British Airways has lashed out at the prospect of higher airport charges at Heathrow, accusing operator BAA of exaggerating the cost of a fifth terminal at the airport to justify an inflation-busting increase.
BA's chief economist, Andrew Sentance, said the airline would seek grounds for a judicial review if plans were approved for a 40% rise over five years in the cost of flying from Heathrow, typically £6 per passenger.
"There is a public interest issue here," Mr Sentance said, warning that higher charges would mean increased fares. "It's a question of whether the public is getting a fair deal."
He was giving the airline's first response to a consultation document from the civil aviation authority. The authority said it was considering letting BAA raise its charges sharply at Heathrow, if it kept prices down at Gatwick and Stansted.
Mr Sentance said BAA was playing a game of brinkmanship by threatening to shelve the £4bn fifth terminal unless it got the extra cash: "Terminal five needs building for the national interest. It is not some thing that should be held to ransom."
The price rise proposals assume that BAA would have a cost of capital of 7.75% in borrowing money to fund the improvements. Mr Sentance said that other regulated industries such as water and energy typically assumed a cost of capital closer to 6%.
"It's really quite a high figure - you wouldn't want to take out a mortgage at that rate."
He claimed the timing of BAA's assumed fundraising was flawed, pointing out that the airports operator had already received contributions of £350m towards the new terminal from airlines. If these factors were taken into account, he insisted that airport charges would fall.
BAA rejected the criticisms. A spokesman said BAA would have to pay more to raise money than most other companies because its investment programme was particularly big.
Banks were concerned about the risks in investing in transport following September 11, the collapse of Railtrack and the financial crisis gripping Britain's air traffic control network.
