Heathrow charges set to rise as UK CAA sets out price proposals
The UK aviation regulator has set out proposals for how much Heathrow Airport can charge airlines over the next five years. It is not as much as Heathrow wanted, but it could still be an increase of up to £12.40 per passenger on 2020 charges.
The UK Civil Aviation Authority (CAA) sets a cap on how much Heathrow, the UK’s largest airport, can charge per passenger. The next price control period runs from summer 2022 for five years.
Heathrow had asked that the cap be increased to be between £32 and £43 ($44-$59), the CAA said on October 19, 2021. The highest figure is almost double the £22 ($30) charged per passenger for 2020. However, the CAA is proposing a range of £24.50 to £34.40 ($33.87-$47.56) per passenger.
The CAA is also suggesting an interim price control of approximately £30 ($41) per passenger, which will commence in January 2022 to cover the time until the five-year price control period starts in summer 2022. Heathrow had suggested an interim charge of £38 ($53) to airlines, the CAA said in a statement.
“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,” CAA chief executive Richard Moriarty said.
Privately-owned Heathrow said it looked forward to reaching a settlement with the regulator, and that it believed such a settlement should also ensure a fair return for investors. The operator added that it provides great value for money.
“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,” a spokesperson said on social media in response to the proposals.
The airport’s proposed increases had prompted an angry response from Willie Walsh, head of the International Air Transport Association. Walsh, former chief executive of British Airways, the largest carrier at Heathrow, has never shied away from criticising the airport over fees.
“The slow UK recovery in air connectivity risks being derailed by the proposed charges increase at the UK’s primary air gateway, Heathrow airport,” Walsh said at the UK Aviation Club on October 13, 2021, saying the proposed charges would add around £100 ($138) to the cost of an average family’s holiday and that shareholders should invest instead.
“Instead of expecting the travelling public to be covering excessive returns, it’s time for [shareholders] to invest. All eyes will be on the CAA to ensure they are doing their job in protecting the consumer by pushing back on the airport’s outrageous behaviour,” Walsh said.
At the IATA meeting in Boston on October 4, 2021, Walsh had also highlighted other airports seeking to increase charges, saying it could hurt airlines as they try to recover from the COVID-19 pandemic. He cited Amsterdam Schiphol airport’s request to increase charges by more than 40% in the next three years and Airports Company South Africa asking for a 38% rise in charges in 2022.
The CAA’s consultation on the proposed charges runs for eight weeks. The authority expects to make a final decision in spring 2022.
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