UK’s Regulator Grants Heathrow Airport Permission To Increase Fees To PassengersApril 29, 2021
The UK’s Civil Aviation Authority, the acting industry’s regulator just granted Heathrow Airport Limited a minimal increase in fees the airport may be allowed to overcharge passengers.
The decision is taking place after the airport had moved to expand its Regulatory Asset Base ( RAB ), as the airport attempts to secure additional capital given the severity of the financial losses encountered during the enduring Covid19 crisis.
In spite of the negative criticisms that are likely to surface from the airlines that serve the airport, the decision had only been a partial measure, allowing the airport to charge passenger only a fraction of what had been requested.
According to CAA, Heathrow Airport Limited had requested an immediate adjustment to its Regulatory Asset Base (RAB) of £800m, to which another £1.8bn could be added by the end of 2021. Instead, only £300m have, for the moment been granted. While this surcharge only amounts to an extra 30 pence charged per passenger, it is much lower than the £2 per passenger that could otherwise have been accorded.
For the CAA, formulating a decision shielding the consumers from unwelcome price hikes was as important as giving the airport the ability to secure the minimal financial resources needed to preserve service quality. Moreover, the significant efforts required to gradually restore capacity and re-open some terminals this coming summer could very rapidly drain available funds, particularly after last year’s £3 billion recorded losses.
For airlines, increasing fares would make passengers carry a much higher burden than the current period of depressed travel levels may warrant. Because the CAA latest decision has only been taken temporarily, a more serious increase could come as early as the upcoming year’s end CAA session.