Heathrow airport and airlines launch rival appeals over landing fee ruling

Heathrow airport and two of the UK’s biggest airlines have launched separate appeals against the level of landing charges at the hub airport, extending a bitter confrontation as the industry recovers from the Covid-19 pandemic.

The Civil Aviation Authority, the industry regulator, ruled in March that landing fees paid by airlines to land at the main international airport that serves London should fall from £31.57 a passenger to £25.43 from next year.

The appeals against the CAA’s decision, which will be considered by the Competition and Markets Authority watchdog, extend a feud between Heathrow and its biggest airlines that has gripped the UK aviation industry for more than a year.

Heathrow launched its appeal on Wednesday, arguing that the rates, which are typically passed to customers through ticket prices, should be higher to encourage greater investment into the airport.

“We believe the CAA has once again focused on driving down charges to airlines, which will not be passed on to passengers, and is undermining the investment needed to deliver the airport service and resilience consumers want,” the airport said in a statement.

The airport says that its owners, a group of international investors including Spanish infrastructure group Ferrovial, will see low returns under the current fee structure, leaving Heathrow less attractive than other regulated assets.

In contrast, Virgin Atlantic and British Airways owner IAG said they had appealed to try to lower the charges further, given that they were some of the highest in the world.

Virgin said the regulator’s decision “contained multiple errors of fact and judgment, including pessimistic passenger forecasts that ignore the strength of recovering demand”.

“The CAA did not go far enough in its final determination, resulting in excessive Heathrow charges that expose a fundamentally broken regulatory framework,” the airline added.

IAG said the level of Heathrow’s charges left the UK uncompetitive compared with other European hub airports.

In response, the CAA’s chief economist Andrew Walker said the level of the charges represented a balance between passengers’ interests and the need to fund continued improvements.

“We are confident our final . . . decision . . . represents a good deal for consumers, while allowing Heathrow to invest in improving services for the future,” he said.

The Unite union on Wednesday said security officers working at Heathrow would take eight more days of industrial action in a dispute over pay.

A similar walkout over Easter forced British Airways to cancel scores of flights in advance, but had little impact on passengers’ journeys on strike days.

Separately, transport secretary Mark Harper conceded that delays to the construction of HS2, the high-speed rail project that was originally envisaged to connect London to Manchester and Leeds via Birmingham by 2033, would not save money in the long term.

Ministers last month announced plans to delay building several stages of the rail link, including the line into central London, as the project grappled with rising costs compounded by the impact of inflation.

Giving evidence to MPs on Wednesday at a House of Commons transport select committee, Harper said: “In itself, delaying delivering something doesn’t save money.”

But, he added, the delays were a reflection that the government “has to live within annual budgets” and were a “sensible” reaction to inflation in the construction sector.