CAA cuts Heathrow landing fees further after competition findings

11th Jul 2024 11:07

(Sharecast News) - The Civil Aviation Authority (CAA) has ruled that the amount Heathrow is allowed to charge airlines in landing fees must be reduced by a further 6% over the next two years following a competition appeal last year.

The CAA has said that the average charge per passenger that airlines must pay Heathrow would now be capped at £23.73 per passenger in 2025 and £23.71 per passenger in 2026.

That's down £1.52 and £1.57 on the previous caps decided last March, respectively. That's a large reduction from the £25.24 price cap for 2024, which was already cut significantly from £31.57 for 2023.

The Competition and Markets Authority said in October 2023 that while the CAA had struck broadly the right balance between passenger and investment interests when determining the price cap, the aviation body made some errors in its calculations.

That followed an appeal of the CAA decision by airlines British Airways, Delta Air Lines and Virgin Atlantic, as well as Heathrow Airport Limited itself.

Heathrow complained that the cut would limit investment, while the airlines said the cuts didn't go far enough - with both parties arguing that the price control limit was not in the interests of consumers.

The CAA said that Thursday's announced changes reflect: "a smaller reduction in charges for the over recovery of revenue by Heathrow in 2020 and 2021; elimination of the premium that had been allowed on indexed linked debt in calculating Heathrow's cost of capital; and changes to ensure that Heathrow's charges reflect the costs of pension deficit repair payments and business rates."