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Heathrow faces larger cut in landing fees, regulator says

Lars Mucklejohn
·2-min read

The UK aviation regulator has proposed forcing London Heathrow Airport to further reduce the landing fees it can charge airlines over the next two years, following a long-running dispute over prices at Britain’s biggest airport.

The UK Civil Aviation Authority’s (CAA) latest changes will result in Heathrow’s price per passenger being capped at an estimated £23.73 in 2025 and £23.71 in 2026, the watchdog said on Thursday.

It added that the changes would lead to Heathrow’s charges decreasing by around six per cent, or £1.52 in 2025 and £1.57 in 2026.

The announcement marks a shake-up of the proposals since the regulator announced in March 2023 that charges would be capped at an estimated £25.24 per passenger in 2025 and £25.28 in 2026. Heathrow’s charges for 2024 were capped at £25.24.

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The regulator’s latest decision followed an appeal made by Heathrow to the Competition and Markets Authority (CMA) to prevent the caps going ahead, with the airport claiming they would hurt investment, particularly in the aftermath of the Covid-19 pandemic.

Airlines including British Airways, Virgin Atlantic and Delta Air Lines also appealed, although they asked for a further cut and argued Heathrow was trying to price gouge customers.

The CMA “broadly found in favour” of the CAA last October but asked it to reconsider some minor parts of its measures.

The CAA said on Thursday that its changes, which came after a six-week consultation, reflected a smaller reduction in charges for the over recovery of revenue by Heathrow in 2020 and 2021.

It added that they also marked an ​elimination of the premium that had been allowed on indexed linked debt in calculating Heathrow’s cost of capital and ​changes to ensure that Heathrow’s charges reflect the costs of pension deficit repair payments and business rates.

City A.M. approached Heathrow for comment.

Separately on Thursday, Heathrow reported back-to-back record-breaking days for passenger numbers in June as demand for holiday travel rebounds.