Intermoney | The UK’s airport regulator decided on Wednesday that Heathrow’s airport charges should be lowered because passenger numbers have recovered faster than expected. In 2021, Heathrow was given permission to increase passenger charges for airlines from £19.60 to £30.19 by summer 2022 and the average passenger charge for 2023 is £31.57. This should fall to £25.43 in 2024 and remain flat until the end of 2026. Heathrow wanted charges to rise to over £40, while the airlines proposed that they should be no more than £18.50
Executives at two of Heathrow’s largest capacity airlines, British Airways and Virgin Atlantic, have long complained that charges at the airport, Europe’s busiest, are the highest in the world. Shai Weiss, chief executive of Virgin Atlantic said “Heathrow has abused its power throughout this process, peddling false narratives and flawed passenger forecasts in an attempt to win an economic argument”, while Luis Gallego, chief executive of IAG, the parent company of British Airways, said the “high charges” were “designed to reward shareholders at the expense of customers” and risked undermining Heathrow’s competitiveness.
Assessment: Positive news for IAG, as British Airways is the airline with the most slots (temporary slots to use airport runways) at Heathrow with more than 50% of capacity, so it will be the airline that benefits the most from this fare cut. The increase in airport charges is one of the biggest risks faced by airlines, which are often unable to pass it on to passengers.