Analysis: Airlines cautioned to be wary on Heathrow fees

Airline chiefs demanding a review of Heathrow’s charges ahead of investment in a third runway should be “careful what they wish for”, according to a senior airports source.

British Airways owner IAG, Virgin Atlantic, the Heathrow Airline Operators Committee and hotel, property and construction group Arora launched a Heathrow Reimagined campaign in February calling for “fundamental reform of Heathrow’s regulatory model”.

IAG chief executive Luis Gallego insisted: “We wouldn’t support [a third runway] with the current regulatory model.”

This came after chancellor Rachel Reeves confirmed government support for a third runway, inviting proposals to be brought forward “by the summer” and promising to “move at speed on granting development consent”.

Heathrow Reimagined hit out at the airport’s “declining experience and ageing infrastructure” when it is “the most expensive airport in the world”, said its “substantial market power has for too long given it an incentive to spend inefficiently” and warned its expansion “will see charges rise again”.

The campaign called on the CAA “to investigate what has gone wrong before passengers and airlines are locked into higher charges for decades to come”.

The Advantage Travel Partnership, Business Travel Association, World Travel & Tourism Council and UK Board of Airline Representatives in the UK joined the campaign in March.

However, a leading airport source said: “Airlines need to be careful what they wish for. Reforming the charging system might not work in the airlines’ favour.”

Heathrow charges are regulated by the CAA, and the source acknowledged: “Heathrow is the most expensive airport in the world by charges. But it’s also the most constrained airport [and] the only wholly private major airport.”

The source noted the CAA takes account of “what Heathrow is allowed to charge and what the airlines argue [for] and always ends up in the middle”, adding: “The airlines are making a case, and doing so very strongly, about how a third runway would be paid for. But why would a review come down on the side of the airlines?”

All investment in Heathrow expansion would be private money – “the government would not be spending a penny” – the source pointed out, adding: “If investors are going to take on the costs, they’re going to recoup it in charges. We would say the user should pay, and airlines are going to pass [the costs] on to customers.”

He pointed out charges on retail outlets and parking and drop-off charges could also increase and said: “We’re still at a very early stage with this. The CAA will make a decision. We expect some compromise. We don’t think there will be massive change at this stage.

“[But] if airlines are worried about the cost of flying from Heathrow, they could fly from somewhere else.”