The announcement by the Civil Aviation Authority (CAA), allowing Heathrow Airport to raise landing charges in line with inflation, has been described as “bad news for the UK’s international competitiveness” by the Board of Airline Representatives in the UK (BAR UK).
Heathrow had angered the airline community by submitting plans for a hike in charges 4.6 per cent above the rate of inflation.
Dale Keller (pictured), Chief Executive of BAR UK, said: “Airline CEO’s 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.
“Consumers have benefitted from intense competition between airlines, driven by major efficiency gains and razor thin margins. Yet the CAA’s new primary duty to consumers has failed its test flight by instead rewarding operating inefficiencies and excessive shareholder returns at the monopoly that is Heathrow.”
Keller claimed increases in charges had exceeded 300 per cent over the past 11 years, a trend, he said, that weakened the international competitiveness of the UK’s only hub airport.
“Meanwhile, Gatwick also enjoys the benefits of significant market power and airlines are concerned that proposed price commitments may not go far enough to protect consumers from profiteering,” Keller said, adding: “Airlines and their customers expect the government to apply the same economic reality they encounter every day to regulated airport charges, and its own air passenger duty, by calling time on some of the highest air ticket charges in the world.”
CAA Chairman Deirdre Hutton claimed it was tackling “the upward drift in Heathrow’s prices” and noted it had initially proposed an annual increase of RPI minus 1.3 per cent before acknowledging the cost of capital driven by higher debt costs.
Richard Branson’s airline Virgin Atlantic issued a statement to say it was “deeply disappointing to see the CAA has bowed to pressure from Heathrow Airport Limited and its shareholders”.
It added that the decision to increase charges was a “hammer blow for both UK consumers and overseas visitors wanting to travel to this country”.
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