No-frills price hike?

Industry commentators are today predicting that UK no-frills airlines will be forced to raise their fares, following the publication of the Government’s White Paper on Aviation. According to The Independent’s transport editor Barrie Clement, the government report will today call for a new runway at the Essex hub, while suggesting that any subsequent expansion in the south east could be at Gatwick, rather than Heathrow. But that decision is likely to mean increases in costs for carriers such as Ryanair and EasyJet, following a prediction from BAA that such a project could only be funded by increased airport charges. The Independent predicts that BAA could end up raising fees to more than £4 per passenger at the airport, compared to the current £2.89. This has not gone down well with Michael O’Leary, chief executive of Ryanair. He reportedly told the newspaper that it would be “beyond comprehension” for there to be an increase in charges when traffic was likely to increase dramatically. He further argued that a new runway should only cost £120 million, reportedly adding that BAA should not be allowed to fritter customers’ money. BAA countered by stating that its charges are lower than its competitors in Charles de Gaulle airport, Paris, and also at Frankfurt in Germany.