British Airways warns it will quit City Airport if new owners hike prices

Passengers currently pay a £19 fee to the airport on every flight

Passengers currently pay a £19 fee to the airport on every flight (Dan Kitwood/Getty Images)

British Airways will “take its business elsewhere” if City Airport’s new owners jack up prices after a jumbo £2 billion takeover, the boss of BA said today.

Willie Walsh, chief executive of BA-owner IAG, said a consortium led by the Ontario Teachers’ Pension Plan paid a price which “does not make sense”.

The £2 billion paid by Alberta Investment Management Corporation and Wren House represents around 44 times airport earnings in 2014.

The buyers snapped up the airport from Global Infrastructure Partners and Highstar Capital after winning a hotly contested bidding war.

But Walsh warned that the price paid could translate to higher fees for airlines and passengers. Passengers currently pay a £19 fee to the airport on every flight, one of the most expensive fees after Heathrow.

“It’s foolish,” Walsh said. “Don’t expect us to operate out of the airport at the same levels if they increase prices – we’re not captive customers. If the airport increases charges we will take our business elsewhere. We are the main reason performance has improved at the airport - we are behind the growth of City Airport,” he said.

Walsh said the new owners had not yet contacted him.

BA is the most frequent flyer out of City Airport, a popular haunt for jet-setting executives near Canary Wharf.

FTSE 100 giant IAG enjoyed a surge in profits last year, propelled by its takeover of Aer Lingus in September and cheaper fuel costs.

Operating profits rose 68 per cent to €2.3 billion and revenues rose 13.3 per cent to €22.9 billion. The board has proposed a final dividend of 10 cents a share, taking the full year payout fo 20 cents.