Published : 2 years ago, on 19/04/2023

UK’s Heathrow, airlines appeal regulator’s landing fee cut

By Sarah Young

LONDON (Reuters) -A cut to the fees Britain’s Heathrow can charge airlines faces separate appeals from the airport and two of its biggest carriers, British Airways and Virgin Atlantic.

Britain’s busiest airport says that investment will be undermined without a rise in fees, while the airlines argue that even with the cut, the fees are still excessive and Heathrow remains one of the world’s most expensive hubs.

Heathrow was told by the Civil Aviation Authority (CAA) in March that fees would need to fall during the 2024-26 period. Under the plan, Heathrow charges would drop to about 25.43 pounds per passenger in nominal terms over that period.

But in the latest chapter in a years-long battle between the airport and its customers, airlines say the CAA has not gone far enough. Both sides are appealing its decision.

Britain’s Competition and Markets Authority must now decide whether any of the appeals have grounds to proceed.

Heathrow argues it needs higher fees to provide a good service, pay its shareholders returns and fund investment.

“We believe the CAA has once again focused on driving down charges to airlines, which will not be passed on to passengers, and is undermining the investment needed to deliver the airport service and resilience consumers want,” it said in a statement.

Virgin Atlantic said that the CAA calculations did not take account of a strong recovery in travel since the pandemic.

“The CAA decision contained multiple errors of fact and judgment, including pessimistic passenger forecasts that ignore the strength of recovering demand,” a Virgin spokesperson said.

Heathrow is owned by Spain’s Ferrovial, Qatar Investment Authority and other financial investors.

Qatar is also the largest shareholder in BA-owner IAG through its Qatar Airways unit.

(Reporting by Sarah Young; editing by William James and Alexander Smith)