Reading the newspapers this week you could be forgiven for thinking that air fares are set to rise dramatically at Heathrow and Gatwick.
It is true that fares from these airports will increase from April 1. However, the £20 extra quoted in some national papers will not be put into effect immediately but rather is the target for 2012. The initial increases will see fares rise by £2.44 from Heathrow and £1.18 from Gatwick.
So what are these extra costs for? And why has there been such a huge outcry from the airlines involved?
The increases are in direct response to airport operator BAA receiving the go-head from the Civil Aviation Authority to raise landing fees. The CAA has said this move is necessary to pay for the modernisation of Heathrow and Gatwick, but is there more to it than meets the eye?
There is no hiding the fact that BAA’s owner, Ferrovial, is in financial difficulties, not least due to the £9 billion of debt it took on when buying the airports in 2006.
This settlement means BAA has avoided a financial crisis – but it is not the same deal that was proposed by the CAA in November last year.
Gatwick can now charge 12% more than the recommendation made only a few months ago while Heathrow can charge 7% more. The CAA is blaming a rise in security costs, although how they could have changed so much since November is not clear.
The heads of BMI, Virgin Atlantic and EasyJet were quick to show their anger, but their reaction is perhaps misleading. Considering the huge rise in oil prices this month – 20% – the new landing charges are relatively small.
What they will affect is the low-cost carriers’ pile ‘em high, sell ‘em cheap business model. Maybe this is why they are so angry.