Plans to expand the capacity at London Heathrow Airport with the addition of a third runway present an opportunity to dilute the dominant control of slots currently enjoyed by the International Airlines Group (IAG, in which British Airways is the largest carrier), according to a new report commissioned by Virgin Atlantic Airways. The report, called “Letting competition fly—the case for two national flag carriers” was published on September 12 by WPI Economics. It argues that 18.5 million passengers each year could be paying around 10 percent more for flights out of Heathrow due to a lack of competition on some routes.
British Airways responded that it welcomes competition at Heathrow. It argued that Virgin has declined to take several opportunities to increase its share of slots at the UK’s main gateway.
According to WPI Economics, one in four Heathrow passengers effectively had no choice but to take an IAG flight. The consultants claimed that IAG operated 77 monopoly routes over the summer season, including services to San Diego, Madrid, Osaka (Japan), Glasgow, and Belfast.
The report said that IAG fills 55 percent of the takeoff and landing slots at Heathrow. The next largest airline is Germany’s Lufthansa with 8 percent and the Virgin Atlantic/Delta alliance with 7 percent. The authors claim that the proportion of routes out of Heathrow on which IAG faced no competition has increased from 18 percent in 2005 to 39 percent in 2019.
WPI believes that the addition of just over 350 daily slots that are projected to be created by the third runway would create the environment in which a “second national flag carrier” capable of carrying 20 million passengers a year could more effectively challenge IAG. A public consultation over Heathrow’s expansion is due to end at midnight on September 13. In June 2018, the UK parliament and the government provisionally approved plans when the proposals were adopted as part of the country’s Airports National Policy.
“The government must ensure that allocation of extra capacity at Heathrow delivers more choice for passengers and effective competition between airlines,” said the report’s co-author Matthew Oakley. “Ensuring the system for allocating capacity supports the emergence of a second flag carrier with the scale and capacity to compete with IAG is the best way of introducing effective competition at Heathrow. Heathrow expansion presents a unique opportunity to boost competition, lower fares, and increase choice for UK air passengers.”
Early on Friday morning, police arrested two men from Heathrow Pause, an environmental group opposing the expansion, whom they suspected of trying to fly drones to disrupt flights. The police have established a 5 km (3 mile) exclusion zone in a bid to keep drones away from Heathrow traffic.