Increased charges inbound
Next year will see London Heathrow Airport (LHR) implement higher landing charges as it looks, like the industry as a whole, to recover from the financial impacts of COVID-19. The BBC reports that the UK’s busiest airport is presently allowed to charge as much as £22 ($30.41) per passenger for the use of the airport. This fee is typically part of ticket prices.
As such, to increase the charge means that the burden of the higher fees lands at the feet of the passengers through higher fares. As Reuters notes, airlines may be hesitant to increase their fares to cover the fees. After all, this could stifle demand at a time when every passenger counts, with airlines looking to bounce back after a difficult 18 months.
Nonetheless, according to The Guardian, the Civil Aviation Authority (CAA) has permitted Heathrow to raise the charges by up to 56% by 2023. This will see them climb as high as £34.40 ($47.55). However, the CAA has set an interim cap of £30 ($41.47) for next year.
Not as high as Heathrow wanted
The BBC reports that the CAA’s rationale behind permitting the increases was, according to CEO Richard Moriarty, to “keep the charges as low as possible, whilst recognizing it’s really important for Heathrow to invest and maintain a high-quality airport.” Meanwhile, a spokesperson for London Heathrow Airport explained to The Guardian that:
“Our aim is to reach a settlement that enables us to give passengers a great service while operating a safe, resilient, and competitive hub airport for Britain. (…) While it is right the CAA protect consumers against excessive profits and waste, the settlement is not designed to shield airlines from legitimate cost increases or the impacts of fewer people traveling.”
A 56% increase is a significant proportion of Heathrow’s existing landing charges. However, the airport had, in fact, initially hoped to be able to almost double them. Indeed, LHR’s desired cap had been at £43 ($59.44), which would have represented a 95% raise. In any case, the 56% increase has still incensed airlines, with Virgin Atlantic CEO Shai Weiss stating:
“Abusing its unique position as the UK’s only hub airport, Heathrow’s proposed increase of charges will hurt the UK’s economic recovery and unfairly hit the pockets of families and businesses around the nation. No other airport in the world is proposing increases on this scale and, by becoming unaffordable, competing EU hubs and airlines will benefit.”
Meanwhile, IAG CEO Luis Gallego added:
“Heathrow is already the world’s most expensive hub airport. The disproportionate increase compared to other European hubs will undermine its competitiveness even further and UK consumers will be losing out. A cost-efficient Heathrow would benefit travellers, businesses and the UK economy as a whole. Airport charges must be competitive if Global Britain is to become a reality.”
A hot topic this year
This is not the first time this year that Heathrow’s charges have been the subject of discussion. Indeed, the airport was temporarily allowed to increase its fees back in April, in light of its heavy losses since the start of the coronavirus pandemic. As of July 2021, these had hit £2.9 billion ($4 billion). It will certainly be interesting to see the impacts of the increased charges, both in terms of Heathrow’s recovery and how passenger numbers react.
What do you make of this development? Does the prospect of increased charges put you off using airports like Heathrow? Let us know your thoughts in the comments.
Cre: Simple Flying
Nguyen Mai Huong-COMM
