Heathrow landing fee cuts mean ‘five years of chaos for travellers’

The airport’s boss is trying to make his long-suffering passengers finance a giant pandemic bailout for its billionaire overseas owners

HEATHROW has warned passengers should expect travel chaos to continue for the next five years, blaming the regulator for bowing to airlines by cutting landing fees. The Civil Aviation Authority (CAA) said the cap on landing fees per passenger at Heathrow will fall from £30.19 to £26.31 by 2026, after furious lobbying by the airport and airlines.

Airlines have long argued that Heathrow is one of the most expensive airports in the world and urged the CAA to resist its demands to raise charges to more than £40 per passenger.

Heathrow, meanwhile, has said that it needs to raise the fees to make sure the airport does not fall into disrepair. Richard Moriarty, chief executive of the CAA, said: “Today’s announcement is about doing the right thing for consumers. We have listened very carefully to both Heathrow airport and the airlines who have differing views to each other about the future level of charges. Our independent and impartial analysis balances affordable charges for consumers, while allowing Heathrow to make the investment needed for the future.”

However, Heathrow hit back at the decision, saying that it would result in further chaos at a time when thousands of passengers are being hit by cancellations owing to staff shortages.

John Holland-kaye, the chief executive of Heathrow, said: “The CAA continues to underestimate what it takes to deliver a good passenger service, both in terms of the level of investment and operating costs required and the fair incentive needed for private investors to finance it.”

Airlines including British Airways and Virgin Atlantic are still likely to be disappointed by the decision, as the fees are considerably higher than last year’s £22. In a long-running spat between them and Heathrow, owned by a collection of predominantly overseas pension, infrastructure and sovereign wealth funds, airlines have accused the airport of paying dividends of £4bn in recent years.

Mr Holland-kaye added: “The CAA’S proposal will undermine the delivery of key improvements for passengers, while also raising serious questions about Britain’s attractiveness to private investors.

“There is still time for the CAA to get this right with a plan that puts passengers first.”

If you currently work in the travel industry, it probably pays to have a sense of humour. Take the chief executive of Heathrow, who clearly still has time for a good joke. In typically brazen fashion, John Holland-kaye has warned that a ruling forcing the airport to cut its charges will leave holidaymakers facing “a worse experience”.

Sorry, “worse”? How often does he actually set foot inside Heathrow? Sadly, Holland-kaye is being serious but try telling those poor passengers whose children were forced to sleep on the floor last week after the cancellation of 15,000 flights that things could have been worse.

Or the people whose luggage ended up in a sea of suitcases strewn across the airport floor and had to wait days to get their precious belongings back. Or how about those who were told to find hotels in the middle of the night after they’d been left stranded amid the chaos.

Still, one thing is funny: Holland-kaye’s increasingly pathetic attempts to get passengers to effectively finance a giant pandemic bailout for Heathrow rather than trying to persuade its billionaire owners – sovereign wealth funds from Qatar, Singapore and China, plus Spanish construction giant Ferrovial and a handful of other private equity houses – to put their hands in their pockets for once.

He is at risk of becoming little more than a shameless cheerleader for the airport’s wealthy shareholders. The overwhelmingly sensible, not to mention morally correct response to the Covid-driven downturn in air travel, would of course be to slash prices across the board in a bold attempt to lure back travellers. Having endured more than two years of mayhem, disappointment and infuriating inconvenience, holidaymakers deserve to be treated generously.

But when it comes to Heathrow’s owners, greed seemingly always wins over common sense and good taste, with passengers squeezed at every opportunity right down even to car park fees. At an incredible £5 per vehicle, the drop-off charge for passengers arriving by road is now a giant money-making machine in itself. The fee for vehicles wanting to park for just 12 hours in the short stay section is a mind-boggling £77.10.

Ryanair and easyjet are the masters when it comes to stinging customers with hidden charges, but you could probably get a return flight to half the major cities in Europe for less than that. Though probably best to steer clear of Heathrow on recent form.

Yet, the income generated from parking fees would have amounted to little more than a side gig if the airport had been allowed to get away with ramping up passenger charges so excessively. Heathrow had asked the regulator to agree to an outrageous hike from a pre-pandemic rate of £22 per passenger to £41.95 – a near-doubling at a time when households are reeling from spiralling costs.

Having initially approved an interim jump this summer to £30.19 – an increase equivalent to five times the current rate of inflation – the Civil Aviation Authority (CAA) has performed a giant reverse ferret and is now proposing that Heathrow reduces the figure to £26.31 by 2026.

The decision is a severe blow to the airport’s aspirations but a victory for common sense, and the airline industry which has campaigned furiously against the price spikes. Former British Airways boss Willie Walsh, who now runs the International Air Transport Association trade body, had called it “gouging” – something “only a monopoly supplier could dream up”.

Holland-kaye had laughably talked about “kickstarting” Brexit Britain but Luis Gallego, the boss of BA owner IAG, claimed that instead of helping the country, it would “thwart” it.

Even now, Heathrow’s chief is up to his old tricks. He accuses the CAA of “underestimating” not only “the level of investment” required but also “the fair incentive needed for private investors to finance it”.

But shouldn’t £4bn of dividend payouts in the years prior to the pandemic be enough of an incentive? They even helped themselves to a £106m payment during the Covid downturn and the airport avoided having to raise fresh equity or turn to the Government’s Covid support schemes, unlike the top airlines.

Heathrow may be nursing £4bn of Covid losses but, as the CAA itself has previously pointed out, that is “for shareholders, not consumers to resolve”. That is especially true since it is investors that lumbered the company with close to £16bn in borrowings during more benign times.

It is little more than scaremongering. As CAA boss Richard Moriarty points out, the watchdog’s proposal “includes £3.6bn worth of investment”, a figure that should still enable Heathrow to be upgraded with new baggage systems, security scanners and other vital technology.

Yet, the airlines want the CAA to reduce the cap even further to reflect the cost of living crisis engulfing the country. A recent study commissioned by the industry found that Heathrow was attempting to justify higher levies by underestimating the recovery, as well as overestimating its cost. The result, it claims, is that per passenger charges have been inflated by £5bn over the next five years. Yet, it also points out that Heathrow is already the most expensive European airport and third most costly on the planet. As for Holland-kaye’s plea to the CAA for a final decision that “puts passengers first”, what would he know about that?

If Heathrow keeps this up, the slump in air travel risks turning into a permanent affair.

‘The correct response to the downturn in air travel would be to slash prices’