The UK Civil Aviation Authority (CAA) has confirmed the final level of price cap on what Heathrow Airport can charge its airline customers.

The new cap, which will be affective until the end of 2026, will see the average maximum price per passenger drop 20% to £25.43 in 2024 from £31.57 in 2023.

The regulator also said that the price per passenger will further drop and remain broadly flat until the end of 2026.

The new rate will take the average charge over the five years to £27.49 compared to £28.39 for final proposals.

UK CAA chief executive Richard Moriarty said: “We have carefully considered the sharply differing views from Heathrow Airport Limited and the airlines about the future level of charges. Understandably, their respective shareholder interests lead the airport to argue for higher charges and the airlines to argue for lower charges.

“Our job is to reach an independent decision from these conflicting commercial interests and focus on what is in the best interests for the travelling public that will use Heathrow in the years to come. In doing so we have taken all the points made by Heathrow Airport Limited and airlines into account, along with extensive consultation and our own detailed analysis.”

The authority decided to reduce charges from 2024 as it expects passenger volumes to return to pre-pandemic levels.

The decision will benefit passengers, while enabling Heathrow Airport to continue investing in the airport.

Richard Moriarty added: “We are confident our final decision represents a good deal for consumers using Heathrow, while having regard for the airport’s need to efficiently finance its operations and be able to invest in improving services for the future.”

Last month, the Heathrow Airport posted an adjusted pre-tax loss of £684m in 2022, a drop from the £1.27bn loss a year ago due to Covid-19-induced travel restrictions.