ALEX BRUMMER: Heathrow’s parasitic owners harm us all

Losing command and control over Heathrow, the UK’s major hub airport, is among the most egregious examples of how overseas ownership is disadvantaging Britain.

The market response of a sensibly-run business to a downturn is to lower prices wherever possible and attract back customers.

Spanish infrastructure group Ferrovial, and the other dividend-hungry owners of Heathrow, have chosen a different route, raising prices and jeopardising the competitiveness of Britain’s leading long-haul carriers.

Own goal: Spanish infrastructure group Ferrovial, and the other dividend-hungry owners of Heathrow, are jeopardising the competitiveness of Britain’s leading long-haul carriers

IAG-owned British Airways and Virgin Atlantic have both experienced the most appalling financial shock as a result of Covid-19. 

Moreover, while their European and American counterparts have benefited from government subventions, the UK carriers were largely left to sink or swim.

The owners of Heathrow lose no opportunity to rack up the prices for airport users. Car park charges have been escalating, especially for the shortest of visits, and the airport has now introduced a drop-off charge for passengers arriving by road.

This is just the start of things. The airport’s greedy owners requested of the regulator the Civil Aviation Authority (CAA) an outrageously high new charging cap for passengers, set between £32 and £43 against the pre-Covid 2020 price of £22. 

Instead of taking the side of the passengers and the airlines, giving the aviation industry the chance to recover, the CAA has accepted a price rise is justified and is allowing Heathrow to set the charges between £24.50 and £34.40.

Not surprisingly the response of the carriers is one of outrage. IAG, which reported a catastrophic loss of €7billion (£5.9billion) last year, has denounced the higher fee as ‘disproportionate’, noting that it is a threat to the UK’s post-Covid bounce back.

An estimated 1.5m jobs are supported by UK aviation, accounting for as much as 4.5 per cent of national output or GDP.

That compares with say 0.6 per cent for agriculture which garners so much of the nation’s broadcast airtime. The response of Shai Weiss, chief executive of Virgin Atlantic, is even more coruscating. 

He points out that Heathrow’s passenger forecasts for 2022 are far too pessimistic, envisaging a 44 per cent drop on 2019 numbers. Virgin also noted that in the good years the airport reaped big dividends.

During the pandemic, the wealthy owners that include Ferrovial, the Qatar Investment Authority, Singapore’s GIC, the US private equity firm Alinda and China, eschewed the opportunity for new equity investment.

Instead, Heathrow actually managed to pay £106million of dividends to shareholders, cash which largely left the UK.

Even before the latest requested price increases, Heathrow was among the most expensive hub airports in Europe. If the proposed increases are adopted, it could make Heathrow up to 50 per cent more costly than rivals. 

Covid rules and the extended US travel ban on flights from the UK have already caused its leadership across the Atlantic (where BA used to earn 60 per cent of its income) to be eroded. 

Finance and business traffic has diverted to Paris, Frankfurt and Zurich. Winning this back would not be easy under the best of circumstances.

As an economic regulator, the CAA’s lack of judgement knows no bounds. Instead of siding with the parasitic owners of Heathrow, it should be on the side of families and enterprise. Transport Secretary Grant Shapps should intervene without delay. 

It may also be time for the UK to take back control by requiring a free float of Heathrow shares in London.

Surrender terms

In the end, money speaks and shareholders in Bradford-based Morrisons overwhelmingly voted to fall into the hands of private equity imperialists Clayton, Dubilier & Rice (CD&R). 

The victory is a loss for UK food security, the wages and prospects for the group’s 120,000 workforce and the Exchequer as the nation’s tax base is eroded.

If the financially-driven ownership of shoe group Clarks and the strains at Asda are any guide, the board and big battalion investors should be hanging their heads in shame.

True and fair

CD&R is in overdrive. It has purchased PwC’s business travel and overseas employment offshoot for £1.6billion. 

It is part of a pattern which has seen the Big Four audit firm disgorge consulting services to concentrate on core audit issues with environmental, social and governance reporting high on the agenda. 

Disposals should mean less conflicts of interest and fewer ghastly errors such as the audit of BHS before its sale.

Not before time.