The Civil Aviation Authority (CAA) has announced that Heathrow Airport must reduce its passenger charges, with the cap on average fees per passenger set to fall from £30.19 to £26.31 by 2026. This represents nearly a 6% reduction each year when adjusted for inflation, according to the regulator.
The decision follows a dispute between Heathrow and airlines over the appropriate charge level. While charges are paid by airlines, they are typically passed on to passengers in air fares. The CAA described the announcement as 'about doing the right thing for consumers', adding that its analysis balances affordable charges with allowing Heathrow to invest in improvements such as next-generation security scanners and a £1.3 billion upgrade of baggage facilities at Terminal 2.
Heathrow chief executive John Holland-Kaye criticised the proposal, claiming the regulator 'continues to under-estimate what it takes to deliver a good passenger service' and warning that it could lead to a worse experience for passengers as investment dries up. The airport's owners include sovereign wealth funds from China and Qatar, Spanish construction firm Ferrovial and large infrastructure funds.
Virgin Atlantic chief executive Shai Weiss called the CAA's announcement a 'positive step' but urged the regulator to go further, citing 'robust demand for travel this summer and beyond'. Luis Gallego, chief executive of British Airways' parent company IAG, noted that even after the reduction, Heathrow's charges would still be three times more expensive than its EU rivals and 56% higher than last year.
The CAA said these are its 'final proposals', with a 'final decision' due in the autumn. The actual annual caps will be adjusted based on inflation, using the Office for Budget Responsibility's forecast.
