Yahoo Finance Heathrow and British Airways brace for landing fees dogfight
British Airways and Virgin Atlantic are bracing for a dogfight with Heathrow as the airport prepares a legal challenge in a long-running row over passenger landing charges.
Britain’s biggest airport is widely expected to lodge a legal appeal with the Competition and Markets Authority (CMA) against the aviation regulator’s decision to lower fees by 20pc from next year.
Heathrow is thought to be working with external lawyers on a submission that will be filed early next week, City sources said.
Sources close to Heathrow on Friday night insisted that no final decision had been taken by the airport in relation to a legal challenge.
Nevertheless, BA and Virgin have set aside their long-running rivalry to join forces with other airlines in a counter-attack against Heathrow, industry sources said.
Lawyers for carriers operating out of the airport are understood to be finalising representations to be submitted to the CMA this weekend in the event of the airport mounting a formal legal bid.
An industry source said that a Heathrow challenge is “kind of inevitable”, adding: “I can’t see how they can climb down.”
An industry executive added that the push for a legal challenge is being “driven by Ferrovial”, Heathrow’s largest shareholder.
In response, “BA and Virgin are standing pretty close together on this”, they added.
The airport has until April 18 to challenge the decision, which was announced by the Civil Aviation Authority (CAA) at the start of March.
Heathrow operates as a regulated monopoly, meaning that its profitability is tightly controlled by the CAA.
The regulator sparked fury among airlines during the pandemic by sanctioning a steep rise in landing fees to compensate for a sharp fall in passenger numbers.
Heathrow, meanwhile, claimed it was entitled to even more money and warned the CAA that its decision meant it would have to postpone much-needed investment across the airport’s terminals.
The latest decision, to reduce fees from the current £31.57 per passenger to £25.43 from next year, came as a major blow after Heathrow argued to be able to charge a levy of up to £40.
Nevertheless, airlines were unhappy with the decision too. Luis Gallego, chief executive of BA owner IAG, said that the size of charges “risked undermining [the UK’s] competitiveness”.
Shai Weiss, Virgin Atlantic chief executive, said that “the CAA has not gone far enough to push back”.
He claimed that Heathrow had “peddled false narratives and flawed passenger forecasts in an attempt to win an economic argument”.
The prospect of a legal challenge could be complicated by Heathrow boss John Holland-Kaye standing down later this year.
Sources said that his replacement – the favourite being Mr Holland-Kaye’s deputy Emma Gilthorpe – may wish not to pursue a strategy that would plunge relations with airlines to new lows.
The CAA originally proposed a £28.39-per-passenger charge before a fierce lobbying effort by airlines convinced the regulator to reduce the fee to £25.43.
Ferrovial, which owns a 25pc stake in Heathrow, complained that the £28.39 was too low during a call with analysts in February.
The Spanish firm’s chief executive, Ignacio Madridejos Fernandez, said: “We hope the CAA final decision corrects the errors in the CAA's forecast of key regulatory building blocks. After the final decision, Heathrow and airlines have the option to appeal to the CMA.”
All parties declined to comment.
