IAG share price: Report blames BA Heathrow dominance for higher fares

A new study has found that Heathrow passengers could be paying as much as 10 percent more on fares because they lack an alternative to flying with International Consolidated Airlines Group’s (LON:IAG) British Airways, City A.M. The news comes at a sensitive time for the British flag carrier which has been hit by pilot strikes.

IAG’s share price has been steady in London this Thursday, having gained 0.28 percent to 452.99p as of 13:53 BST. The advance is largely in line with the broader UK market, with the benchmark FTSE 100 index currently standing 0.19 percent higher at 7,351.91 points.

British Airways dominance

City A.M. reported today that a report by WPI Economics, commissioned by Virgin Atlantic and using estimates supplied by the airline, says that IAG operated 77 monopoly routes from Heathrow this summer to destinations including San Diego, Madrid and Osaka, and the lack of an alternative airline has resulted in passengers paying more in fares.

The report further says that Heathrow’s disputed £14 billion expansion plan offers a “golden opportunity” to break the IAG “monopoly” because more than 350 take-off and landing slots are expected to be created.

IAG surprised by report

City A.M. also quoted a spokesman for IAG as responding that the FTSE 100 group welcomed competition but was surprised by Virgin’s economic report.

“Virgin had the opportunity to increase its slot share at Heathrow to 19.7 per cent by buying slots but it chose not to do so,” the spokesman elaborated, adding that “the airline has failed to create more competition at the airport – it closed Little Red on domestic routes, pulled off long haul routes and rents out the slots it owns to other airlines to fly”.

According to MarketBeat, the British Airways and Iberia parent currently has a consensus ‘buy’ rating, while the average target on the IAG share price stands at 643.58p.