Heathrow customers to face higher prices

3 October 2013

The cost of flights to and from Heathrow are set to rise as the airlines face higher flying costs from April next year.

Airlines had called for a 9.8% cut to charges over the next five years, while Heathrow Airport itself proposed an above-inflation annual increase of 4.6% in charges during the next five years.

The Civil Aviation Authority, which sets the take off and landing fees airlines must pay at London's three main airports - Heathrow, Stansted and Gatwick - has ruled that airline charges must not rise higher than inflation (as measured by the Retail Price Index or RPI, currently 3.3%) until 2019.

Despite this being far less than Heathrow Airport had been demanding, Willie Walsh, chief executive of British Airways' parent company IAG, warned Heathrow customers that they will pay an extra £1 billion over the next five years as airlines pass on the extras costs to consumers.

Walsh said: "It is a bad day for our customers who have been let down by the CAA. With this settlement, Heathrow will continue to levy charges well above other major hub airports."

He added that CAA had neglected its primary duty to further the interests of passengers, by allowing Heathrow to "over-reward investors by imposing excessive charges on users."

High levels

Dame Deidre Hutton, CAA chair, defended the increase: "The challenge for Heathrow is to maintain high levels of customer service while reducing costs. We are confident this is possible and that our proposals create a positive climate for further capital investment, in the passenger interest."

Heathrow criticised the CAA for capping the charges level with RPI, saying this could have "serious and far-reaching consequences for passengers and airlines" at the airport.

For Gatwick, CAA said charges will increase by RPI plus 0.5% a year for seven years from 2014, and charges at Stansted are yet to be decided. The confirmation of these proposals will be made in January.

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