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Fri, Feb 03, 2023

Heathrow CEO to Step Down

British Steal

After nine years at the helm of the U.K.’s largest airport, London Heathrow (LHR) CEO John Holland-Kaye is stepping down amidst clashes with airlines over his controversial handling of COVID-19 exigencies and restrictions imposed on flights during summer 2022’s surge in air-travel .

During Holland-Kaye’s tenure, Heathrow racked up a startling £4-billion ($4,895,600,000) in losses. Proponents of the outbound CEO attribute the shortfall to COVID lockdowns. Holland-Kaye’s opponents, conversely, ascribe the airport’s poor performance and fiscal paucity to weak leadership.

Airlines have fiercely and repeatedly criticized Holland-Kaye, stating Heathrow, under his management, engaged in price-gouging by dramatically increasing landing fees.

In summer 2022, Holland-Kaye faced a near and self-induced revolt when Heathrow announced to air-carriers that passenger numbers were to be capped resultant of fears the airport would be overwhelmed in the face of staffing shortages.

In October 2022, citing the chaos precipitated by Holland-Kaye’s policies and leadership, Sir Tim Clark, the British head of Emirates Airlines, called for the Heathrow boss’s resignation.

Former British Airways CEO turned IATA General Director Willie Walsh stopped short—more or less—of calling for Holland-Kaye to fall on his sword, but warned he should resign were Heathrow to remain a model of ineptitude and bureaucratic impotence.

Blame for ongoing hold-ups to Heathrow’s Parliamentarily-approved expansion have also been heaped upon Holland-Kaye.

Green-lit by Her Majesty’s government in 2018 and predicated largely on the addition of a third runway, Heathrow’s expansion was met, initially, with numerous legal challenges—the entirety of which were overturned, ultimately, by Britain’s Supreme Court. Notwithstanding the absence of impediment, the four ensuing years have seen the airport’s expansion abjectly unrealized

Asked during a February 2023 aviation conference whether the airport’s expansion would yet be undertaken, Holland-Kaye remarked: “We will say more on that later this year.”

Holland-Kaye’s departure coincides with the handing down of a critical decision by Britain’s Civil Aviation Authority (CAA), a decision apt to have serious implications for Heathrow’s cornerstone investor, the Spanish infrastructure fund Ferrovial—which owns a 25-percent stake in the airport.

Heathrow, after the fashion of most major terminal airports, is a regulated monopoly, the policies of which are dictated by federal regulatory bodies. Ergo the CAA determines the type and the amount of the charges Heathrow assess airlines.

If the CAA fails to adequately increase Heathrow’s fee schedule, Ferrovial may deem the airport a poor investment, and move to offload its stake therein.

Contrariwise, an excessive increase in airport charges will elicit the outrage of airlines contemporaneously long-weary of Heathrow’s high fees and predisposed to equating the airport with price-gouging.   

Luis Gallego, CEO of British Airways parent company IAG, has previously and publicly asserted that large increases in Heathrow’s airport charges would likely compel the U.K. flag carrier to expand service at airports on the European mainland—such as Paris’s Charles de Gaulle (CDG).

In November 2021, Mr. Gallego set forth: “From a group point of view, what is very important is the concept of capital allocation. We are going to invest in the places where we are going to have the best return of capital. If we are going to have an inefficient hub, it's going to be difficult to invest in that hub. And I think that's going to be a problem for Heathrow, for the U.K.”

FMI: www.heathrow.com


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