Heathrow passengers hit by £300m airport charge hike

Heathrow will be allowed to recoup £300m from passengers for losses suffered as a result of flights being grounded during the pandemic.

The Civil Aviation Authority conceded there was a danger Heathrow may not be able to reopen airport terminals quickly enough as travel restrictions are lifted unless it was permitted to raise charges. 

However, the increase was considerably lower than the £2.6bn that Heathrow had sought - which would have led to charges rising by 10pc.  

Paul Smith, the CAA director, said Heathrow’s demands were “disproportionate and not in the interests of consumers”.

“We do, however, recognise that these are exceptional circumstances for the airport and there are potential risks to consumers if we take no action in the short term," he said.

"The decision we have announced today will incentivise and allow Heathrow to maintain investment, service quality and be proactive in supporting any potential surge in consumer demand later this year.”

Heathrow is understood to be reviewing the regulator’s conclusions before deciding on whether to take legal action. It has previously threatened to sue the CAA if the regulator did not acquiesce to its demands.

A spokesman for Heathrow said: “The CAA accepted the need for it to act in order to meet its duties to consumers and to Heathrow’s financeability – but today it has failed to deliver.

"At a minimum it needed to immediately restore regulatory depreciation in line with UK regulatory principles – the interim adjustment falls far short. This undermines investor confidence in UK regulated businesses, and puts at risk the Government’s infrastructure agenda.”

The CAA said it would review how a complex regulatory framework will function in the future, raising the possibility that the airport could recoup more losses from passengers. 

© Provided by The Telegraph Global Air Travel

The watchdog also supported the airport’s request to pass about £500m of costs associated with preparing for the third runway on to travellers.

The decisions angered the owner of British Airways. An IAG spokesman said: "We're extremely disappointed with the CAA's decision, which will unfairly penalise consumers. Heathrow is the most expensive hub airport in the world. For over seven years, passengers paid Heathrow higher airport charges to cover the risk in the case of lower traffic.”

Former British Airways chief executive Willie Walsh, now head of airlines body IATA, joined the criticism. 

“The CAA have caved to pressure from Heathrow. Consumers will pay millions more to travel, to the benefit of Heathrow’s shareholders. Heathrow’s landing charges are already the highest in the world, damaging UK competitiveness and burdening travellers. To make this even more acute as the industry gears-up for a restart is madness," he said.

"This is the time when everyone in aviation should be pulling together to reduce costs and rebuild an important sector of the economy, not seeking to cover losses on the tab of its customers. Irrespective of our next steps to counter the damage of this decision, we do agree with the finding of the CAA that Heathrow must invest in better services for airlines and travelers. We expect the CAA to hold Heathrow to these obligations.” 

Reference: The Telegraph: Oliver Gill  2 hrs ago