UK to cut Heathrow charges after airline protests

LONDON (Reuters) -London’s Heathrow Airport will have to lower landing fees over the next four years after Britain’s aviation regulator responded to pressure from airlines over the cost of flying at the hub.

Heathrow wanted to double the fee it charges airlines in order to provide a better service to customers while retaining the support of its owners, but the plan drew fury from the likes of British Airways and Virgin Atlantic who said the airport was already among the most expensive in the world.

The dispute reflects the pressures in the aviation industry as it recovers from the pandemic, and more broadly the need to limit consumer price rises at a time of soaring inflation while still investing to modernise services.

The Civil Aviation Authority (CAA) said on Tuesday that the average maximum price per passenger would fall to 26.31 pounds ($32.26) in 2026 from 30.19 pounds currently, based on inflation forecasts.

The regulator had previously said Heathrow could charge between 24.50 pounds and 34.40 pounds, while the airport argued for a cap of 32 to 43 pounds.

Heathrow said on Tuesday the CAA had underestimated what was needed to provide a good service.

“Uncorrected, these elements of the CAA’s proposal will only result in passengers getting a worse experience at Heathrow as investment in service dries up,” Heathrow CEO John Holland-Kaye said.

Heathrow has argued that the recent disruption seen in some other European airports as demand surged underlined the need to invest in customer service.

Heathrow and other British airports have also seen chaotic scenes in recent weeks due to technical issues, staff shortages and other factors.

IAG, the owner of Heathrow’s biggest customer BA, said consumers would benefit if the hub were more efficient.

“In 2022 airport charges at Heathrow will still be three times more expensive than its EU rivals and 56% higher than last year,” IAG chief executive Luis Gallego said.

Virgin Atlantic said it was a positive step but the CAA needed to go further.

“With travel recovery underway, our collective focus should be on upholding the best possible experience for customers with fair charges, especially with consumers facing cost of living pressures and our Global Britain aspirations at stake,” Chief Executive Shai Weiss said, referring to government ambitions to make the UK a more open, free trade economy.

The CAA said it would confirm its changes to Heathrow’s licence in the autumn.

($1 = 0.8155 pounds)

(Reporting by Kate Holton, Editing by Paul Sandle and Susan Fenton)