Regulator rejects Heathrow’s bid to raise £2.6bn through higher charges

Heathrow’s bid to increase airport charges to recover £2.6 billion lost during the coronavirus pandemic has been rejected by the aviation regulator.

Civil Aviation Authority director Paul Smith described the plan as “disproportionate and not in the interests of consumers”.

It has allowed the west London airport to initially raise only an additional £300 million through higher charges.

Heathrow’s passenger numbers have fallen to the lowest level since the 1960s, with just 461,000 people travelling through the airport in February.

That represents a 92% decline compared with February 2020.

In relation to the additional money Heathrow wants to recover, the CAA said it will “consider this issue further” as part of the airport’s next regulatory period which begins on January 1 next year.

Mr Smith insisted the CAA recognises that “these are exceptional circumstances for the airport and there are potential risks to consumers if we take no action in the short term”.

He went on: “The decision we have announced today will incentivise and allow Heathrow to maintain investment, service quality and be proactive in supporting any potential surge in consumer demand later this year.”

The regulator confirmed it will allow the airport to raise charges to recover the £500 million “it incurred efficiently” on its third runway project between 2017 and March 1 2020.

IAG, the parent company of British Airways, the airline that operates the most flights at the airport, said in a statement it was “extremely disappointed” with the decision, which will “unfairly penalise consumers”.

It went on: “Heathrow is the most expensive hub airport in the world.

“For over seven years, passengers paid Heathrow higher airport charges to cover the risk in the case of lower traffic.

“Meanwhile Heathrow’s shareholders have earned nearly £4 billion in dividends.

“The airport has deliberately rewarded its investors at the expense of consumers and now the regulator is asking passengers to bail it out.

“The CAA’s role is to protect consumers’ interest not Heathrow’s shareholders profits.

“Post-Brexit this makes the UK even less competitive and will drive traffic to other airports.

“We’re assessing our options.”