Heathrow calls on aviation regulator to ‘protect services’ with favourable price cap

Heathrow has urged the aviation regulator to “protect services and resilience levels” by setting a price cap favourable to the airport.

“The last thing passengers want is a cut price plan that leads to the cancelled holidays, stress and ‘hassle’ seen at other airports,” the hub said in an update on Monday.

The airport asked the Civil Aviation Authority (CAA) to incentivise investment and maintain affordable private financing. 

According to the hub, services could be protected with less than a 2 per cent increase in ticket prices. 

“​​Failure to invest risks degrading passenger experience at a time when it has never been more important for operations to ramp up smoothly,” commented chief executive John Holland Kaye. 

The remarks were lambasted by BA’s owner IAG, who said hiking fees will be “detrimental to UK consumers and the economy,” while Virgin Atlantic called on the CAA to “protect consumers” from Heathrow’s “monopolistic attempt to levy unjustified additional charges until the end of 2026.”

Aviation analyst Sally Gethin argued that both sides have their reasons.

“With airlines haemorrhaging revenues and some barely able to preserve their operations in the current travel chaos, many are at further financial risk if there is an increase in airport charges,” she told City A.M.

“But airports are fixed assets and have also haemorrhaged revenues in the pandemic when some had to close their facilities – they need increases in charges to continue in order to maintain standards and infrastructure.”

The price Heathrow can charge its airline customers for using the facility has been at the centre of contention between the airport and airlines over the last few months.

Following two disastrous years plagued by Covid-induced losses, the hub lobbied with the CAA to increase the cap to as high as £43 per passenger, angering airlines. 

British Airways’ (BA) owner and IAG were Heathrow’s biggest detractors, recently accusing it of “abusing its monopoly to fleece passengers” to enrich its shareholders. 

The allegations were rebuked by the hub’s chairman, Lord Paul Deighton, who recently argued that higher airport charges were needed if Heathrow wanted to remain Britain’s hub airport. 

The CAA is set to make a decision this summer after it set in October last year an interim price cap at £30.19 per passenger, which angered both sides.

The hub said today it was “making good progress” with the plan to ramp up labour capacity, increasing its security, engineering and services teams while reopening terminal 4 on Tuesday.

“I’m immensely proud of the way my team has worked with airlines and other partners to ensure passengers got away during the Jubilee half term,” Holland-Kaye added. 

Compared to the widespread chaos registered at airports around the country during the Bank Holiday weekend, Heathrow reported that 90 per cent of passengers passed through security in less than 10 minutes. 

The airport added that flights cancelled – which on Tuesday alone amounted to 124 – were no more than any given day.

Passenger levels returned to 79 per cent of pre-pandemic levels, with 5.3 million people passing through Heathrow’s terminals in May, with the month the airport’s busiest since March 2020.