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Airlines threaten to pull out of London City
Three of London City’s biggest airlines have allegedly threatened to pull their services if a new owner raises fees to fund its investment.
The airport’s current owners, US private equity firm Global Infrastructure Partners, has set a deadline of this Friday for final bids and it is believed to have attracted interest from five parties.
However, British Airways, CityJet and Flybe, which together account for 70% of passengers using London City, are concerned that any new owner would have to raise fees to cover the £2 billion asking price for the airport.
"Any potential new owner for London City should be left in no doubt that British Airways can move flights elsewhere if it ramps up airport charges to fund its investment," a spokesperson for British Airways owner International Airlines Group said.
An investigation commissioned by BA and CityJet showed that fees are likely to be raised if the airport is sold at the full £2 billion asking price.
"This brings into question the long term sustainability of airline operations at London City Airport," said CityJet executive chairman Pat Byrne.
Willie Walsh, chief executive of BA parent IAG has slammed the £2 billion price tag as ‘foolish’ as it represents 44 times London City’s pre-tax earnings. "BA’s customers will not swallow increased fares to fund unrealistic returns for a monopoly airport supplier."
Walsh told the FT that the airline could not afford any increase in charges at London City, where it accounts for about 40% of the passengers.
Parties to have expressed interest in the airport are Asia’s richest man Li Ka-Shing, Chinese aviation firm HNA and a consortium made up of the Kuwait Investment Authority, Borealis Infrastructure, AIMCo, Hermes and the Ontario Teachers’ Pension Plan.
It was bought by GIP 10 years ago for £750 million.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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