Heathrow Airport could face larger cut in airline passenger fees

Britain’s aviation regulator could force London Heathrow Airport to further reduce its charges on air passengers over the next two years.

The Civil Aviation Authority has launched a six-week consultation to determine the maximum average amount the UK’s largest airport can charge air carriers for each customer they carry.

A year ago, the CAA ruled that Heathrow fares would be capped at £25.43 in 2024, a drop of around 20% on the previous year, followed by £25.24 in 2025 and £25.28 in 2026.

He said the decision reflected the expected rebound in passenger numbers compared to pre-Covid volumes and the need to keep costs for customers low while ensuring Heathrow could fund necessary infrastructure improvements.

But Heathrow then slammed the CAA’s proposals, saying they would weaken investment, and appealed to the Competition and Markets Authority to prevent them from going ahead.

Airlines British Airways, Virgin Atlantic and Delta Air Lines also appealed, alleging that the proposed fee levels were too high.

While the CMA “largely ruled in favor” of the CAA last October, it asked the body to reconsider some minor aspects of the pricing judgment.

Measures proposed by the CAA include ensuring that Heathrow “neither loses nor gains on matters beyond its control in relation to pension deficit repair costs and business rates”.

If the regulator chooses to implement all the changes proposed following the consultation, Heathrow’s average fares per passenger could fall by around £1.52 to £23.72 next year and by 1.58 £ to £23.70 in 2026.

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Heathrow returned to profit for the first time in four years in 2023 after passenger numbers jumped almost 29% to 79.2 million, the third highest in its history.

It reported an adjusted pre-tax profit of £38m, compared with a loss of £684m the previous year, when staff shortages and delays led the travel platform to impose a cap on daily passengers during the busy summer period.

The airport expects to attract a record 81.4 million passengers in 2024, supported by travel demand which continues to recover despite widespread cost of living pressures.

However, its chief executive, Thomas Woldbye, warned: “We will need to pull every lever to become more efficient and make difficult choices about where we spend and invest our money to overcome the enormous cost challenge posed by the CAA and remain profitable during the year. the next three years.

Woldbye replaced his long-time boss, John Holland-Kaye, last October, after 12 years at the helm of Copenhagen Airport, where he oversaw a significant expansion of its facilities and passenger numbers.