IAG CEO Urges Heathrow Regulatory Overhaul Before Backing Expansion

International Airlines Group (IAG) CEO Luis Gallego has voiced conditional support for London Heathrow Airport’s proposed third runway—but emphasized that significant changes to the airport’s regulatory framework must occur before the company can fully endorse the project.

Speaking at an event held by trade association Airlines UK, Gallego stressed that IAG—the parent of British Airways—backs the UK government’s growth agenda and recognizes the vital role Heathrow plays as a hub for connectivity and economic development. However, he argued that the airport’s current regulatory model is “not fit for purpose” and needs to be restructured.

“We want to develop Heathrow, and we support the development if we have the right regulatory model ... but with this model, I think it doesn’t make sense to do the investment,” he added.

Gallego criticized Heathrow’s high costs for airlines and lagging passenger experience. “Heathrow is currently the most expensive airport in the world, but the experience for passengers doesn’t match this,” he said. “The last review of its business model was in 2009—15 years ago. It’s time to take another look at the system to see if there are ways to benefit customers.”

Gallego also highlighted the need for UK airspace modernization, agreeing with UK Aviation Minister Mike Kane that the country has “an analogue system in a digital age.” However, while welcoming a commitment to modernization, he noted that improvements of “15 or 20%” are necessary, not just incremental changes.

The comments on Heathrow’s proposed expansion come amid reports that the UK Chancellor Rachel Reeves is expected to give her firm support for a third runway at the UK’s busiest airport, as well as bringing a second runway at London Gatwick Airport into full-time use.

IAG’s more cautious stance contrasts with that of easyJet, which has expressed strong support for the Heathrow third runway project.

Speaking on Jan. 22, easyJet CEO Kenton Jarvis welcomed the expansion as a chance to establish a scalable presence at the airport and bring more affordable travel options to passengers.

Separately, Gallego praised the UK government’s decision to waive the newly introduced Electronic Travel Authorization (ETA) requirement for transit passengers. The ETA, which became mandatory for non-European visitors on Jan. 8, costs £10 ($12) and allows multiple visits over two years or until the traveler’s passport expires, whichever comes first. Starting April 2, European travelers will also be required to obtain an ETA to enter the UK.

“It’s very good that they have decided transit passengers will not have to pay more—that was a mistake,” Gallego said. “We are competing with other hubs. Many passengers connect through Heathrow, but they can just as easily choose other airports. When you raise prices, you see an effect on demand.”

Despite the decision to waive the fee for transit passengers, the UK Home Office on Jan. 16 proposed that the maximum ETA fee should be increased from £10 to £16—a move IATA described as “bewildering.”