Heathrow ‘duped’ regulator on landing fees

Airport underestimated revenue by £1bn to justify putting up charges to passengers, report claims

‘Already the most expensive in Europe, Heathrow is abusing its monopoly position to fleece passengers’

HEATHROW has duped the Civil Aviation Authority (CAA) into inflating costs and underestimating revenue to justify steep increases in landing charges, according to a report by a former Treasury official.

The findings also allege that Heathrow’s predominantly overseas shareholders are in line for a £5bn payday at the expense of the British passengers.

A long-running row between Heathrow and airlines – such as British Airways and Virgin Atlantic – is set to reach its climax in the coming weeks as the CAA decides how much the airport can increase its landing charges over the coming years – fees that are typically passed on to passengers.

Heathrow said the findings were “so flawed it is embarrassing” and accused airlines of trying to “protect profits”.

The analysis, authored by former Treasury official Matthew Oakley and commissioned by airlines, says the regulator has made a series of mistakes when assessing Heathrow’s application.

It found that operating costs were over-estimated by £750m, revenue was underestimated by £1bn and passenger numbers were underestimated by as much as 57m over the next four years.

Meanwhile, the airport overestimated costs by a further £3bn to justify the rate of return needed to raise investment from its shareholders, the report’s authors claimed.

Shai Weiss, chief executive of Virgin Atlantic, said: “Already the most expensive airport in Europe, Heathrow is abusing its monopoly position to fleece passengers and undermine the competitiveness of ‘Global Britain’, all to deliver excessive returns to its shareholders.”

A spokesman for Heathrow hit back, saying: “Airlines appear less interested in giving passengers a reliable journey at the airport, and more interested in protecting their own profits.

“Airlines set fares to what the market will bear, and consumers will have seen fares rise by up to 100pc already as airlines try to recover Covid losses.

“The increase in airport charges that guarantees a good service will reduce airline margins slightly, but have no impact on consumer prices.”

The row between airlines and airports has been rumbling on for approaching two years now. Heathrow wants to increase charges to an average of around £40 per passenger – but has agreed to defer some of the payments.

The rise would be considerably more than the £22 charged last year and even the £30 that is currently being levied.

The CAA is responsible for considering a charging framework every five years. Heathrow is owned by a group of investors including Spain’s Ferrovial and sovereign wealth funds from Qatar, Singapore and China. The UK’S USS pension fund owns a 10pc stake.

Virgin Atlantic has calculated that if Heathrow gets its way the cost of a holiday to Florida for a family of four would increase by £200.

A spokesman for Heathrow said: “We trust that the CAA will make its decision based on the evidence, in the interests of consumers and financeability, in line with its duties.”

The CAA is expected to make its final determination in July. It did not comment further.

Luis Gallego, IAG’S chief executive, said: “Heathrow’s passengers forecast is deliberately pessimistic to pursue an unjustified 90pc hike in charges. Its view is totally inconsistent with the industry’s expectations ... which suggests passenger volumes could easily exceed 70m this year.”