Heathrow Airport has warned that a proposed reduction in the amount of money it can charge airlines per passenger would mean a significant 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 on its airfare, should drop from its COVID crisis level of 30 , £ 19 to £ 26.31 in 2026.
The airport had sought a range of between £ 32 and £ 43; airlines such as BA and Virgin Atlantic bitterly opposed it, arguing that west London’s central airport was already the most expensive to operate.
The CAA said the proposed price reflected “the expected increases in the number of passengers as the pandemic recovers and the higher level of the price cap continues in 2022, which was set in 2021 to reflect the challenges of the pandemic at that time “.
He said that when the effects of inflation were eliminated, the proposed maximum levels were equivalent to almost a 6% reduction each year from the current level until 2026 and would be “affordable” for consumers amid the cost crisis of life.
They are adjusted each year of the period to take account of inflation.
CAA CEO 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 on the future level of charges.
“Our independent and impartial analysis balances affordable charges for consumers, while allowing Heathrow to make the necessary investment for the future.”
Heathrow, which lost nearly £ 4bn during the public health emergency that nearly shut down global travel, is expected to remain at a loss this year as it tries to recover from the outage.
The aviation industry has been hit by staff shortages that have made it difficult for passengers to return, causing delays and cancellations during this year’s peak periods, with Heathrow recently unable to cope with luggage volumes, which has led to the accumulation of mountains in the arrival halls.
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0:22 Luggage chaos at Heathrow
Its chief executive, John Holland-Kaye, said of the CAA’s proposals: “As the industry rebuilds, our goal is to work alongside airlines and their ground operators to offer passengers a reliable and consistent journey through Heathrow.
“The CAA continues to underestimate what is needed to provide good passenger service, both in terms of the level of investment and operating costs required and the fair incentive needed for private investors to fund it.
“Without correction, these elements of the CAA proposal will only cause passengers to have a worse experience at Heathrow as the investment in service dries up.”
The CAA’s decision now goes to the industry consultation before a final decision in the fall.
Virgin Atlantic chief Shai Weiss said in response: “In its final proposals for Heathrow charges, the CAA has taken a positive step towards a price cap that puts customers first.
“However, the regulator can and should go further to lower the limit beyond the proposed average of £ 28.39, adjusted for inflation, by the end of 2026, reflecting strong travel demand this summer and beyond. “