Heathrow Airport’s expansion was estimated to cost up to £62bn as of last year.
A significant outcry has erupted from the airline industry following Heathrow Airport’s proposal to drastically increase its passenger charges. IAG (International Airlines Group), the parent company of British Airways and Vueling, and Virgin Atlantic have fiercely condemned the move, warning that it could cripple air travel and deter investment in the UK.
Heathrow Airport Limited (HAL) has put forward plans to raise its average regulated asset base (RAB) charge per passenger from £24.60 to £34.40. This substantial 39% increase, slated to take effect from 2024, has been met with fierce opposition from airlines, who argue it will make flying from Heathrow prohibitively expensive and damage the UK’s global competitiveness.
Willie Walsh, the chief executive of IAG, did not hold back his criticism, labeling Heathrow’s proposal as "outrageous" and a "blatant attempt to claw back losses incurred during the pandemic." He highlighted the fact that Heathrow has already received billions in government support and is now seeking to pass on its costs to consumers and airlines at a time when households are already facing economic hardship. Walsh pointed out that this move would disproportionately affect British Airways, which is a major carrier at Heathrow, and ultimately impact passengers.
Shai Weiss, CEO of Virgin Atlantic, echoed these sentiments, warning that the proposed charge hike would "destroy competition" and "undermine the UK’s economic recovery." He argued that such a steep increase would deter airlines from flying to Heathrow, leading to fewer routes, less choice for passengers, and higher ticket prices. Weiss emphasized that Heathrow already has some of the highest airport charges in the world, and this latest proposal would push it further out of reach for many travelers and businesses.
Airlines are particularly incensed by Heathrow’s justification for the increase, which they claim is based on an inflated asset base and the airport’s reluctance to reduce its operating costs. They argue that Heathrow is not adequately demonstrating efficiency and is instead resorting to imposing punitive charges on airlines and their customers. The proposed charges are currently under review by the Civil Aviation Authority (CAA), the UK’s aviation regulator.
The potential consequences of this charge hike extend beyond passenger fares. Airlines have warned that it could lead to a significant reduction in flight capacity at Heathrow, impacting vital international connectivity for businesses and tourism. Furthermore, the increased cost burden could discourage airlines from investing in new routes and services to the UK, potentially isolating the country from key global markets. The industry is urging the CAA to reject Heathrow’s proposal and instead pressure the airport to find more sustainable and cost-effective ways to manage its finances. The future of affordable and competitive air travel to and from the UK hinges on the CAA’s decision.
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