Third runway at Heathrow is vital to UK's economic future, says BA chief

Willie Walsh, the chief executive of British Airways, has warned that Britain faces a low-growth future if the Government fails to allow a third runway to be built at Heathrow.

In a strongly worded speech to the Guild of International Bankers last night, Mr Walsh said building the runway would benefit the UK economy to the tune of £9bn a year without increasing carbon emissions.

"If we as a country turn our back on expanding Heathrow, we are throwing in the economic towel – and must prepare ourselves for the consequences of a low-growth, or perhaps no-growth, economy in the future," he said.

Mr Walsh argued Heathrow has lost its position as Europe's number one airport with the number of destinations served by the London hub falling to 180 from 227 in 1990 because of a "chronic shortage of runway capacity".

Mr Walsh said that a public consultation over a third runway at Heathrow is expected to be launched within days and added that building it would prove crucial to ending "the Heathrow hassle of queues and flight delays". His comments come on a day when the Civil Aviation Authority (CAA) warned consumers that the cost of flying into Heathrow and Gatwick will rise over the next five years.

The regulator proposes allowing BAA, owner of the two airports, to increase prices by around £12 per passenger at Heathrow next year and £6 at Gatwick to cover increased security costs. The price caps proved bad news for BAA as it represents a cut to the permitted return on investment it can make at the airports. The CAA also proposed that BAA will have to pay fines of up to £75m if it fails to meet performance targets at the airports. The price caps could hit BAA hard with its parent company, Spain's Ferrovial, thought to be considering refinancing the airport operator's £10bn debt.

BAA said it would consult with the CAA over the price caps which it says will inhibit its ability to provide a world-class service at its airports. "We believe the regulator has not recognised the significant challenges we all face in transforming passengers' daily experience and the new security reality in which we operate," BAA said.