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21 Mar 2018

BY Edward Robertson

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Kreeger: Heathrow should foot bill of any expansion overrun

If the cost of Heathrow’s expansion overruns it should be the airport that foots the bill.

Heathrow Expansion CGI
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“Virgin Atlantic has led an effort to propose that Heathrow should bear the costs of any overrun as they are the ones who have the ability to control those costs and knowledge of the achievability of them.”

That was the message of Virgin Atlantic’s chief executive Craig Kreeger, speaking at an Airlines UK lecture last week.


While Kreeger made clear the airline backs the decision for Heathrow to be the focus of the UK’s airport expansion – “Heathrow is a preferred location to any other London airport and we see that with demand” – he insisted that this was “not at any cost”.


“This is a big, hairy complicated project,” said Kreeger. “While I have every reason to expect that the £14 billion estimated for the project is reasonable and achievable, I find myself in front of the Select Committee in the House of Commons being put in the interesting position of being asked to endorse and support explicitly a plan where the consequences of cost overrun are likely to be borne by our airlines or our customers.


“And given the lack of detailed knowledge that we airlines and customers actually have over how achievable the costs are, that seems very misplaced.


“Virgin Atlantic has led an effort to propose that Heathrow should bear the costs of any overrun as they are the ones who have the ability to control those costs and knowledge of the achievability of them.”


He added: “They should issue a passenger cost guarantee that charges will be no higher in real terms than they are today. We don’t want our customers ultimately holding the bag at the end.”


Kreeger went on to call for an independent process to review how capacity is allocated at Heathrow once the third runway has been built.


“I don’t know that Virgin will be a winner in that process. I believe that we would, but I don’t know… this is an opportunity to create a truly viable vibrant opportunity [in terms of slot allocation at Heathrow].”


Kreeger also reiterated a call for UK Air Passenger Duty (APD) to be “dramatically reduced”.


“It’s so wrong,” he said. “It’s absolutely to the detriment of transportation in and out of the UK. It’s so out of whack with other countries. It makes us uncompetitive.


“And here we sit in an environment where we’re going to have new capacity, we’re going to be outside the EU, and we need to demonstrate to everyone who wants to do business here that this is a place they want to come to. I don’t think APD is helpful.”

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