Heathrow vs airlines – dispute continues as parties given permission to appeal price cap
Heathrow Airport and separately 3 major airlines (Virgin Atlantic, British Airways and Delta Air Lines) have been granted permission to appeal the Civil Aviation Authority (CAA)’s decision on the Heathrow price cap. The airlines have been locked in a fierce dispute with Heathrow over the amount the airport can charge per passenger. Both sides launched rival appeals in April against the CAA’s decision to lower the cap; the appeal process was then passed to the Competition and Markets Authority (CMA). The appeals followed the CAA’s confirmation in March that the levy would remain fixed at the same rate as set out earlier in the year – not allowing Heathrow to charge a higher rate. The CAA had announced in January that the 2023 cap would be raised to £31.57 per passenger, up from £30.19. It will then fall about 20% to £25.43 per passenger in 2024 and will remain there until 2026. The airlines argue that Heathrow has played down its recovery from Covid, and used “knowingly undercooked and self-serving passenger forecasts,” to attempt to keep the cap, which is set based on passenger numbers, higher. Heathrow argue that the rate should be greater, to boost investment in the airport.
.
Tweet
Heathrow vs airlines – dispute continues as parties given permission to appeal price cap
BY GUY TAYLOR (City AM)
11.5.2023
Heathrow Airport and three major airlines have been granted permission to appeal the Civil Aviation Authority (CAA)’s decision on the Heathrow price cap this afternoon.
The airlines, which are Virgin Atlantic, British Airways and Delta Air Lines, have been locked in a fierce dispute with Heathrow over the amount the airport can charge per passenger.
Both sides launched rival appeals in April against the CAA’s decision to lower the cap; the appeal process was then passed to the Competition and Markets Authority (CMA).
The appeals followed the CAA’s confirmation in March that the levy would remain fixed at the same rate as set out earlier in the year.
The regulator had announced in January that the 2023 cap would be raised to £31.57 per passenger, up from £30.19. It will then fall about 20 per cent to £25.43 per passenger in 2024 and will remain there until 2026.
The airlines argue that Heathrow has played down its recovery from Covid, and used “knowingly undercooked and self-serving passenger forecasts,” to attempt to keep the cap, which is set based on passenger numbers, higher.
Heathrow argue that the rate should be greater, to boost investment in the airport.
A Virgin Atlantic spokesperson said of today’s decision “the CAA did not go far enough to protect consumers from excessive Heathrow charges in its final determination, demonstrating how the current regulatory framework is fundamentally broken.”
“The CAA decision contained multiple errors, including outdated passenger forecasts that fail to account for the strength of recovering demand.”
The spokesperson added: “We, along with other airlines, submitted our appeal to the CMA on 18 April so that consumers using the world’s most expensive airport are protected. Now that permission to appeal has been granted, we look forward to supporting the CMA as it considers our case.”
A CMA spokesperson said: “The CMA will now begin the formal stage of carefully considering the appeals from Heathrow Airport Limited, British Airways, Virgin Atlantic and Delta Air Lines.”
British Airways were contacted for comment. Heathrow declined to comment.
,
See earlier:
Likelihood of Heathrow’s 3rd runway even lower, after CAA charges decision
The CAA has refused Heathrow’s demand for a big increase in the fees it charges airlines. It had wanted up to £43 per passenger. But its regulator, the CAA, allowed it £27.49 on average. The present charge is higher, which means that fees will have to come down over the next few years. Heathrow can appeal to the Competition and Markets Authority (CMA). It looks increasingly unlikely that Heathrow will be able to build a 3rd runway. There was little mention of it in the CAA’s recent analysis. The 242 page ruling on charges just says: “We [the CAA] have said we will deal with these matters separately and in a way consistent with our statutory duties if Heathrow were to reintroduce proposals for capacity expansion.” Heathrow will say only that the plan is under review. There is some evidence in the CAA’s prices ruling that the runway will be a long way off, if ever. The CAA said the charges they are allowing would give Heathrow sufficient financial headroom to pay investors £1.5 billion over the next few years, a rate of return in line with other utility investments. But Heathrow has a level of gearing – the ratio of borrowing to equity base — of over 82%, making even that rate of return unlikely. And the negative impact of the CO2 from an expanded Heathrow make the project ever more improbable.
Click here to view full story…
CAA rules that Heathrow average maximum price per passenger will fall from £31.57 in 2023 to £25.43 in 2024
The UK Civil Aviation Authority has published its Final Decision for the annual caps that will apply to the charges that Heathrow levies on airlines for using the airport, until the end of 2026. The CAA confirmed that charges for 2023 will remain fixed at the level set out in its interim decision issued earlier this year. The average maximum price per passenger will then fall by about 20% from £31.57* per passenger in 2023 to £25.43** per passenger in 2024 and will remain broadly flat at that level until the end of 2026. This means the average charge over the five years will be £27.49 compared to £28.39 for Final Proposals, a reduction of £0.90 (all in nominal prices). This lower level of charges from 2024 recognises that passenger volumes are expected to return to pre-pandemic levels, and should allow Heathrow to continue “investing in the airport for the benefit of consumers and supporting the airport’s ability to finance its operations.” The CAA hopes passengers will benefit from slightly cheaper fares, and better systems when they travel. The current passenger forecasts are higher than in earlier assessments.
Click here to view full story…
.
.
.