

Gallego highlights the potential financial burden on travelers.

"We want a model that incentivises delivery of infrastructure efficiently."

Sean Doyle, CEO of British Airways, calls for a better framework for infrastructure development.

"We have seen since the announcement of tariffs volatility in the market."

Gallego notes ongoing challenges affecting profitability and pricing in the leisure segment.

The situation at Heathrow highlights a broader issue in the aviation sector regarding infrastructure costs and customer pricing. A potential doubling of passenger fees may frustrate travelers and airlines alike. As digital transformation and global demand increase, airports will need to find innovative ways to balance infrastructure investments with keeping air travel affordable. The push for a revised regulatory model at Heathrow could serve as a critical test case for other major airports grappling with similar financial challenges. Stakeholders' diverse plans suggest that the situation may evolve in unexpected ways, potentially reshaping air travel dynamics.