Virgin Atlantic livid as UK regulator details interim Heathrow price cap

The UK Civil Aviation Authority has published proposals for an interim price cap on passenger charges at Heathrow airport for 2023, prompting a renewed backlash from airlines including Virgin Atlantic. The CAA announced the interim move as it works towards finalising a five-year price-control settlement for the period ending December 2026 – expected “later in 2023” – and comes with airports and airlines at loggerheads on projections for the pace of demand recovery, and thus likely revenues, as they lobby the regulator over the level of the charges. The proposed interim price cap of £31.57 ($38.74) per passenger for 2023 “is in line with our Final Proposals issued in June 2022”, the CAA said on 8 December, referencing the five-year settlement. It notes that as with the interim 2022 cap, prices will be retrospectively “trued up or down” once that five-year level is agreed. Responding to the news, Virgin Atlantic CE Shai Weiss suggests the CAA is wrong to base its decision on Heathrow’s passenger number forecasts, which airlines claim underestimate the pace of demand recovery. “By maintaining a pessimistic outlook for 2023 passenger forecasts, not only do customers face excessive charges but potentially also a poorer airport experience,” Weiss states. “We expect the CAA to use its powers to course correct, so that accurate and realistic forecasts inform both the 2023 cap and the final determination for the regulatory control period ending December 2026.” He alleges that the proposed cap would put ”the interests of a monopolistic airport and its shareholders ahead of passengers”. Weiss had already said that Virgin’s experiences during recent consultations on higher charges at Heathrow had prompted it to “refine our unequivocal support” for a third runway at the facility.<br/>