CAA directs Heathrow Airport to cut charges on airlines

London Heathrow airport.
Photo Credit: LHR Airports Ltd

In a landfall win for airlines and air travellers the UK CAA has directed London Heathrow Airport (LHR) to cut charges it levies on airline operators following the recovery of demand post-pandemic. The annual caps will apply to airport users until the end of 2026.

The UK aviation regulator has confirmed that charges for 2023 will remain fixed at the level set out in its interim decision issued earlier this year.

The average maximum price per passenger will then fall by about 20% from £31.57 per passenger in 2023 to £25.43 per passenger in 2024. The CAA says that charges will then remain broadly flat at that level until the end of 2026.

In broad terms, this will mean that the average charge over the five year period will be £27.49 compared to £28.39.

Passenger volumes


According to a statement issued by the CAA, the proposed lower level of charging from 2024 recognises the fact that passenger volumes are expected to return to pre-pandemic levels.

The regulator says that this should benefit passengers in terms of lower costs, whilst also allowing Heathrow Airport to continue its investment in airport infrastructure.

Passengers are set to benefit from a £3.6 billion capital investment programme which will see the installation of next generation security scanning equipment and a new baggage system for Terminal 2.

The CAA’s updated analysis reflects a passenger forecast which has been revised upwards since its Final Proposals were published in June last year, in the early stages of the recovery period.

CAA statement


Speaking on the recently announced cap on passenger charges, Richard Moriarty, Chief Executive at the UK Civil Aviation Authority, said:

“Our priority in making this decision today is to ensure the travelling public can expect great value for money from using Heathrow in terms of having a consistently good quality of service, whilst paying no more than is needed for it.”

“We have carefully considered the sharply differing views from Heathrow Airport Limited and the airlines about the future level of charges. “

“Understandably, their respective shareholder interests lead the airport to argue for higher charges and the airlines to argue for lower charges. 

“Our job is to reach an independent decision from these conflicting commercial interests and focus on what is in the best interests for the travelling public that will use Heathrow in the years to come.”

“In doing so we have taken all the points made by Heathrow Airport Limited and airlines into account, along with extensive consultation and our own detailed analysis. 

“We are confident our final decision represents a good deal for consumers using Heathrow, while having regard for the airport’s need to efficiently finance its operations and be able to invest in improving services for the future”.

Summary


The proposed cut in charges by the UK aviation regulator is set to benefit both passengers and airlines operating out of the major London airport facility.

The fee reduction will benefit airlines like British Airways and Virgin Atlantic; two major airlines which have remained critical of Heathrow managements handling of charges in the post-pandemic era.

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