In October 2021, the CAA confirmed the airport had requested to increase its passenger charges – the fee it charges airlines, per passenger, to use the airport – from £22 to between £32 (45%) and £43 (95%).
Heathrow’s airlines, by comparison, suggested the charge should be no more than £18.50 on average.
Following a consultation last summer, the CAA proposed a more modest increase in the cap to between £24.50 and £34.40, and in January 2023, it introduced an interim price cap on the charge of £31.57 per passenger.
On Wednesday, the CAA confirmed Heathrow’s passenger fees would remain capped at this interim level of £31.57 for the rest of the year, taking account – it said – of the "sharply differing views" held by the airport and airlines.
The cap will then descrease by around 20% to an average maximum price per passenger of £25.43 in 2024 and remain "broadly flat" for the remainder of the term through to the end of 2026. The CAA said this meant the average charge over the latest five-year term would be £27.49 per passenger.
"This lower level of charges from 2024 recognises passenger volumes are expected to return to pre-pandemic levels and should benefit passengers in terms of lower costs, while also allowing Heathrow airport to continue investing in the airport for the benefit of consumers and supporting the airport’s ability to finance its operations," said the CAA.
Heathrow has repeatedly warned a more frugal cap will hold back its ability to invest in the airport’s recovery from the pandemic.
’Sharply differing views’
CAA chief executive Richard Moriarty said the authority’s priority was ensuring value for money for travellers, and a "consistently good quality" level of service from Heathrow.
"We have carefully considered the sharply differing views from Heathrow airport and the airlines about the future level of charges. Understandably, their respective shareholder interests lead the airport to argue for higher charges and the airlines to argue for lower charges.
"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. In doing so, we have taken all the points made by Heathrow and airlines into account, along with extensive consultation and our own detailed analysis.
"We are confident our final decision represents a good deal for consumers using Heathrow, while having regard for the airport’s need to efficiently finance its operations and be able to invest in improving services for the future."
Heathrow can appeal to the Competition and Markets Authority if it wishes. A spokesperson told TTG the airport was considering its options.
"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.
"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."
