Heathrow forced to cut airline landing fees by UK watchdog

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Heathrow forced to cut airline landing fees by UK watchdog

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Heathrow airport will be forced to trim the landing fees it charges airlines following an intervention by the competition regulator. 

The UK Civil Aviation Authority on Thursday said charges will be capped at £23.73 per passenger in 2025, and £23.71 in 2026, about 6 per cent lower than planned.

It changed its calculations following a ruling from the Competition and Markets Authority in October, which intervened in a long-running and acrimonious row between the UK’s hub airport and its main airline customers. 

The competition regulator had given its qualified backing to the CAA’s original decision on charges, but said at the time there were some issues to re-examine, including how pension payments are reflected in the charges.  

The CAA’s decision on Wednesday marks the end of a years-long dispute between Heathrow and airlines, including British Airways and Virgin Atlantic, over whether the airport should be allowed to increase its fees during the regulatory period that runs from 2022 to 2026.

The charges are typically passed straight on to passengers through ticket prices.

Heathrow had originally pushed to be allowed to charge much higher fees — as much as £40 per passenger — in part to help it recoup some of its losses from during the pandemic, when air travel was curtailed.

But in an increasingly acrimonious dispute, the airlines had accused the airport of price gouging and deliberately underestimating the speed of the recovery in its passenger forecasts, in order to win a better settlement on prices from the regulator.

Both sides have said they would like to work together more closely when setting the next regulatory settlement, and that the industry’s rapid recovery from the pandemic has taken the sting out of the dispute.

Heathrow on Thursday said 81.9mn passengers passed through the airport in the 12 months to the end of June, up 13 per cent compared with the same period a year earlier.

The airport experienced its busiest day ever on June 30, when 268,000 passengers travelled.

Last month French private equity group Ardian and Saudi Arabia’s sovereign wealth fund agreed to buy a 38 per cent stake in Heathrow for £3.3bn in a major shake-up of the airport’s ownership.

The deal will see infrastructure group Ferrovial sell the vast majority of its stake in the airport after 18 years of ownership.

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