Heathrow Airport has been told to lower its charges from 2024, after the airport lobbied to increase them by 27 per cent to more than £40, an argument that International Air Transport Association (IATA) director general Willie Walsh called “outrageous”.
Aviation regulator the Civil Aviation Authority (CAA) has confirmed that while charges for 2023 will remain fixed at a price cap of £31.57 per passenger, Heathrow will be subject to an average cap of £25.43 per passenger from 2024, until the end of 2026.
Airlines strongly contested Heathrow’s proposed increase to charges, which they pay for the use of the airport’s infrastructure, from runways to terminals. Usually, increases are passed onto passengers in fares.
Richard Moriarty, chief executive of the CAA said that the decision represents “a good deal for consumers using Heathrow.”
However, despite the drop in charges of around 20 per cent next year, the overall reduction is just 90p. Mr Walsh commented that the marginal improvement shows that “the CAA is still hostage to Heathrow’s pessimistic passenger outlook, and airlines and passengers will continue to pay one of the highest airport charges in the world.”
He added that the model for deciding airport charges to incentivise better performance at Heathrow requires a fundamental review and that IATA will be watching the airport’s performance this summer and beyond “very closely” with any repeat of last summer’s failures “totally unacceptable.”
Shai Weiss, chief executive of Virgin Atlantic – which has transferred its Gatwick flights to Heathrow since the pandemic – said that Heathrow has “abused its power” during the pricing review process, “peddling false narratives and flawed passenger forecasts in an attempt to win an economic argument.”
The CAA has based its final determination on annual passenger forecasts that suggest a return to pre-pandemic levels at Heathrow by 2025. Mr Weiss said the decision means that passengers are still being “penalised at the world’s most expensive airport.”
The overall reduction in charges over the next three years is unlikely to bring prices down for passengers, who are already subject to higher fares as a result of reduced capacity, salary inflation and high oil costs. According to the Office for National Statistics, flight fares rose by 44.1 per cent in the year to December 2022, the largest increase since the late 1980s.
A Heathrow spokesperson argues that the airport “remains loss-making because of fewer passengers and higher financing costs. [The CAA’s decision] makes no sense and will do nothing for consumers at a time when the CAA should be incentivising investment to rebuild service.”