Heathrow airport has been ordered to cut average passenger charges by about 20% next year, in a move that could translate to lower ticket prices for travellers.
The decision by the UK regulator the Civil Aviation Authority (CAA) comes despite Heathrow having argued for higher fees, which are charged to airlines and are used to fund baggage handling, security and other costs across the airport’s terminals.
The CAA said its decision reflected the fact that travel was set to return to pre-pandemic levels from 2024 and “should benefit passengers in terms of lower costs”. 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.
That is despite Heathrow having pushed for an increase to more than £40 a passenger.
The regulator said Heathrow’s push for higher charges was driven, in part, by its attempt to secure higher returns for its shareholders.
The CAA said it was confident its final decision represented a “good deal for customers using Heathrow”.
The regulator’s chief executive, Richard Moriarty, said: “Our priority in making this decision today is to ensure the travelling public can expect great value for money from using Heathrow in terms of having a consistently good quality of service, while paying no more than is needed for it.
“We have carefully considered the sharply differing views from Heathrow Airport Ltd and the airlines about the future level of charges. Understandably, their respective shareholder interests lead the airport to argue for higher charges and the airlines to argue for lower charges.
“Our job is to reach an independent decision from these conflicting commercial interests and focus on what is in the best interests for the travelling public that will use Heathrow in the years to come. In doing so we have taken all the points made by Heathrow Airport Ltd and airlines into account, along with extensive consultation and our own detailed analysis.”
It is not the first time that Heathrow has clashed with the regulator over fees. Last month the airport accused the CAA of “getting it wrong” by lowering landing fees for airlines, while the airport itself faced higher costs. Heathrow’s chief executive, John Holland-Kaye, said airports were still able “charge what they like” and make “huge profits” on high fares.
While passenger numbers trebled in 2022, Heathrow made an adjusted loss of £684m compared with a loss of about £1.3bn the previous year.