Heathrow today defended a price hike that could leave passengers paying £13 more for tickets – as it revealed Covid losses had plunged to £3.4billion with passenger volumes still at just 45% of pre-pandemic levels.
The airport had planned to double the fee it charges airlines per traveller to £43 in a bid to repair pandemic damage to its finances – a plan slammed by airline bosses who accused it of acting like a ‘greedy monopoly’.
Industry regulator the Civil Aviation Authority (CAA) then stepped in and ordered the fee – which covers the cost of operating terminals, runways, baggage systems and security – to be capped at £25 to £35 for five years.
An interim charge of £30 has already been agreed for January, and is due to be discussed as part of a separate consultation in November.
The rising cost will be passed on by airline passengers who already have to endure months of travel disruption, confusing travel restrictions, costly Covid testing requirements, and months of travel disruption.
Today, CEO John Holland-Kaye used a financial update to defend the fee increases and lashed out at airlines for opposing them while they were ‘free to charge what they choose’.
He stated that the 76% increase that the CAA had indicated it would consider ‘does not go far enough for financeability’ and that it needed more money to continue to provide world-class service.
John Holland-Kaye (Heathrow CEO) used a results report to attack airlines for opposing increased landing fees, while they were ‘free’ to charge what it wanted.
The passenger numbers at Britain’s most important hub airport are still at 45% of pre-pandemic levels
Heathrow passengers have been repeatedly confronted with chaos at passport control, even though Heathrow chiefs claim that the issue is entirely the responsibility of the UK Border Force.
The rise, based on next year’s £30 figure, means the average family of four face an extra £32 in flight costs – before any annual ticket price adjustments from the airlines themselves.
It also comes as Heathrow this month introduced a new £5 drop-off charge outside its terminals.
Heathrow officials have however defended the hike. It is part of airport’s plan to recover its huge losses due to Covid.
Today, the airport stated that it continues to lose money despite having reduced its operating costs by more then 30%.
Passenger numbers are recovering more slowly than rival hubs on Continent such as Madrid, Charles de Gaulle, and Schiphol.
But Heathrow insisted it has the ‘financial strength’ to survive ‘until the market recovers’, with £4.1 billion of cash.
The airport at West London was visited by 10.2 million passengers in the first nine month of the year, compared to 19.0 millions in the same period in 2020.
Mr Holland-Kaye added: ‘We are on the cusp of a recovery which will unleash pent-up demand, create new quality jobs and see Britain’s trade roar back to life – but it risks a hard landing unless secured for the long-haul.
Heathrow is losing ground against its rival hub airports in the Continent. In this graphic, the number 9M refers to the first 9 months of a particular year.
“To do this, we need to continue focusing on the global vaccination program so that borders can reopen with no testing; we need a fair settlement from the CAA for service and resilience following 15 years of negative real return for investors; and we have to have a global mandate for sustainable aircraft fuels that is increasing in number so that we can preserve the benefits of flying in a world that doesn’t produce carbon.
According to the CEO, passenger numbers are at ‘around 45 percent of our pre-pandemic levels’. He expects that it will take five more years for demand to return back to 2019 levels.
He stated, “We don’t think that we’ll get to pre-pandemic passenger level until 2026.
“But we’ll have the cost of a lot of it back in before then.”
He stated that ‘we are seeing steady growth, and so we have taken a view of the market and started to invest ahead.
“Having significantly reduced our costs over the last 18 month, you’ll be able to see us now investing in bringing people back, re-engaging people and getting ready for the growth that lies ahead.
The air industry regulator is planning to raise the cap on the average charge per passenger over the next five years to between £24.50 and £34.40. Heathrow had called for the range to be between £32 and £43. The current average charge is £19.60. File pic