LONDON – On June 28, the United Kingdom’s busiest airport that surrounds its capital city, London Heathrow, has provided its comments in regards to the UK CAA’s (Civil Aviation Authority) final proposal of changes to its H7 price control period that will run from January 2022 until December 2026.
What the proposal means…
At present, Heathrow Airport, currently pays an average maximum price of £30.19 per passenger back to the CAA, a charge that is ultimately passed through airlines which has for many years hiked up air fares for customers flying in and out of London Heathrow (LHR).
However, under the new H7 price control proposal, it is said that these passengers charges will drop by a 6% reduction every year until 2026 where the price will fall to £26.31 per passenger, ultimately a £3.88 price reduction over the course of this five-year control period.
Commenting at the time of the new proposal, the UK CAA’s Chief Executive Officer, Richard Moriarty, had 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.”
“Our independent and impartial analysis balances affordable chargers for consumers while allowing Heathrow to make the investment needed for the future.”
As part of the latest final changes that have been proposed to the H7, they will now undergo a period where it will enable both Heathrow Airport and airlines to provide feedback before the CAA makes it final decision on the H7 which is expected later this year.
The £30.19 charge however, will remain unchanged for the entirety of 2022, meaning we won’t see any of the new proposed reductions come into play until next year.
Announcing their feedback on the CAA’s final proposal, Heathrow’s Chief Executive Officer, John Holland-Kaye, has said, “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. Economic regulation should drive affordable private investment in Britain’s infrastructure to the benefit of users, not hamper it.”
“The CAA’s proposal will undermine the delivery of key improvements for passengers, while also raising serious questions about Britain’s attractiveness to private investors.”
“We will take time to assess the CAA’s proposal in more detail and will provide a further evidence-based response to this latest consultation. There is still time for the CAA to get this right with a plan that puts passengers first and encourages everyone in the industry to work together to better serve the travelling public.”
It is evident from these comments that Heathrow Airport is still frustrated with the CAA’s proposed changes and is insisting that more can still be done and should be done.
It will be interesting to see what Heathrow’s evidence-based response will be to this final proposal. It is evident that despite some small positives in the reduction of the charges over the next five years, the CAA still need to enable a pricing model that incentivises private investment whilst also driving down high air fares for passengers.