Baggage handler demands Heathrow red tape overhaul amid cost scrutiny

One of Heathrow’s longest-standing partners has joined a campaign demanding an urgent overhaul of the airport’s regulatory model, saying the hub’s current cost structure and performance languish behind other world-leading hubs.

City AM can reveal that Menzies Aviation, which handles much of the baggage passing through the west London hub, has thrown its weight behind the Heathrow Reimagined campaign, joining the likes of British Airways-owner IAG and Virgin Atlantic to call for a radical shake-up of the airport’s red tape.

Miguel Gomez Sjunnesson, the services giant’s European boss, said that despite the airport’s sky-high fees, its quality of service and track record remained well behind international peers.

“We know that cost effective infrastructure investment will bring clear benefits to the UK aviation industry and wider economy,” he said. “Yet, Heathrow’s cost structure, service and operational reliability are outliers when compared to our experience at other international hubs.”

Heathrow model under pressure

The decision to push ahead with the totemic third runway megaproject has added to pressure on the aviation watchdog to revamp Heathrow’s regulatory model. Along with parallel projects in Gatwick, Luton and City airports, the airport’s expansion has been hailed as an important pillar of the government’s growth agenda. But it has sparked several warnings from airlines and other Heathrow customers, who fear the development will be hit by cost overruns which under the current model they will be on the hook for.

So-called passenger fees at Heathrow – the amount an airport charges airlines and other providers – are already the highest in the world. But they are expected to more than double when the £49bn third runway development begins to be passed onto HAL customers when the plans are fully rubber-stamped by ministers and regulators.

Sjunnesson added: “Regulatory reform and the introduction of competitive cost structures is required to ensure that businesses and passengers are able to see the economic benefits from
increased expansion. It is a pivotal moment for Britain’s future, and we look forward
to working with the campaign to secure regulatory reform and deliver better
outcomes for customers.”

Menzies, a global services provider that turns over $3bn and can trace its roots back to the 17th century, added its name to the list of firms demanding a regulatory revamp a fortnight after rival ground services shop Swissport also joined Heathrow Reimagined campaign.

Writing in The Times, Swissport boss Warwick Brady warned that a hub that consistently ranks as the world’s most expensive will “struggle to remain globally relevant”.

“If we get this wrong, we risk entrenching a structural disadvantage which makes the UK less attractive, less connected and less competitive,” he added.

Heathrow Reimagined also counts as its backers the airline industry body Iata, American Airlines and the Arora Group, a hotel empire run by its billionaire founder Surinder Arora. It argues that the hub’s current framework incentivises its operators to ‘gold-plate’ any upgrades and new infrastructure, while Arora was the brains behind a rival bid to deliver the third runway.

HAL has previously argued that the Heathrow’s unique geographical – and Britain’s unwieldy planning system – make it harder for it to keep a lid on costs.

Heathrow and the CAA were contacted for comment.