Airlines suck up any increase in fees by passing them onto passengers, so Heathrow’s wish to nearly double them could see a hike in ticket prices your customers won’t stomach unless they have deep pockets.
In 2021, Heathrow’s airport charges were £19.36pp. Now, it proposes increasing them to a breathtaking £37.63 in 2022 to make up for the losses it suffered during the pandemic.
The CAA, which has final approval, has proposed a range between a more modest £24.50 and a hefty £34.40 and begun a consultation that ends in mid-December.
Heathrow says this is a “legitimate response to keep airports operating”. “As we emerge from the pandemic, the vast majority of airports right across the UK and the world are having to increase their prices – it’s not a uniquely Heathrow phenomenon,” said a spokesperson.
Meanwhile, an interim price control of £30 per passenger is to be implemented from January 2022. The CAA says this “will protect consumers” in the gap between the current price control finishing and the next one starting and is “significantly lower” than Heathrow’s own proposed interim charge of £38.
Both these proposals are out for consultation, but the CAA won’t have to wait long for responses, judging from the outrage so far. The unusually blunt response from Airlines UK urged the CAA to act “against a monopoly-abusing hub airport”.
“Monopolies will always try it on and that’s why we need a strong regulator to clamp down on what is blatant gouging,” it said, adding: “How on earth can it be in the interests of consumers to ramp up charges by as much as 50%? It’s Heathrow’s shareholders and not our customers who should be asked to foot the bill.”
Airlines UK has a point, as the union Unite made clear last autumn. It said then that in the last five years, Heathrow’s debt had increased by nearly £3 billion, while since 2012, it had paid out £4 billion in dividends to shareholders. This includes £107 million in May 2020, after the huge hit from the pandemic.
Many asked then why such dividends had been paid, but the standard answer to these questions is that those are the rules for investors. Well, it’s about time we changed them.
Heathrow and other major UK airports used to be state-owned and not so beholden to shareholders wanting to make big bucks on their investment. Now, the state wealth funds of Qatar and China own 30% of Heathrow, with private financial institutions the remainder. Arguably, they can all stomach the costs of the pandemic – just like the rest of the corporate world has had to.
True, there are far fewer passengers, but Heathrow has seen 15 new airlines during the pandemic, even though there has never been more spare capacity at other London airports. Virgin Atlantic moved there wholesale from Gatwick and British Airways has temporarily shifted all its Gatwick short-haul there, so if anyone needed to raise fees to make up for this, perhaps it’s London’s second airport.
Heathrow’s new charges will come into force next summer, just in time for what will – fingers crossed – be a real return to travel. Let’s hope some leisure travellers who have to use the airport aren’t priced out of what may be their first summer break in three years.
