Aviation watchdog limits Heathrow’s price hike plans but cost of travel to rise

Aviation watchdog limits Heathrow’s price hike plans but passengers are set to see the cost of travel rise at Britain’s busiest airport

  • CAA caps price rise to between £24.50 and £34.40 per Heathrow customer
  • But the airport had sought an increase from £22 to between £32 and £43
  • Watchdog says its proposals balance customer protection and airport’s needs 

The aviation regulator has moved to stop Heathrow airport from hiking its passenger charges as much as it wanted, but customers of Britain’s busiest airport are set to see the cost of travel increase.

In a bid to recover from the heavy blow it was dealt by Covid-19 travel restrictions over the last 18 months, Heathrow wanted to increase the amount it charges each customer from a cap of £22 in 2020 to between £32 and £43.

But the Civil Aviation Authority confirmed on Tuesday that the airport may only increase its per-customer charge to between £24.50 and £34.40.

Heathrow and the broader airline industry face a tough path to recovery from the damage caused by the pandemic 

The watchdog said it wanted to balance ‘affordable charges for consumers’ with allowing the airport to continue to invest in service quality, while also ‘supporting consumer demand as the industry recovers’.

Heathrow’s charge cap demands come in the context of its airline customers’ reluctance to raise ticket prices to cover higher airport charges just when they are trying to stimulate passenger demand for their own recovery.

The CAA proposals, which will be finalised next year, include a five-year ‘control period’, allowing the airport to ‘smooth charges for consumers and provide investors with medium-term certainty’.

Heathrow will also see no adjustment to its regulatory asset base, which is designed to provide assurance to investors, ‘to account for losses caused by the pandemic’.

The CAA is also proposing the introduction of a new traffic risk sharing mechanism, designed to prevent either the airport or consumers ‘bearing all the risk of the uncertainty as a result of the industry’s ongoing recovery’.

In addition, it has proposed an interim price cap for 2022 to protect consumers from any undue increase in airport charges while the full proposals are finalised.

Chief executive of the CAA Richard Moriarty ‘While international air travel is still recovering, setting a price control for Heathrow Airport against the backdrop of so much uncertainty means we have had to adapt our approach.

‘Our principal objective is to further the interests of consumers while recognising the challenges the industry has faced throughout the Covid-19 pandemic.

‘These initial proposals seek to protect consumers against unfair charges, and will allow Heathrow to continue to appropriately invest in keeping the airport resilient, efficient and one that provides a good experience for passengers.’

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