Will holidaymakers be the losers in the Battle of Heathrow?
Travel firms’ fury as airport plans to hike fees for hotels, parking and planes But it blasts back – saying it needs an extra £2.8 billion and can’t afford the bill
HEATHROW is at the centre of a bitter row after hatching a plan to make airlines and passengers pay more.
The airport told The Mail on Sunday it plans to put up its landing fees by £10 in January to £30 per passenger to cover the cost of fewer people flying. Airlines add these fees to airfares, meaning a family of five faces paying an extra £50 for flights leaving Heathrow.
Heathrow is also hoping to recoup part of its record £2 billion loss for 2020 with a separate £8.90 per passenger Airport Recovery Charge this year. The charge includes fees for baggage handling, water, waste disposal and car parking.
Meanwhile, Britain’s biggest airport is lobbying the aviation regulator for a £2.8 billion increase in its overall funding model, which is used to work out the maximum it can charge in landing fees.
The £ 8. 90 Airport Recovery Charge – which will apply for 2021 only – was approved in consultation with firms such as hotels, retailers and airlines. But it has angered some businesses, which say they also face a battle to survive.
Surinder Arora, whose Arora Group runs two hotels inside Heathrow’s boundary, said he was ‘appalled’ by the extra fees and accused Heathrow of ‘abusing its monopoly position’ with ‘rip-off rates’.
The hotelier revealed the cost of the water supply to his hotels at Terminals 2 and 5 had doubled from £11.84 to £21.72 per cubic metre.
Arora said: ‘Businesses like ours are trying to survive the worst pandemic in the history of aviation, but these guys are now trying to charge us ten times the going rate for utilities to cover their losses and line shareholders’ pockets. Why should Heathrow be exempt from shouldering losses?’
Heathrow hit back last night, saying it expected fewer passengers until at least 2023, so the cost of using the airport has to rise to make up for this.
The airport said it would not make a profit from the £8.90 per passenger charge, which would help cover the cost of passenger numbers plunging 73 per cent last year to 22.1 million.
Heathrow has made £394 million of cost-savings in the pandemic, including cutting 1,700 jobs, and has scrapped £700 million of investment. It has also raised £2.5 billion of cash including £600 million from private investors.
But airlines say they have made huge losses too and argue that Heathrow’ s seven wealthy shareholders, which include Spanish infrastructure giant Ferrovial and Qatar’s sovereign wealth fund, should repair the debt-laden airport’s balance sheets. Heathrow has paid out about £4 billion of dividends since 2012, including a £100 million dividend last February, just before the pandemic hit travel into and out of Britain.
IATA, the global industry body for airlines, said: ‘Heathrow’s application to extort billions of pounds from airlines that have been devastated by Covid-19 is a direct attempt to protect its investors’ interests on the backs of consumers.’
In total, around 20 airlines that fly from Heathrow oppose its plans to raise prices, including British Airways, Virgin Atlantic, Emirates, Etihad and United Airlines.
Heathrow said that if the Civil Aviation Authority refused to raise its funding base by £2.8 billion, it would seek to raise passenger fees by £15 rather than £10 next year to £35 per passenger to cover costs.
It said the extra funding would allow it to spend £220 million on upgrades and that without it services to customers would suffer.
Gatwick posted a £465.5 million loss for the year to December 31, but said its landing fees would remain ‘very competitive’ at £11.34 per passenger from April. Chief executive Stewart Wingate said: ‘We want to offer a bargain to airlines so they can offer very competitive fares that will stimulate demand and help the industry recover when it is safe to travel.’
The CAA will announce its decision on funding in the coming weeks. It said it proposes to reject Heathrow’s ‘ di s proportionate’ request, but is considering ‘a more limited and targeted intervention’. Heathrow said: ‘Timely action from the CAA… will ensure Heathrow consumers get a better service at a lower cost in the years to come.’