Flying into Heathrow is likely to cost passengers more from January, after the UK regulator approved a 37% hike in landing charges at the country’s busiest airport.
The Civil Aviation Authority has approved an interim rise from £22 to £30.19 a passenger. But the move has failed to appease either airlines – which have condemned the increase – or the airport, which was calling for even higher charges ranging from £32 to £43 to help recoup losses caused by the coronavirus pandemic.
Heathrow’s demands had already caused contention among the airline industry. Willie Walsh, a former chief executive of British Airway’s owner, IAG, who now leads the global airline body Iata, accused the airport of “gouging” its customers.
On Thursday, Iata expressed its “disgust” with the announcement, with Walsh claiming at the CAA had “basically ordered consumers to pay over £700m to Heathrow for nothing in return”, and that only Heathrow’s shareholders would benefit. “It’s an outrageous result, ensuring that the economic hit everyone had to take from Covid-19 never applies to them.”
He called on the UK government to intervene and “remind the CAA of its obligations” to consumers.
The levy is likely to be directly passed on to travellers, as airlines also try to shore up finances after months of travel disruption caused by Covid restrictions.
The CAA said the £30.19 fee reflected “the uncertainty of the recovery of passenger volumes at the airport from the pandemic, particularly following the emergence of new information about the omicron variant of Covid-19 since the end of the consultation period”.
The increase will only apply for the first six months of 2022, with a decision on the fee that will apply for the next five years set to be come into force in the summer.
Heathrow said it was “extremely disappointed in this interim decision from the CAA”, saying the increase had relied on rushed analysis that undershot its own budget by £173m. “This is even lower than we were able to achieve in 2020, when we served half as many passengers with only one runway and two terminals operating and the benefit of a government furlough scheme,” the airport said.
“There are material and basic errors in many aspects of the CAA’s assessment. Uncorrected, this risks leaving Heathrow without sufficient cashflow to support investment in improving passenger service and resilience.” Heathrow said in July its total losses since the start of the pandemic had reached £2.9bn.
Airlines also hit out at the decision, with the chief executive of IAG, Luis Gallego, claiming the increase in landing charges would give European rivals an edge against Heathrow at a time when the UK’s economic recovery relied an ability to compete on the global stage.
Heathrow’s landing fees are already 44% more expensive than European competitions, he said, adding that 40% of passengers making connecting flights could easily do so from other European hubs.
“After the worst crisis in aviation history we need to attract demand to stay competitive. Hiking charges will have the opposite effect,” he said. “Britain will become not more competitive, but less. A cost-efficient Heathrow would benefit UK consumers, businesses and trade. Global Britain needs a global and competitive hub.”