Heathrow asked to reduce passenger charges

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Ethereum Airport will have to reduce its passenger charges amid rising demand for flights, the aviation regulator has announced.

The Civil Aviation Authority (CAA) said the average charge per passenger at West London Airport would be reduced from £ 30.19 today to £ 26.31 in 2026.

According to the regulator, when the effects of inflation are eliminated, it is equivalent to a reduction of about 6% per year.

The decision follows a bitter dispute between the airport and the airlines over what the cap should be.

Charges are paid by airlines but are usually transferred to passengers in air fares.

Heathrow was allowed to raise its average fee from the previous level of £ 19.60 on January 1 due to reduced passenger numbers due to the corona virus epidemic.

But during the five-year control period announced by the CAA from 2022 to 2026, the cap will be seen at the bottom of the £ 24.50 to £ 34.40 range, which it advised.

Incorrectly, these elements of the CAA proposal will result in a worse experience for passengers at Heathrow as the investment in the service is eliminated.

The CAA said these were its “final proposals”, with the “final decision” due to be published in the fall.

Heathrow chief executive John Holland-Kaye claims that the regulator “keeps estimating what is needed to provide good passenger service, both in terms of investment level and operating costs and what private investors need to know.” In terms of the fair incentives needed for financial assistance. ” .

“There is still time for the CAA to get this right,” he said, adding: “Incorrect, these elements of the CAA proposal will result in a bad experience for passengers at Heathrow.” Because the investment in the service is gone. “

The announcement is “about doing the right thing for consumers,” said Ricard Moriarty, CAA’s chief executive.

Our independent and impartial analysis balances affordable charges for consumers, while allowing Heathrow to make the necessary investments for the future.

He asserted that the regulator had “listened carefully” to Heathrow and the airlines.

“Our independent and impartial analysis balances affordable charges for consumers, while allowing Heathrow to make the necessary investments for the future,” he said.

CAA believes Heathrow will still be able to invest in improvements, such as the next-generation security scanner and £ 1.3 billion upgrade of equipment in Terminal 2.

Heathrow said the cap ranges from £ 32 to £ 43.

Owners of the airport include China and Qatar Sovereign Wealth Funds, Spanish construction firm Fairwell and large infrastructure funds.

The airport has reportedly paid about £ 4 billion in dividends to shareholders since 2012.

But it expects to remain in deficit and no longer make a profit in 2022.

CAA data for the control period is based on the Office for Budget Responsibility inflation forecast.

The actual annual caps will be adjusted based on what happens to inflation.

Heathrow was first described by the airline industry as an “airport abusing monopoly”.

Luis Gallego, chief executive of British Airways’ parent company IAG, said in October last year that it was “already the most expensive airport in the world”, adding that the huge increase in fees “further weakens its competitiveness”. will make”.

Heathrow raised its annual passenger forecast last week due to “stronger than expected demand”.

The airport said it expects 54.4 million passengers to travel through its terminals this year.

That’s about nine million more than the guidance given in December, but close to two-thirds of the 2019 level.

Heathrow has been accused by airlines of undermining demand for air travel in an effort to persuade the CAA to allow further increases in passenger fares.