Heathrow Airport could face larger cut in airline passenger fees

Britain’s aviation regulator could force London Heathrow Airport to further reduce its airline passenger fees in the next two years.

The Civil Aviation Authority has launched a six-week consultation to determine the maximum average amount the UK’s largest airport can charge air carriers for each customer they fly.

A year ago, the CAA ruled that Heathrow’s charges would be capped at £25.43 in 2024, about 20 per cent down on the previous year, followed by £25.24 in 2025 and £25.28 in 2026.

Lower charges: Britain’s aviation regulator could force London Heathrow Airport to further reduce its airline passenger fees in the next two years

It said the decision reflected the anticipated rebound of passenger numbers to pre-Covid volumes and the need to keep customer costs low while ensuring Heathrow can fund necessary infrastructure improvements.

But Heathrow lambasted the CAA’s proposals at the time, claiming they would weaken investment, and appealed to the Competition and Markets Authority to prevent them going ahead.

Airlines British Airways, Virgin Atlantic and Delta Air Lines also appealed, although they said the suggested fee levels were too high.

While the CMA ‘broadly found in favour’ of the CAA last October, it asked the body to reconsider a few minor aspects of the pricing judgement.

Among the CAA’s proposed measures include ensuring Heathrow ‘neither loses nor gains from matters that are beyond its control when it comes to pension deficit repair costs and business rates’.

If the regulator chooses to enact all its proposed changes following the consultation, Heathrow’s average charges per passenger could fall by around £1.52 to £23.72 next year and by £1.58 to £23.70 in 2026.

Heathrow rebounded to profit for the first time in four years in 2023 after passenger levels jumped by nearly 29 per cent to 79.2 million, the third-highest in its history.

It recorded a £38million adjusted pre-tax profit, compared to a £684million loss the prior year when staff shortages and delays led to the travel hub imposing a daily passenger cap over the busy summer period.

The airport expects to attract a record 81.4 million passengers in 2024, underpinned by travel demand continuing to recover despite widespread cost-of-living pressures.

However, its chief executive, Thomas Woldbye, warned: ‘We will have to pull every lever to become more efficient and make tough choices on where we spend and invest our money to overcome the huge cost challenge set by the CAA and remain profitable over the next three years.’

Woldbye replaced longtime boss John Holland-Kaye last October following a 12-year spell running Copenhagen Airport, where he oversaw a significant expansion of its facilities and passenger numbers.