Last week we reported how a Canadian investment group swooped for a London airport
, and now a leading airline has issued a warning about the move.
Following the purchase of London City Airport by an investment group that included Ontario Teachers’ Pension Plan, OMERS and Alberta Investment Corporation, British Airways, the UK’s leading airline, has said it won’t accept higher fees.
The group paid approximately £2 billion (C$3.76 billion) for the airport, which most analysts have viewed as a high premium. Fears have since mounted that airlines may be forced to pay increased fees in order to cover the price.
Speaking about the takeover, Will Walsh, British Airways’ chief executive, commented that: “we’re not going to be in a position where a new owner can just jack up prices.” He stated that if the investment group did choose to increase prices, the airline would follow its own strategy and reduce capacity. Simply put, he said: “If the routes to London City are not profitable, then we won’t go there.”
Though London City Airport has enjoyed a 50 per cent increase in passenger numbers during the last five years, and is the closest airport to the country’s financial centre, it is nowhere near the size of other major airports in the city such as Heathrow and Gatwick.
According to estimates, the winning bid was said to be around 44 times the airport’s earnings before tax, interest, depreciation and amortization of £45.8 million in 2014. No price, however, has yet been officially revealed for the takeover.