UK. International Airlines Group (IAG), the owner of London Heathrow Airport’s biggest airline tenant, British Airways, has called for the UK gateway to be broken up so that its terminals can be run by third parties.

Breaking up Heathrow’s terminal concessions “would cut costs, diversify funding and ensure developments are completed on time, leading to a win-win for customers,” says IAG Chief Executive Willie Walsh

In a submission to the UK’s Civil Aviation Authority (CAA), IAG stated the expansion at Heathrow is an opportunity for independent companies to design, build and run commercial facilities such as terminals. The move could create more competition and lower costs for customers, argued the airline group, which also owns Aer Lingus, Iberia and Vueling.

IAG Chief Executive Willie Walsh – a vocal critic of costs at Heathrow – said on Monday: “Heathrow’s had it too good for too long and the government must confirm the CAA’s powers to introduce this type of competition.

“This would cut costs, diversify funding and ensure developments are completed on time, leading to a win-win for customers. Heathrow has already reassessed its expansion plans when faced with a new potential developer. Our proposal will ensure it continues to focus on cost control, something it has been reluctant to do in the past.”

Due to the hypothetical nature of its proposal, the airport company declined to comment to The Moodie Davitt Report on how retail and F&B concession partners, such as World Duty Free (Dufry), would be affected if such a break-up was to go ahead.

Walsh suggested that independent terminal operations at a large hub like Heathrow, where a third runway is planned, made sense. “This is not rocket science. Most major US airports have terminals owned or leased by airlines and there are European examples at Frankfurt and Munich airports. There’s absolutely no reason why this cannot happen at Heathrow.

“With more passengers and the introduction of internal competition, the airport’s charges should go down. If they remain at current levels we, along with other airlines, support a price cap to ensure they cannot rise, and have written to the Transport Select Committee to highlight this.”

Heathrow Airport CEO John Holland-Kaye says a third runway at Heathrow Airport could increase competition from airlines, bringing down fares for passengers

This week, that committee of MPs heard Heathrow Airport CEO John Holland-Kaye give evidence related to an Airports National Policy Statement. Asked about a commitment to not increasing landing charges, Holland-Kaye said: “It would be a mistake at this stage to make any guarantee about particular costs. We still have to finalise our master plan… but we need to keep our prices close to current levels. If we can do that, it would be a remarkable achievement.” He cited Hong Kong, where construction of a third runway meant that landing charges would double.

London Heathrow Airport argues that a third runway will enable more airlines to compete on the same routes from the UK’s biggest airport, bringing fares down for passengers and increased business for Britain, notably with China.