Heathrow will have to cut passenger charges by almost a fifth next year after losing an appeal to the UK competition watchdog.
The London airport had hoped to raise the fees it charges to airlines to fund baggage handling, security and other costs, which are set by the aviation regulator, the Civil Aviation Authority (CAA).
In March, Heathrow was told by the CAA that it must cut the charges by about 20% next year, after airlines convinced the CAA to reassess its original proposals supporting an increase.
The airport made an appeal to the Competition and Markets Authority (CMA) over the decision, which it described as “making no sense”.
However, in a provisional ruling, the CMA said that while the regulator had “made some errors” that needed to be revised, they would not significantly change the level of charges.
“While it is not possible now to quantify any changes in the price cap that could result from CAA reconsideration of these aspects, we would expect any such changes to have only a small net impact relative to the CAA’s overall price control decision, particularly as they may work in opposite directions,” the CMA said.
The CAA had ruled that travel was expected to return to pre-pandemic levels from 2024 and “should benefit passengers in terms of lower costs”.
Airlines, which had lobbied hard after the CAA initially proposed charges closer to Heathrow’s demands, had also lodged an appeal with the CMA, saying that the level remained too high.
While prices will remain the same for 2023, the average maximum per-passenger fee will drop from £31.57 this year to £25.43 in 2024, and will stay broadly flat until the end of 2026. Heathrow had pushed for an increase to more than £40 a passenger.
A spokesperson for Heathrow said: “We are carefully considering the CMA’s initial findings to understand what impact they may have on passengers and our ability to deliver our investment plans.”
While passenger numbers trebled in 2022, Heathrow made an adjusted loss of £684m compared with a loss of about £1.3bn the previous year. It forecasts it will reach 83% of 2019 passenger levels this year.
Airlines continued to argue for more cuts. A Virgin Atlantic spokesperson said the CMA ruling was “disappointing”, adding: “The airport has prioritised shareholders over consumers, relying on pessimistic passenger forecasts to support its agenda, in stark contrast to the actual number of passengers flying from Heathrow, which is close to pre-pandemic levels.”
The CMA will publish its final decision on the appeals against the CAA’s per-passenger charges on the 17 October.
