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The Civil Aviation Authority has directed Heathrow to reduce airline passenger fees annually through 2026. According to the regulator, a cut in fees would still allow the airport to make investments while reflecting the recent uptick in traveler numbers.
The move, according to Heathrow, would jeopardize the implementation of crucial enhancements, which is why it wanted the charges increased. Airlines are responsible for paying the fees; however, they may be passed along to travelers in the form of airfare. In addition, the fees support the upkeep of the airport’s terminals, runways, baggage handling, and security systems.
Currently, Heathrow charges an average of £30.19 per passenger, but the CAA predicts that by 2026, that figure will be down to £26.31. Heathrow, though, favored raising it to £41.95.
The authority to increase the passenger fee from £19.60 to £30.19 for this summer was granted to Heathrow in December 2021.
Chief Executive Officer of the CAA Richard Moriarty stated that the fee reduction was “about doing the right thing for consumers.”
The regulator, according to John Holland-Kaye, chief executive of Heathrow, “continues to underestimate what it takes to produce a strong passenger service, both in terms of the degree of investment and running costs required and the appropriate incentive needed for private investors to finance it,”
How much should Heathrow be allowed to charge airlines for each passenger to cover the costs of maintaining the terminals, runways, baggage systems, and security?
Major airlines using the airport and the airport have quite different perspectives.
The CAA asserts that it has taken into account anticipated increases in the number of passengers, but it also emphasizes that there are still some unknowns. For example, it is anticipated that Heathrow passenger numbers won’t return to pre-Covid levels until 2025. It also discusses striking a balance between the need for consumer-friendly fees — fees that won’t lead to significant cost increases — and allowing Heathrow to make significant investments that would enhance the traveling experience.
According to Heathrow, there is an improper equilibrium.
The announcement made today was welcomed by airlines, but they demanded that the fees be reduced even further.
However, the story is not over just yet. This is a significant turning point. Before a choice is made and published later this year, the proposals are currently out for discussion. The Competition and Markets Authority is then a possible appeals destination.
In response to “more passengers coming in,” Mr. Moriarty said that rates could be reduced because of the economy’s strength. However, he added that the cap would still permit Heathrow to invest £3.6 billion, including new baggage systems for terminal 2.
Following issues with the baggage system that caused luggage to accumulate, 5,000 travelers were affected by Heathrow flight cancellations earlier this month.
According to Mr. Moriarty, the airport needs to “lift its game” in order to address issues with disabled travelers being left on aircraft after other passengers have disembarked. These issues were brought up by BBC security journalist Frank Gardner.
The International Air Transport Association (IATA) demanded that Heathrow fees be reduced “immediately,” claiming that the increase announced in December 2021 was based on erroneous assumptions that had already been disproven by the robust post-pandemic demand for travel.