The UK Civil Aviation Authority reduced the charges London Heathrow airport will be able to levy from airlines over the next five years.
London Heathrow airport
London’s Heathrow airport is set to be moved to lower its landing charges as demand for flying recovers, following a bitter dispute between the UK’s hub airport and its largest airlines.
The Civil Aviation Authority, the sector regulator, proposed on Tuesday that Heathrow’s landing fees should fall from £30.19 per passenger to £26.31 by 2026, which it told struck a balance between permitting the airport to invest in infrastructure while keeping costs affordable for consumers.
Heathrow chief executive John Holland-Kaye said the CAA’s decision would result in a “worse experience” for passengers as an investment “dries up”.
“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 needed and the fair incentive required for private investors to finance it,” he told.
Heathrow argued that it should be permitted to charge more per passenger given the uncertainty over how many people will fly post-pandemic, and the demand to upgrade the airport’s infrastructure.
But airlines told travel demand had roared back, and warned of increased ticket costs for passengers at an airport that already has some of the highest landing charges in the world. Fees are typically passed on to customers.
Shai Weiss, chief executive of Virgin Atlantic, said the CAA had taken a “positive step” but should lower the cap further.“With travel recovery underway, our collective focus should be on upholding the best possible experience for customers with fair charges,” he told.
In a sign that the dispute was possible to resume, both Heathrow and airlines told they would push for changes before the CAA formalizes the decision in August.
Holland-Kaye told, “there is still time for the CAA to get this right”, while Weiss told Virgin “reserved the right” to take an appeal to the Competition and Markets Authority.
Overall, the charges will average £28.39 between 2022 and 2026 — enough, the regulator told, for Heathrow to install security equipment and a luggage system in Terminal 2, replacing technology that failed this month.
The final decision is at the lower end of the range the CAA had been considering, and came after the charge was raised from £22 to £30.19 in January for an interim time to account for the lower number of passengers passing through the airport during the pandemic.
International Air Transport Association
Willie Walsh, head of the International Air Transport Association, a trade body, told the charges should never have been raised in the first place, particularly given the rapid rebound in travel this year.
“The CAA must stop rewarding this monopoly,” he told. “Unless the CAA takes the opportunity to protect today’s customers the whole process should be reviewed.”
Richard Moriarty, CAA chief executive, said the regulator was focused on “doing the right thing for consumers”.
“We have heard very carefully to both Heathrow airport and the airlines . . . Our independent and impartial analysis balances affordable charges for consumers while permitting Heathrow to make the investment required for the future,” he stated.
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