Watchdog rejects Heathrow move to pass its Covid costs to airlines
AVIATION regulators have dealt Heathrow a blow by rejecting a request to increase airport charges by £1.7bn to cover coronavirus losses.
The Civil Aviation Authority said the demands by Europe’s busiest airport were not “proportionate”.
British Airways owner IAG welcomed the announcement and said it was “staggering” that Heathrow was seeking to pass its losses on to airlines. Heathrow operates under a regulatory mechanism that allows it to increase airport charges based on the costs it incurs.
Separately, it is waiting on a final decision on whether it can recharge airlines £500m for costs in preparation for the building of a third runway.
The airport, which is owned by a consortium including Spanish infrastructure giant Ferrovial and the Qatari state, appealed to the CAA to increase charges amid the Covid-19 pandemic.
Heathrow said revenue losses in 2020 and 2021 would top £2.2bn and submitted a request over the summer that £1.7bn could be recouped.
The CAA said yesterday: “While [Heathrow] has raised important issues that result from the Covid-19 pandemic, we do not currently consider that [the airport] has demonstrated that its request is a proportionate response.”
A spokesman for Heathrow said: “We are disappointed with the CAA’S initial assessment and believe that it is not the right outcome for passengers. It risks further job losses at Heathrow and will make future improvements for passengers much more expensive. We intend to respond robustly to the CAA.”
IAG, the FTSE 100 owner of BA and
Heathrow’s biggest customer, has previously criticised the current mechanism that allows the airport to bill carriers for costs it incurs.
A spokesman for IAG said: “We welcome the CAA’S decision not to allow Heathrow to recharge its losses for this year and next on to airlines and their customers. We’re staggered that Heathrow thought it appropriate to pass its Covid losses on to us.
“Heathrow is a wealthy, privately owned company which should seek funds from its shareholders, as many other businesses in our industry have done, to weather this pandemic. We
look forward to participating in the CAA’S consultation process.”
The Supreme Court this week considered an appeal by Heathrow after the Court of Appeal blocked the building of a third runway on environmental grounds earlier this year. A ruling is expected in the coming weeks.
Norwegian, which had been the third-biggest airline at Gatwick before the pandemic, will consult on plans to cut up to 259 jobs after deciding to close short-haul operations at the airport.
The airline, which is in talks with government officials over a state bailout i n return for Oslo taking a stake, employs more than 1,100 pilots and cabin crew at Gatwick.