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Heathrow airport has been instructed by the Civil Aviation Authority to reduce airline passenger fees annually until 2026. However, the regulator claimed that while the costs had been reduced, the airport would still be able to make investments because of the recent uptick in traveler numbers.
The move, according to Heathrow, would jeopardize the implementation of crucial enhancements. Although the airlines pay the fees, they may be passed on to the passengers in the form of airfare. The charges support the maintenance of the terminals, runways, luggage handling, and security systems.
The average fee per passenger at Heathrow is currently £30.19, but the CAA predicts that by 2026, it will be down to £26.31. Heathrow wished to raise it to £41.95, though.
Heathrow received authorization to increase the passenger fee for this summer from £19.60 to £30.19 in December 2021.
The reduction in fees was “about doing the right thing for consumers,” according to CAA CEO Richard Moriarty.
The regulator, according to Heathrow CEO John Holland-Kaye, “continues to underestimate what it takes to produce a successful passenger service, both in terms of the degree of investment and running costs required and the appropriate incentive needed for private investors to finance it.”
How much should Heathrow be entitled to charge airlines for each traveler to cover operating expenses for the airport’s terminals, runways, baggage handling, and security?
The perspectives of the airport and the main airlines that use it are significantly different.
The CAA claims that it has taken anticipated increases in passenger traffic into account, but it also notes that there are still some unknowns, and Heathrow passenger volume is not likely to return to pre-Covid levels until 2025. It also discusses striking a balance between the need for consumer-friendly fees — those that won’t result in significant cost increases — and enabling Heathrow to make significant investments that would enhance the traveling experience.
According to Heathrow, the balance is off. Although they hailed today’s announcement as a win, airlines demanded that the fees be lowered even further.
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Despite being a significant turning point, the story is far from over. Before a final decision is released later this year, the plans are currently up for consultation. After then, a request can be made to the Competition and Markets Authority.
The strength of the recovery, coupled with “more passengers coming in,” allowed for cheaper fees, according to Mr. Moriarty on the BBC’s Today show. He added that the cap will still permit Heathrow to invest £3.6 billion, notably in new baggage systems for terminal 2.
Due to issues with the baggage system, 5,000 travelers were affected by Heathrow flight cancellations earlier this month.
According to Mr. Moriarty, the airport needs to “up its game” in response to concerns raised by BBC security correspondent Frank Gardner about issues when disabled persons are left on aircraft after other passengers have disembarked.
The International Air Transport Association (IATA) demanded a reduction in Heathrow fees “immediately,” arguing that the increase announced in December 2021 was based on erroneous predictions that have already been disproven by the robust post-pandemic demand for travel.
