London Heathrow and three airlines have failed in their attempts to significantly change the amount that the UK hub airport can charge passengers over the next few years.
The UK’s Competition and Markets Authority (CMA) has largely ruled in favour of the Civil Aviation Authority (CAA), which has told Heathrow that it must reduce average passenger charges from the current £31.57 per passenger to £25.43 in 2024, and then “broadly” stay at that level until the end of 2026.
Heathrow appealed to the CMA to be allowed to increase these charges further up to £40 per passenger, while British Airways, Delta Air Lines, and Virgin Atlantic Airways wanted the charge to be reduced to below £20 per passenger.
Last month, the CMA said it would largely back the CAA’s decision on the level of Heathrow charges, although the aviation regulator would have to reconsider some “smaller issues” related to its pricing decision. The CMA’s verdict was officially confirmed on Tuesday (17 October).
Kirstin Baker, who chaired the CMA group handling the appeals, said: “Having considered these appeals, we found that the CAA’s Heathrow price control struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time.
“There are a handful of smaller issues we have ordered the CAA to look at again and it has agreed to do this swiftly.”
Both Heathrow and the airlines said they were “disappointed” by the CMA’s final verdict on their appeals and called for an overhaul of the regime that sets the airport’s charges.
A Heathrow spokesperson said: “We’re naturally disappointed, but it’s time to move on. We will do our best to deliver the outcomes that passengers told us they wanted within this tight framework.
“Going forward, the CAA needs to take more account of the views of consumers so that the settlement delivers the Heathrow experience passengers are looking for and not just higher profits for airlines.”
Luis Gallego, CEO of British Airways’ parent company IAG, stressed that Heathrow’s charges would still be “among the highest in the world and are not competitive”.
“We would like to work with the CAA to improve the regulatory framework for the future,” he added.
A spokesperson for Virgin Atlantic spokesperson said the CAA’s decision “did not go far enough to protect consumers from excessive charges at Heathrow”.
“Heathrow airport’s repeated attempts to impose excessive charges demonstrate how the regulatory framework, including the formula used to set charges at the world’s most expensive airport, is broken,” said the spokesperson.
“With fresh leadership at both the CAA and Heathrow, now’s the time for a fundamental review of how these charges are set, ensuring that customers are protected ahead of shareholders.”