Yahoo Finance Heathrow passenger charge increase curbed by Civil Aviation Authority
Heathrow’s plans to almost double the passenger charges it levies airlines using the airport to recoup its losses during the pandemic have been rebuffed by the industry regulator.
The Civil Aviation Authority (CAA) said in a consultation document on Tuesday that the London hub could only increase its average charges from a maximum of £22 per passenger currently to between £24.50 and £34.40 from next year.
Heathrow bosses had been asking for the right in hike the cap on charges to as much as £43 to allow it to start clawing back £2.9 billion of losses incurred since the collapse in passenger traffic from Spring last year.
But the CAA’s response was criticised by major airlines such as British Airways and Virgin Atlantic, which said it “failed to protect the British consumer.”
Former BA boss Willie Walsh, now head of global airlines industry body IATA, called Britain’s Heathrow Airport a “greedy monopoly hub” last week, saying its plans could could add as much as £100 to the cost of a family holiday to a long haul destination.
But the CAA’s chief executive Richard Moriarty, said on Tuesday: “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.
“We look forward to working with all stakeholders as we refine this package of measures in the coming months, before setting out our final proposals next year.”
The new charges regime will come into force next summer and will last for five years. The CAA also proposed a new interim cap of £30 while negotiations with the airport continue.
The CAA has also suggested that a new charging system should be put in place that spreads the risk of a slow recovery from the pandemic more equally between the airport and airlines.
A Heathrow spokesperson said: “We provide great value for money which is why airlines generate premium profit margins on their services from our world-class facilities. 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.”
Virgin Atlantic’s 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 per cent 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.
Luis Gallego, chief executive of BA’s owner, aviation group IAG, said: “Heathrow is already the world’s most expensive hub airport. The disproportionate increase compared to other European hubs will undermine its competitiveness even further and UK consumers will be losing out. A cost-efficient Heathrow would benefit travellers, businesses and the UK economy as a whole.”
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