Heathrow warns on investment as regulator eyes reduction in passenger charges

Business

Heathrow Airport has warned that a proposed reduction in the amount of money it can charge airlines per passenger would result in a major reduction in investment.

In its final proposals revealed on Tuesday, the Civil Aviation Authority (CAA) said the average maximum charge – which is passed on to passengers in their air fare – should fall from its COVID crisis level of £30.19 to £26.31 in 2026.

The airport had sought a range between £32 to £43 – bitterly opposed by airlines including BA and Virgin Atlantic which argued that the west London hub airport was already the most expensive to operate from.

The CAA said the proposed pricing reflected “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.”

It said that when the effects of inflation were removed, the proposed cap was equivalent to nearly a 6% reduction every year from today’s level up to 2026 and would be “affordable” for consumers amid the cost of living crisis.

CAA chief executive Richard Moriarty 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.

More from Business

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

Heathrow, which lost almost £4bn during the public health emergency that all but closed down global travel, is expected to remain loss-making this year as it tries to get back on its feet after the disruption.

The aviation industry has been plagued by staff shortages that have hampered the return of passengers, resulting in delays and cancellations during peak periods this year with Heathrow recently failing to get to grips with baggage volumes, resulting in mountains building up at arrival halls.

Please use Chrome browser for a more accessible video player

Luggage chaos at Heathrow

Its chief executive, John Holland-Kaye, said of the CAA’s proposals: “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.”

The CAA’s decision now goes out to industry consultation ahead of a final decision in the autumn.

Products You May Like

Articles You May Like

Salman Rushdie is on a ventilator and may lose eye after he was stabbed on stage, says agent
Elon Musk’s SpaceX in Talks With ESA to Allow Temporary Use of Its Launchers
‘People started falling on top of each other’: At least 41 people – including children – killed in fire at Egypt church
Call for Babs’ army of volunteers to test dementia therapies in memory of Dame Barbara Windsor
Apple Card’s rapid growth, outside vendors blamed for mishaps within Goldman’s credit-card business

Leave a Reply

Your email address will not be published.