Airport Charges Row: Heathrow Vs The Airlines

After the recent announcement of a new proposals for airport charges at Heathrow, airlines have hit back claiming they are being forced to ‘burden their customers’ with the cost. CAA (Civil Aviation Authority) proposes set controls over airport charges for the next five years from April 2014, with the final decision due in January 2014.

Airlines are now battling with the authorities over the increased airport charges and have expressed their disappointment in the CAA for agreeing Heathrow can raise its landing fees. According to airlines they’ll be forced to pass the increased cost of operation to their customers, which is something they are very worried about.

Heathrow Airport1

Dale Keller, chief executive of airline representation group BAR UK said: “Airline CEOs will be reaching for their oxygen masks in the knowledge that they will be forced to pass on excessive airport charges to their customers for the next five years”

Virgin also expressed their disappointment: “It is deeply disappointing to see the CAA has bowed to pressure from Heathrow and its shareholders. The decision to further increase charges at the airport for the next five years is another hammer blow for both UK consumers and overseas visitors wanting to travel to this country. Prices at Heathrow are already triple the level they were ten years ago and coupled with ever increasing Air Passenger Duty, passengers are facing some of the highest charges in the world and this is deterring inbound tourism and foreign investment,”

Heathrow Airport Ltd have openly attacked the plan and claim it will have a different set of consequences for passengers. According to Heathrow a 5.3% return on capital under the proposed limit, could endanger the passenger service by deterring investment. Heathrow also claim the cap will mean a lower quality of service and they’d have to review their own investment plans in the future.

Dame Deirdre Hutton who’s the honorary vice president of trading standards, and a CAA board member has a different view and said: “Tackling the upward drift in Heathrow’s prices is essential to safeguard its globally competitive position. 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,”

Airlines and Heathrow Airport Ltd are miles apart in terms of where they think the figures should be. Heathrow’s initial proposal was a 4.6% real-terms increase and the airlines wanted a 9.8% cut per year.

The CAA clearly felt they had reached a suitable compromise with the cap. The final decision is due in the New Year and with no one happy, this row looks set to run and run.  Who do you think is right? 

 

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