Heathrow ordered by CAA to trim airline fees

The aviation regulator today insisted it was “doing the right thing for consumers” with a reduction in fees airlines will pay to use Heathrow.

The Civil Aviation Authority today issued final proposals for the maximum fees the London hub can charge carriers over five years. 

The average maximum price per passenger that airlines will pay Heathrow will fall from £30.19 today to £26.31 in 2026.  

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Heathrow had wanted to be able to charge airlines £43 for every passenger handled to rebuild its finances after the pandemic.

However, the CAA said: “When the effects of inflation are removed, this is equivalent to nearly a six per cent reduction every year from today’s level up to 2026. 

“This pricing profile reflects expected increases in passenger numbers as the recovery from the pandemic continues and the higher level of the price cap in 2022, which was put in place in 2021 to reflect the challenges from the pandemic at the time.

“While passenger numbers are expected to continue to recover in 2022 and into 2023, the proposals include new mechanisms to deal with the remaining uncertainty in respect of passenger numbers.”

CAA chief executive Richard Moriarty told BBC Radio 4’s Today programme: “We would expect airlines to pass this onto consumers over time.”

Announcing the cap on future charges, he said: “Today’s announcement is about doing the right thing for consumers.  

“We have listened very carefully to both Heathrow airport and the airlines who have differing views to each other about the future level of charges. 

“Our independent and impartial analysis balances affordable charges for consumers, while allowing Heathrow to make the investment needed for the future.”

Virgin Atlantic chief executive Shai Weiss said: “In its final proposals for Heathrow charges, the CAA has taken a positive step towards a price cap that puts customers first.

“However, the regulator can and must go further to lower the cap beyond the proposed average of £28.39, adjusted for inflation, up to the end of 2026, reflecting robust demand for travel this summer and beyond.

 “With travel recovery underway, our collective focus should be on upholding the best possible experience for customers with fair charges, especially with consumers facing cost of living pressures and our global Britain aspirations at stake.

“Along with the industry community, we’ll respond to the CAA’s consultation with the data that supports a further reduction, while reserving the option to appeal to the Competition & Markets Authority, so that passengers are protected and the CAA’s duties are fulfilled.”

Business Travel Association chief executive Clive Wratten said: “The CAA’s proposals for Heathrow charges are a small move in the right direction.

“We encourage the CAA to go further still. It is clear that Heathrow requires significant investment, but, the business and leisure customer must be encouraged to travel again.

“The proposed price reductions don’t go far enough.”

But Heathrow chief executive John Holland-Kaye accused the CAA of underestimating what is takes to deliver a good passenger service.

 He said: “As the industry rebuilds, our focus is to work alongside airlines and their ground handlers to give passengers a reliable and consistent journey through Heathrow. 

“The CAA continues to underestimate what it takes to deliver a good passenger service, both in terms of the level of investment and operating costs required and the fair incentive needed for private investors to finance it. Uncorrected, these elements of the CAA’s proposal will only result in passengers getting a worse experience at Heathrow as investment in service dries up.

“Economic regulation should drive affordable private investment in Britain’s infrastructure to the benefit of users, not hamper it. 

“The CAA’s proposal will undermine the delivery of key improvements for passengers, while also raising serious questions about Britain’s attractiveness to private investors.

“We will take time to assess the CAA’s proposal in more detail and will provide a further evidence-based response to this latest consultation. There is still time for the CAA to get this right with a plan that puts passengers first and encourages everyone in the industry to work together to better serve the travelling public.”

 MoreHeathrow chairman retaliates against airlines in fees hike row

Heathrow under fire over airline charge hike proposal

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