Nobody's happy as Heathrow is cleared to bump up passenger charge

LONDON (Reuters) -Heathrow Airport can charge airlines 30 pence ($0.42) more per passenger to help recover pandemic losses, Britain's regulator said on Tuesday, a fraction of what Heathrow had asked for but enough to infuriate the owner of British Airways.

Heathrow's passenger numbers have plunged over the last year and have remained more than 80% lower than pre-pandemic levels in recent months, pushing its losses to around 3 billion pounds ($4.2 billion).

Heathrow had asked the Civil Aviation Authority (CAA) if it could raise its fees to claw back 2.6 billion pounds, but the regulator limited the amount to 300 million pounds.

That means that from 2022, Heathrow can raise the landing fees, which currently stands at 21.08 pounds per passenger, by 30 pence per passenger or 1.4%.

The decision exasperated Heathrow's biggest airline customer, British Airways-owner IAG, which has long criticised the fees charged by the airport, saying it is already the most expensive hub airport in the world.

The regulator's decision will penalise customers, said IAG, adding that it would assess its options.

"The airport has deliberately rewarded its investors at the expense of consumers and now the regulator is asking passengers to bail it out," IAG said in a statement.

Heathrow, which last year lost its crown as Europe's busiest hub to Paris, also criticised the CAA's decision, saying the fee increase was inadequate and would undermine investor confidence in UK regulated businesses.

But the CAA said the airport's 2.6-billion-pound request was not in the interest of consumers.

"The decision we have announced today will incentivise and allow Heathrow to maintain investment, service quality and be proactive in supporting any potential surge in consumer demand later this year," the CAA added.

Heathrow is owned by investors including Spain's Ferrovial, the Qatar Investment Authority and China Investment Corp.

($1 = 0.7187 pounds)

(Reporting by Sarah Young; Editing by Kate Holton and Pravin Char)