London Heathrow Airport’s (LHR) efforts to increase charges appear to have been thwarted following a provisional ruling by the UK Competition and Markets Authority (CMA), which sided mostly with the UK Civil Aviation Authority (CAA) in a dispute over airline fees.
In March, the CAA initially mandated a 20% reduction in passenger charges from 2024, citing a projected return to pre-pandemic travel levels. This decision prompted appeals from both Heathrow Airport Ltd. (HAL) and airlines such as British Airways and Virgin Atlantic.
The airport argued that the reduced fees would hamper its ability to fund necessary investments, saying the decision made “no sense” and would “do nothing for consumers at a time when the CAA should be incentivizing investment to rebuild service.” Meanwhile, carriers contended that the CAA had not gone far enough, saying the charges meant that airlines would continue to pay one of the highest airport charges in the world.
The CMA’s provisional ruling has acknowledged some errors in the CAA’s calculations, but ultimately backed most of the regulator’s decisions. However, it sided with the airlines on specific issues related to the potential impact of exceptional events and “one, relatively minor, aspect of its cost of debt calculation.”
The CMA has asked the CAA to reconsider where errors have been made, but admitted that any potential changes would “have only a small net impact relative to the CAA’s overall price control decision, particularly as they may work in opposite directions.” It will now consider any appeals made before Oct. 17 prior to publishing a final determination.
Under the CAA proposals outlined in March, the average maximum per-passenger fee would drop from £31.57 ($39.52) in 2023 to £25.43 in 2024 and remain relatively stable until the end of 2026. Heathrow had sought an increase to more than £40 per passenger, while airlines were pushing for the cap to be lowered to about £20 per passenger.
Following the CMA’s initial findings, HAL says it will assess what “impact they may have on passengers and our ability to deliver our investment plans.” Airlines remain disappointed by the decision, with Virgin Atlantic accusing the airport or prioritizing shareholders over consumers.
In July, Heathrow reported pre-tax profits of £279 million in the six months to June 30, a rise of 6% on the first half of 2022, as total passenger figures topped 37 million. Revenues rose by 36% to £1.74 billion over the same period.
Separately, Qatar Airways has leased three slot pairs at the airport for the winter 2023-24 season from Air Mauritius, according to data from Airport Coordination Ltd. The move comes after Air Mauritius opted to transfer its LHR route to London Gatwick Airport from Oct. 29. Qatar Airways now intends to offer 7X-daily flights from Doha to LHR this winter, up from 47X-weekly at present.
Related Content
