BA to fight 'insane' Heathrow levy

BRITISH Airways is prepared to take legal action to stop BAA imposing huge increases in landing charges at Heathrow, the world's busiest airport. It is understood that BA is so angry at the new levies that lawyers at the flagship carrier are working on plans to seek a judicial review.

The decision by the airports operator to put up charges by 40% over the next five years when the industry is facing renewed crisis has been described by one executive as 'insane'.

The Civil Aviation Authority said this month it would allow BAA to raise charges by 6.5% a year above inflation.

BAA said that without the cash, the long-delayed Terminal 5 would not be built. But BA, burdened with £5.5bn debts, said it had already been paying for T5 through existing levies on landing charges. An airline spokesman said: 'An increase of 40% over five years is unjustified and in these market conditions it is one we would find exceptionally difficult to pass on to our customers.'

BA, which is laying off 13,000 staff, accounts for nearly two-fifths of Heathrow traffic. It paid £615m in landing charges last year.

Nigel Turner, finance director of bmi British Midland, said: 'It is insane to ask airlines and passengers to pay more when the same business and travellers will be subjected to considerable disruption.'

BA has been working with Virgin Atlantic and bmi British Midland on a co-ordinated response to the CAA's plans. They argue that the price rise will leave them between £300m and £400m out of pocket because they have already helped to contribute to the cost of T5. They say the extra charges will have to be passed on in higher fares. The airlines have also accused BAA of making excess profits at the expense of airport users.

The threat of higher landing charges could not have come at a worse time. BA is so concerned about a war in Iraq that it has drawn up plans to deal with dramatic falls in business. If passenger numbers fall as they did after 11 September, BA predicts a 30% slump in revenue.