UK watchdog backs CAA decision to cut Heathrow’s landing fees

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The competition regulator has given its qualified backing to a ruling forcing London’s Heathrow airport to cut its landing fees, following a long-running row between the UK’s main hub and its biggest airline customers.

The Competition and Markets Authority on Tuesday found that a decision by the Civil Aviation Authority to force Heathrow to lower its landing fees was “not wrong on most of the issues”.

The CAA ruled in March that Heathrow should cut its charges to airlines by almost a fifth from £31.57 per passenger to £25.43 from next year.

But both sides lodged appeals with the CMA against the decision, with Heathrow saying that it should be allowed to increase its fees, or risk investment at the airport, and airlines wanting a further cut.

Heathrow had long said it should be able to charge as much as £40 per passenger, warning that investment in the airport was otherwise at risk, particularly following the financial hit from the pandemic.

In an increasingly acrimonious dispute, the airlines, including Virgin Atlantic and British Airways, argued that the airport was in effect trying to price gouge customers and that Heathrow’s owners should not be allowed to jack up charges to try to claw back losses suffered during the pandemic.

In its ruling, the CMA asked the CAA to reconsider three relatively small aspects of its calculations, including the one it made for an allowance for exceptional events that might reduce passenger numbers.

“We would expect any such changes to have only a small impact” on overall landing charges, the CMA said. The original CAA decision covers charges the airport can levy until 2026.

Airlines expressed unhappiness at the CMA ruling and called for changes to the regulatory landscape.

Luis Gallego, the chief executive of British Airways owner IAG, said Heathrow’s charges “remain among the highest in the world and are not competitive,” adding: “We would like to work with the CAA to improve the regulatory framework for the future.”

Virgin Atlantic said recent changes in leadership at both the CAA and Heathrow offered a chance “for a fundamental review of how these charges are set”.

Heathrow indicated it would look to put the matter behind it under its new chief executive Thomas Woldbye, the former boss of Copenhagen airport, who joins on Wednesday.

“We’re naturally disappointed, but it’s time to move on,” Heathrow said.