Virgin Atlantic risks seizure of aircraft and heavy fine by taking a stand.
Virgin Atlantic risks a substantial fine or having some of its aircraft impounded by the UK’s Civil Aviation Authority if it continues to refuse to pay fees to the airport operator BAA Ltd. until the end of March. The long-haul airline is taking a stand because of the breakdown in air travel to London Heathrow in mid-December due to heavy snowfall. It says that it is being forced to pay millions in refunds.
Heavy snow and ice across Europe from December 18 resulted in Europe’s busiest airport to cancel all flights for four days in the busy run-up to the Christmas period. An inquiry into the disruption is currently being prepared and it is this that the airline wants to wait for before paying its fees. The UK-based airline, which is 51% owned by Richard Branson’s Virgin Group and 49% by Singapore Airlines, is the second-biggest long-haul carrier operating at Heathrow after British Airways. It says it will withhold fees for the January-March quarter.
“We have written to BAA this weekend to advise them that we are withholding our fees,” Virgin said in a statement. “We are keen that BAA also feels a strong sense of accountability to the consumer and that minds are focused on delivering a fully independent and robust inquiry.” BAA has responded that the airport’s conditions of use do not provide any basis for Virgin Atlantic to withhold landing and parking fees. Virgin Atlantic estimates the disruption cost it more than €12 million. BA says it lost more than €60 million from earnings as its passenger traffic tumbled 8.3% during December.
It is refusing to comment on legal action or other methods of protest against BAA. Lufthansa, which was also badly affected by the airport’s closure, says it has not considered halting payments.
WSJ / Bloomberg