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Heathrow Will Be Allowed to Lift Fees After Clash With Airlines - BLOOMBERG

OCTOBER 19, 2021

(Bloomberg) --

The U.K. will allow London Heathrow airport to raise ticket surcharges by as much as 56%, setting up a clash with airlines who have denounced higher fees as they try to recover from the coronavirus downturn.

The hub will be permitted to lift charges to a range of 24.50 pounds ($33.77) to 34.40 pounds over a five-year period starting next summer, the Civil Aviation Authority said Tuesday. That compares with 22 pounds per passenger in 2020. 

“The CAA will work closely with Heathrow, airlines and other stakeholders to narrow this range over the next few months,” the regulator said. “These proposals will deliver affordable charges for consumers and allow the airport to continue to invest in service quality.”

Heathrow has been at loggerheads with airlines for months after seeking to raise charges by as much as 95% to recover from the Covid-19 pandemic. Willie Walsh, head of the International Air Transport Association lobby group and a former chief of IAG SA-owned British Airways, branded the airport a “greedy monopoly” and said investors should “step up and feel some of the pain.”

IAG shares traded 3% lower as of 8:52 a.m. in London, while EasyJet Plc slid 0.7%. Air France-KLM declined 2.3% in Paris.  

Heathrow said in response to the CAA statement that while the regulator must protect consumers against excessive profits, a settlement must not “shield airlines” from legitimate cost increases. The hub said it will discuss the proposals in detail with the regulator and carriers.

The authority also proposed:

  • A risk-sharing mechanism to prevent either the airport or consumers bearing all risk tied to the uncertain return of passenger traffic.
  • An interim price cap for 2022 to prevent any “undue” increase in airport charges while the full proposals are finalized.


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