Plan to allow Heathrow to raise passenger charges
By Neil Lancefield, PA Transport Correspondent
Heathrow will be allowed to raise passenger charges by up to 56% under plans announced by the aviation regulator.
The Civil Aviation Authority (CAA) is consulting on increasing the cap on the west London airport’s price per passenger from £22 last year to between £24.50 and £34.40.
It is proposing that the exact figure will depend on factors such as passenger demand and commercial revenue, with prices higher if Heathrow continues to struggle in those areas.
The range is planned to come in effect from summer 2022, with an interim cap of £30 being introduced at the beginning of the year.
The charges are ultimately paid by passengers as airlines add the cost to the price of tickets.
Heathrow had called for the cap to range from £32-£43 for the five-year period being consulted on.
The airport said in July that its losses from the Covid-19 pandemic had hit £2.9 billion.
Passenger numbers in September were just 38% of pre-pandemic levels.
CAA chief executive Richard Moriarty said: “While international air travel is still recovering, setting a price control for Heathrow Airport against the backdrop of so much uncertainty means we have had to adapt our approach.
“Our principal objective is to further the interests of consumers while recognising the challenges the industry has faced throughout the Covid-19 pandemic.
“These initial proposals seek to protect consumers against unfair charges, and will allow Heathrow to continue to appropriately invest in keeping the airport resilient, efficient and one that provides a good experience for passengers.”
A Heathrow spokesman said: “While it is right the CAA protect consumers against excessive profits and waste, the settlement is not designed to shield airlines from legitimate cost increases or the impacts of fewer people travelling.
“We look forward to discussing the CAA’s proposals in detail with the regulator and our airline partners as we work towards a new settlement.”
He added that the “power of private investment” has led to the airport being ranked by passengers as one of the best in the world, and for this to continue “the settlement should safeguard a fair return for investors”.
Luis Gallego, chief executive of British Airways’ parent company IAG, said Heathrow is “already the world’s most expensive hub airport” and the “disproportionate increase” in passenger fees compared with other European hubs will “undermine its competitiveness even further and UK consumers will be losing out”.
He continued: “A cost-efficient Heathrow would benefit travellers, businesses and the UK economy as a whole.”
Virgin Atlantic chief executive Shai Weiss said: “Today’s initial proposals from the Civil Aviation Authority fail to protect the British consumer, paving the way for Heathrow Airport to introduce unacceptable charges, just as international travel resumes at scale.
“The world’s most expensive airport risks becoming over 50% more expensive, as Heathrow and its owners seek to recoup their pandemic losses and secure hundreds of millions in dividends to shareholders.
“It is concerning that the regulator has failed in its first opportunity to step in, and together with industry partners, we will oppose these proposals in the strongest terms to protect passengers.
“Abusing its unique position as the UK’s only hub airport, Heathrow’s proposed increase of charges will hurt the UK’s economic recovery and unfairly hit the pockets of families and businesses around the nation. No other airport in the world is proposing increases on this scale and by becoming unaffordable, competing EU hubs and airlines will benefit.”
Earlier this year, the CAA announced that Heathrow would be allowed to raise an additional £300 million from increased charges due to the pandemic.
The regulator said on Tuesday that it is not planning to adjust this amount.
Heathrow had asked last year for the total to be set at £2.6 billion.
Consultations on the interim price cap and the wider proposals will run until November 17 and December 17 respectively.