Writing in the Daily Telegraph, Lord Deighton argued carriers would not hike fares because “airlines set their ticket prices at what the market will bear, not on their cost base”.
“A higher airport charge would deliver clear benefits for passengers but reduce airline profit margins slightly, and that is why they are arguing against it,” he said.
The CAA will in "mid to late June" reveal the amount by which Heathrow can increase its fees. Heathrow had requested the CAA increase charges per passenger to between £32 and £43, but the CAA has said this range will be from £24.50 to £34.40, compared to £22 in 2020. An interim price of £30 was implemented in January.
Deighton argued increased fees were necessary for investment and to recoup pandemic losses of £3.8 billion. “When our shareholders took over in 2006, Heathrow was ranked one of the worst airports in the world,” he said.
“It is only through investment from our shareholders and the stability of the CAA’s regulation that Heathrow has been transformed into a world-class airport that Britain can be proud of.”
Airlines have another reason to be fearful because the Retail Price Index, on which Heathrow’s fee increases are linked, rose to more than 9% this month. This will be factored into any increase.
Carriers argue they will also have to pass increased fuel prices to passengers and that Heathrow’s 2022 passenger numbers are set to reach 53 million, two-thirds of pre-pandemic levels and more than seven million more than the previous estimate.
In a separate piece in the Telegraph, the chief executives of Iata, Virgin Atlantic and IAG said Heathrow was underestimating its recovery and over-estimating its costs.
They said that “as a wealthy private company, the airport should ask its shareholders to inject capital, as every other business significantly impacted in our industry has done”.
They added: “Heathrow’s priorities are clear: shareholder returns at the expense of consumers and Global Britain. The CAA’s priorities should also be clear: upholding its duty to protect consumers by effectively regulating a monopoly.”
