CAA Proposes London Heathrow Charge Changes

London Heathrow Handles 6.6m Passengers in December
Photo Credit: London Heathrow Airport.
Jamie Clarke 4 Min Read
4 Min Read

In the last week the UK Civil Aviation Authority (CAA), has published its proposed Heathrow Airport charge changes.

This article will cover the details surrounding the CAAs charge changes for London Heathrow Airport (LHR) and what this means for the airport.

CAA: Heathrow Charge Adjustments


Photo Credit: Konstantin Von Wedelstaedt (GFDL 1.2 http://www.gnu.org/licenses/old-licenses/fdl-1.2.html or GFDL 1.2 http://www.gnu.org/licenses/old-licenses/fdl-1.2.html), via Wikimedia Commons

The CAAs final decision on the price cap back in March 2023 shown that the price per passenger would be capped at the following – £25.43 in 2024, £25.24 in 2025, and £25.28 in 2026.

Since, the CAA has addressed the CMAs (Competition and Markets Authority) determination on the authorities H7 licence adjustments appeal.

The CMAs appeal found that the CAA was in broadly the right range for the price caps. However, there were some smaller issues that needed to be re-examined.

The H7 licence period runs between January 2022 until December 2026.

Further H7 Adjustments


Looking through the CMAs appeal, the regulator has made further adjustments to its H7 licence, including the following –

  • Through additional corrections, the difference between Heathrow Airport’s actual and allowed revenues in both 2020 and 2021. They will further reduce the airport charges in both 2025 and 2026.
  • Re-examining the inclusion of a premium for index-linked debt in Heathrow Airport’s overall weighted average cost of capital, will be removed completely.
  • Ensuring Heathrow Airport neither loses nor gains from matters that are beyond its control with regards to pension deficit repair costs and business rates.

The CAA will now enter into a six week consultation over these proposed changes with the CMA.

If these changes come into effect, 2025 price cap will drop by £1.52 and the 2026 price cap will drop by £1.58. This will then see 2025 charges at £23.72 and 2026 charges at £23.70.

Overall


Finally, these further price cap reductions will not only help keep fare prices for travelling passengers at more affordable levels. But also, this will help incentivise more investment into the UK capital airport, which it certainly needs.

Maybe these changes may also help investors and the public with spurring the expansions plans for the airport as it struggles to cope with the constant increase in demand across all reaches of the globe.

Recent CAA News…


In recent news, the CAA has been up to the following –

  • An interim report, prepared by an Independent Review Panel into the air traffic control failure on 28 August 2023, has been published by the CAA. Read our article here.
  • Wizz Air has is now fully compliant with the deed of undertaking signed with the CAA last year following disruptions to its service in the summer of 2022. Read our article here.
  • Young people aged 18 to 34 years old are leading aviation’s revival compared to other age groups according to a new consumer trends report from the CAA. Read our article here.

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