bmi threatens legal action over charges

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The Independent Online

The second biggest operator at Heathrow, bmi, is considering taking legal action over the 40 per cent increase in charges levied on airlines by the airport's operator, BAA.

Sir Michael Bishop, the chairman of bmi, said he was "profoundly dissatisfied" at having to pay millions of pounds extra in landing charges in order to fund Heathrow's new Terminal 5, which will be used exclusively by British Airways and its partners in the Oneworld Alliance.

It is possible that bmi's partners in the Star Alliance, which includes Lufthansa, Singapore Airlines and United Airlines, will join in any legal action. The bmi group operates 14 per cent of all take-off and landing slots at Heathrow and in total the Star Alliance has 27 per cent.

Sir Michael said bmi could pursue BAA under the 1986 Airports Act if negotiations did not lead to a voluntary reduction in charges or improve terminal services for other airlines.

The Act prohibits airport operators from distorting competition by unfairly discriminating "against any user or class of users". Sir Michael argues that because the £3.9b Terminal 5 will be used only by Oneworld Alliance airlines, this amounts to unfair discrimination.

Talks have been going on between bmi and BAA for the past nine months and Sir Michael said he was hopeful for a settlement in the next six months. "We are not prepared to pay the full charge for facilities which are inferior to those of our competitors," he said.

He also served notice that bmi would not countenance a further increase in landing charges at Heathrow to pay for a new runway at Stansted, which is used by its low-cost rivals easyJet and Ryanair.

Sir Michael was speaking as the bmi group, which includes the budget airline bmi baby, reported a halving in losses last year to £9.8m on turnover up 7 per cent to £772m. He said the group expected to return to "sustainable profitability" in 2005 with the help of a £100m cost-cutting programme.