Heathrow: competition watchdog orders rethink on charges
A verdict on how much Heathrow airport can charge airlines must be reconsidered in part, the UK’s competition watchdog has ruled, amid a longrunning row at Europe’s busiest airport. In March, the aviation regulator, the Civil Aviation Authority (CAA), ordered London’s largest airport, to cut its passenger charges by about 20% next year, which could result in lower air fares. The CAA said the cap on Heathrow’s average charge for each passenger must be reduced from GBP31.57 for 2023 and last year, to GBP25.43 over the next three years. The airport had hoped to raise the fees it charges to airlines to fund baggage handling, security and other costs, which are set by the regulator. Heathrow and three airlines – British Airways, Delta and Virgin Atlantic – appealed against the CAA’s decision. The airlines argued that Heathrow’s charges were higher than industry averages and that it could curb the aviation sector’s recovery from the Covid pandemic. Heathrow argued lowering the cap on fees would damage investment into the airport. The companies lost their appeal after a provisional ruling by the Competition and Markets Authority (CMA) in September, although it found that the regulator had “made some errors” that needed to be revised. The CMA said on Tuesday that the CAA “was not wrong on most of the issues that were appealed to it”, but had ordered it to reconsider three parts of its pricing decision. Kirstin Baker, who chairs the CMA’s group that assessed the appeals, said: “Having considered these appeals, we found that the CAA’s Heathrow price control struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time. “There are a handful of smaller issues we have ordered the CAA to look at again and it has agreed to do this swiftly.” Of the three issues, the first relates to a part of the CAA’s cost of capital calculation, the second relates to a part of its passenger forecast, and the third relates to a specific adjustment known as the “AK factor”.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-10-18/general/heathrow-competition-watchdog-orders-rethink-on-charges
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Heathrow: competition watchdog orders rethink on charges
A verdict on how much Heathrow airport can charge airlines must be reconsidered in part, the UK’s competition watchdog has ruled, amid a longrunning row at Europe’s busiest airport. In March, the aviation regulator, the Civil Aviation Authority (CAA), ordered London’s largest airport, to cut its passenger charges by about 20% next year, which could result in lower air fares. The CAA said the cap on Heathrow’s average charge for each passenger must be reduced from GBP31.57 for 2023 and last year, to GBP25.43 over the next three years. The airport had hoped to raise the fees it charges to airlines to fund baggage handling, security and other costs, which are set by the regulator. Heathrow and three airlines – British Airways, Delta and Virgin Atlantic – appealed against the CAA’s decision. The airlines argued that Heathrow’s charges were higher than industry averages and that it could curb the aviation sector’s recovery from the Covid pandemic. Heathrow argued lowering the cap on fees would damage investment into the airport. The companies lost their appeal after a provisional ruling by the Competition and Markets Authority (CMA) in September, although it found that the regulator had “made some errors” that needed to be revised. The CMA said on Tuesday that the CAA “was not wrong on most of the issues that were appealed to it”, but had ordered it to reconsider three parts of its pricing decision. Kirstin Baker, who chairs the CMA’s group that assessed the appeals, said: “Having considered these appeals, we found that the CAA’s Heathrow price control struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time. “There are a handful of smaller issues we have ordered the CAA to look at again and it has agreed to do this swiftly.” Of the three issues, the first relates to a part of the CAA’s cost of capital calculation, the second relates to a part of its passenger forecast, and the third relates to a specific adjustment known as the “AK factor”.<br/>
