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Heathrow and Virgin Atlantic appeal over airport fees ruling

Heathrow has lodged an appeal to the Competition and Markets Authority CMA against a CAA ruling that it must cut fees charged to airlines between 2024-2026.

Virgin Atlantic has also appealed to the CMA against the ruling, arguing Heathrow’s fees will remain too high.

The CMA will now decide whether there are grounds for the appeals to go ahead.

The competition watchdog’s internal process is due to take place over the summer with a final decision expected between August and October.

A Virgin Atlantic spokesperson confirmed the carrier had appealed to the CMA saying: “The CAA did not go far enough in its final determination, resulting in excessive Heathrow charges that expose a fundamentally broken regulatory framework.

“The CAA decision contained multiple errors of fact and judgment, including pessimistic passenger forecasts that ignore the strength of recovering demand.

“We have submitted our appeal so that consumers using the world’s most expensive airport will be protected.”

Other airlines are expected to appeal the CAA’s decision.

Heathrow was told by the CAA in March that fees would need to drop. The regulator ruled that charges per passenger can remain at £31.57 in 2023 but fall to £25.43 from next year.

But Heathrow has argued it needs higher fees to provide a good service, pay its shareholders returns and fund investment.

A statement from the airport said: “When current shareholders bought Heathrow in 2006, the UK’s hub airport was suffering from years of underinvestment as airlines drove down airport charges. 

“Consumers bore the brunt of this through poor service. Since then, we have made it our mission to transform Heathrow into one of the best airports in the world, supported by £11 billion of private investment. 

“We believe the CAA has once again focussed on driving down charges to airlines, which will not be passed on to passengers, and is undermining the investment needed to deliver the airport service and resilience consumers want. 

“We have formally requested the CMA review parts of the CAA’s decision.”

Heathrow is seeking to recover pre-pandemic  numbers which saw it handle 80 million passengers a year and 475,000 flights.

It believes the regulator has not taken into account £3.8 billion of losses incurred during the pandemic.  

Heathrow is owned by Spanish group Ferrovial, Qatar Investment Authority and other financial investors.

 

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