The UK’s aviation regulator has told Heathrow to reduce its passenger charges now that demand for travel has returned.
Heathrow Told to Reduce Charges by 2026
The UK’s Civil Aviation Authority (CAA) has told Heathrow Airport it needs to reduce passenger charges for airlines. The regulator has given the airport until 2026 to reduce its average charge per passenger from £30.19 to £26.31.
However, Heathrow opposes the decision, stating that it will undermine the delivery of key improvements. The London hub wanted to increase the charges to £41.95 per passenger. The money goes towards operating the airport terminals, paying staff, and maintaining the runways and other infrastructure.
The CAA says the reduced passenger charge “reflects expected increases in passenger numbers as the recovery from the pandemic continues and the higher level of the price cap in 2022, which was put in place in 2021 to reflect the challenges from the pandemic at the time”. In December 2021, the CAA allowed Heathrow to increase its passenger charge from £19.60 to £30.19 to help it financially recover from the effects of Covid.
What is the Passenger Charge?
The passenger charge is a fee charged to airlines for each customer they carry. For instance, at Heathrow, an airline will pay £30.19 on average for each passenger seated on the plane. Whilst the charges are paid by airlines, they can be passed on to passengers via airfares.
Part of the CAA’s motivation for reducing the charge was to make things fairer for passengers. CAA Chief Executive, Richard Moriarty, said the cut in fees was “about doing the right thing for consumers” Adding:
“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 charges for consumers, while allowing Heathrow to make the investment needed for the future.”
However, Heathrow Airport CEO John Holland-Kaye believes the cuts will have a detrimental effect on passengers:
“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 an investment in service dries up.”
The CAA will finalise its decision in Autumn. In the meantime, Heathrow and its resident airlines will have the option to appeal.
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