Heathrow Airport appeals decision it must cut charges which could lower air fares for passengers

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Heathrow accused the Civil Aviation Authority of “undermining” the investment the airport needs

Heathrow Airport has launched an appeal against a decision that it must cut charges for airlines next year, in a move that could lower air fares for passengers.

The Civil Aviation Authority (CAA) last month said the drop in charges were needed as travel demand is set to return to pre-pandemic levels from 2024.

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The aviation regulator said the cap on the west London airport’s average charge per passengers must be reduced from £31.57 for 2023 and last year, to £25.43 over the next three years. The charges are paid by airlines but are generally passed on to passengers in air fares, meaning it could result in cheaper ticket prices.

But Heathrow has accused the CAA of “undermining” the investment needed in the west London airport and is now asking competition regulator the Competition and Markets Authority (CMA) to review its decision.

Heathrow Airport has launched an appeal against a decision that it must cut charges for airlines next year (Photo: Getty Images)Heathrow Airport has launched an appeal against a decision that it must cut charges for airlines next year (Photo: Getty Images)
Heathrow Airport has launched an appeal against a decision that it must cut charges for airlines next year (Photo: Getty Images) | AFP via Getty Images

The CMA will assess whether any of the grounds for appeal can proceed and if the appeal is heard, a final decision is expected between August and October.

A Heathrow spokesman said: “When current shareholders bought Heathrow in 2006, the UK’s hub airport was suffering from years of under-investment as airlines drove down airport charges. Consumers bore the brunt of this through poor service.

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“Since then, we have made it our mission to transform Heathrow into one of the best airports in the world, supported by £11 billion of private investment.

“We believe the CAA has once again focused on driving down charges to airlines, which will not be passed on to passengers, and is undermining the investment needed to deliver the airport service and resilience consumers want. We have formally requested the CMA review parts of the CAA’s decision.”

In March, the CAA said the cut in charges “should benefit passengers in terms of lower costs”, while also allowing Heathrow’s owners to “continue investing in the airport”.

The regulator argued that its plans include a £3.6 billion capital investment programme and will see passengers benefit from next generation security scanners and a new baggage system in Terminal 2, which are collectively expected to cost around £1.3 billion.

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It added that the new charging structure also incentivises Heathrow to provide a good quality of service and have measures and targets to meet, such as on time waiting in security queues and helpfulness of staff.

CAA chief economist Andrew Walker said: “We are confident our final H7 decision on the charges that Heathrow Airport Limited levies on airlines represents a good deal for consumers, while allowing Heathrow to invest in improving services for the future. We will fully co-operate with the Competition and Markets Authority’s review of the matter.”

Both British Airways and Virgin Atlantic - two of Heathrow’s largest airlines - have long complained that fees at the airport and said it already charges “three times more” than many major airports in Europe.

Luis Gallego, chief executive of British Airways’ parent company IAG, said: “Heathrow already charges three times more per passenger than other major airports in Europe including Gatwick and Madrid, and five times more than Dublin.

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“If the CAA had fully taken into account industry forecasts of passenger volumes post-Covid, it should result in lower prices for consumers. We will continue to assess our options for further action to ensure UK consumers do not pay an unfair price to use Heathrow.”

Meanwhile, Virgin Atlantic claimed the new average charge “still penalises passengers at the world’s most expensive airport” and argued that the CAA “has not gone far enough to push back on a monopolistic Heathrow and fulfil its statutory duty to protect consumers”.

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