The Civil Aviation Authority (CAA) has instructed Heathrow Airport to lower its passenger fees from 2024.
The airport was hoping that passenger chargers would increase to help fund rising airport costs, whereas airlines wanted the fees lowered to benefit their customers.
According to the CAA, the average maximum price per passenger will fall by about 20% next year from £31.57 per traveller to £25.43, remaining broadly at the same level until the end of 2026.
According to The Telegraph, prior to the pandemic Heathrow was charging £22.91 per passenger. This time around, the airport was lobbying to increase the fee to £40.
Heathrow has confirmed that it is taking some time to “carefully consider our next steps” after receiving the decision.
“The CAA has chosen to cut airport charges to their lowest real-terms level in a decade at a time when airlines are making massive profits and Heathrow remains loss-making because of fewer passengers and higher financing costs,” a spokesperson for the airport said. “This makes no sense and will do nothing for consumers at a time when the CAA should be incentivising investment to rebuild service. We will now take some time to carefully consider our next steps.”
The CAA defended its judgement, suggesting that the agency believes that “passenger volumes are expected to return to pre-pandemic levels”.
“We have carefully considered the sharply differing views from Heathrow Airport Limited and the airlines about the future level of charges,” said Richard Moriarty, CEO of the CAA. “Understandably, their respective shareholder interests lead the airport to argue for higher charges and the airlines to argue for lower charges.”
He added: “Our job is to reach an independent decision from these conflicting commercial interests and focus on what is in the best interests for the travelling public that will use Heathrow in the years to come.”
Executives from various airlines have given their responses to the CAA’s decision.
Luis Gallego, CEO of IAG, said: “Heathrow already charges three times more per passenger than other major airports in Europe, including Gatwick and Madrid, and five times more than Dublin. If the CAA had fully taken into account industry forecasts of passenger volumes post-COVID, it should result in lower prices for consumers.”
Meanwhile Willie Walsh, director-general of the global airlines trade body the International Air Transport Association, said: “The marginal improvement in the settlement shows we were right to push the CAA not to take Heathrow’s outrageous claims at face value. But let’s be clear: the CAA is still hostage to Heathrow’s pessimistic passenger outlook, and airlines and passengers will continue to pay one of the highest airport charges in the world.”