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CAA rejects Heathrow’s proposal to cover losses with hiked charges

28 Apr 2021 (Last Updated April 28th, 2021 10:00)

The Civil Aviation Authority (CAA) has turned down Heathrow’s proposal to raise airport charges to cover losses worth $3.61bn (£2.6bn) during the Covid-19 pandemic.

CAA rejects Heathrow’s proposal to cover losses with hiked charges
As an alternative, CAA has authorised a smaller increase of $416.48m (£300m), allowing the airport to finance the reopening of terminals with the recovery of the passenger traffic. Credit: Johnnie Shannon / Pixabay.

The Civil Aviation Authority (CAA) has turned down Heathrow’s proposal to raise airport charges to cover losses worth $3.61bn (£2.6bn) during the Covid-19 pandemic.

The aviation regulator termed the request as ‘disproportionate’ that is ‘not in the interests of consumers.’ According to the regulator, this would have increased the airport charges by 10%.

Instead, the CAA has authorised a smaller increase of $416.48m (£300m), allowing the airport to finance the reopening of terminals with the recovery of passenger traffic. This will add around 30p for each passenger.

For recovering losses, the airport had requested for an instant increase in its regulated asset base figure by $1.1bn (£800m) and by a total of $3.61bn (£2.6bn) by the end of this year.

While rejecting Heathrow’s bid, the CAA addressed that the present conditions are ‘exceptional’ and will pose potential risks for passengers in the short term.

However, the regulator noted that the problems raised by Heathrow could be considered in the upcoming review of charging levels at the airport.

Commenting on the decision of the CAA, Heathrow said that the aviation regulator ‘failed to deliver,’ even after acknowledging its issues.

On the other hand, International Consolidated Airlines Group (IAG) expressed its disappointment and said that the decision of the CAA ‘will unfairly penalise consumers.’

Expressing ‘deep frustration’ at the CAA’s decision, the International Air Transport Association (IATA) director Willie Walsh said that the CAA has ‘caved to pressure from Heathrow,’ which will not be in favour of the consumers.

The CAA controls the airline charges of Heathrow which are eventually passed on to the passengers by those airlines.

Heathrow reported a £2bn loss in 2020 as the pandemic led to international travel curbs.

Passenger numbers fell to 22.1 million in 2020, a 73% slump compared to the previous year.