Thursday, 22 December 2011

IAG deal reflects runway squeeze

Why has the International Airlines Group agreed to pay Lufthansa £172.5 million for British Midland*? Take off and landing slots at Heathrow, that's why. And while that's not immediately bad news for passengers it may prove to have been a symptom of higher fares to come. The deal brings IAG, which includes British Airways, slots for 56 extra round trips and day. Slots are precious because the Government has set its face against the building of another runway at the airport. I'm not being judgmental but you can't have it both ways. Either you expand airport capacity to keep pace with demand or you pay more, eventually, to fly.

*The agreement leaves Lufthansa the option of selling BMI Regional and low cost bmi baby separately

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