Competition watchdog backs Heathrow passenger fee increase

The Competition and Markets Authority has largely dismissed an appeal by British Airways, Delta and Virgin Atlantic against a price control decision from the CAA that spells out how much Heathrow can charge airlines per passenger.

Heathrow raised fees by 56% in 2022, claiming it needed to recoup billions lost during the pandemic. The three carriers appealed to the CMA in April 2023 to determine whether the CAA’s review of the increase had been correct.

The airlines argued the fee increase should be limited to around £18.50, while the CAA told Heathrow only to reduce average charges from the current £31.57 per passenger to £25.43 in 2024. Heathrow had wanted an increase of £32-£43 per passenger in the 2022-2026 period.

The CMA said its role had been to determine whether the CAA had made errors in its judgement and had broadly found in favour of the CAA.

Kirstin Baker, chair of the group making the decisions on the appeals, said:

“Having considered these appeals, we found that the CAA’s Heathrow price control struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time.

“There are a handful of smaller issues we have ordered the CAA to look at again and it has agreed to do this swiftly.”

Andrew Walker, the CAA’s chief economist, said the CMA had “largely supported our decision”.

“It represents a good deal for consumers using Heathrow, whilst allowing the airport to efficiently finance its operations and invest in improving services for the future,” he said.

However, Virgin Atlantic said the original decision “did not go far enough to protect consumers from excessive charges at Heathrow”.

“Heathrow airport’s repeated attempts to impose excessive charges demonstrate how the regulatory framework, including the formula used to set charges at the world’s most expensive airport, is broken,” it said.

“With fresh leadership at both the CAA and Heathrow, now’s the time for a fundamental review of how these charges are set, ensuring that customers are protected ahead of shareholders.

“Heathrow must work collaboratively with airlines to ensure it gets back to its best, so it can deliver a world class experience commensurate with being the world’s most expensive airport.”