Heathrow Airport to increase passenger charge to £30 next yearDecember 16, 2021
Heathrow passengers to pay £30 for airport charges adding £200 to the cost of a family trip to Florida – as ex-BA boss Willie Walsh and Sir Richard Branson slam ‘greedy’ shareholders
- Civil Aviation Authority (CAA) has given Heathrow green light to increase charge
- Passenger charge is paid by airlines and covers cost of terminals and runways
- But the charge, which this year was set at £22, is usually passed on to customers
- Airlines say they are ‘disappointed’ by decision to raise charge to £30.19 in 2022
- But Heathrow, which has lost £3.4bn in pandemic, says increase is not enough
Holidaymakers and frequent flyers will face yet more misery next year, with Heathrow set to hike the price it charges airlines by more than £8 per passenger.
The Civil Aviation Authority (CAA) has given the west London airport the green light to increase passenger charges to £30.19 from January 1 – up from £22 this year.
Bosses at the airport had wanted to set the charge – paid by airlines but generally passed on to customers – to a staggering £43 from January.
Heathrow chiefs argued the steep increase in the airport levy, which covers the costs of operating terminals, baggage systems and security, would help the business recover from its £3.4billion Covid losses.
But the CAA stepped in to cap the increase at £30.19 for next year, having previously consulted on a figure of £29.50 per passenger.
The authority said the final £30.19 figure, announced on Thursday, reflects ‘the uncertainty of the recovery of passenger volumes’ due to Covid.
But, despite the hike, Heathrow chiefs say they are ‘extremely disappointed’ in the figure.
Bosses of the airport say the increase is not enough and warn that it risks leaving the airport ‘without sufficient cashflow’.
Meanwhile, airline bosses including ex-BA chief Willie Walsh and Virgin’s Sir Richard Branson meanwhile slammed the hike, warning it could put passengers off flying.
Virgin Atlantic has said that Heathrow’s proposals would add £200 to the cost of a family trip to Florida.
Holidaymakers and frequent flyers will face yet more misery next year, with Heathrow set to hike the price it charges airlines by more than £8 per person. Pictured: Library image
Meanwhile, Willie Walsh (pictured left), the former boss of BA, and Virgin Atlantic founder Sir Richard Branson (pictured right) joined forces to attack the ‘greed’ of Heathrow’s predominantly overseas shareholders
However a spokesperson for Heathrow said: ‘We are extremely disappointed in this interim decision from the CAA.
‘It relies on rushed analysis and will undermine passenger experience at the UK’s hub airport.
What is the passenger charge and who pays it?
The airport passenger charge is paid by airlines to the airports for the use of their services.
It covers the costs of operating terminals, baggage systems and security.
Generally the charge, which is paid per passenger per flight, is covered in the price of an airline ticket.
The charge is worked out in accordance to the Civil Avitation Authority’s pricing formula.
The formula set by the CAA determines the level Heathrow cannot exceed in charging its airline on a per passenger basis.
This cap is set following a period of formal consultation with the Heathrow airline community.
‘As an example, the CAA’s flawed analysis assumes that operating costs at Heathrow next year will be £173 million lower than our budget.
‘This is even lower than we were able to achieve in 2020, when we served half as many passengers with only one runway and two terminals operating and the benefit of a Government furlough scheme.
‘There are material and basic errors in many aspects of the CAA’s assessment.
‘Uncorrected, this risks leaving Heathrow without sufficient cashflow to support investment in improving passenger service and resilience.’
However, Luis Gallego, chief executive of British Airways’ parent company IAG, said the firm is ‘disappointed that Heathrow charges will increase further’.
‘The UK’s economic recovery depends on its ability to compete on the global stage,’ he said.
‘Heathrow is already 44 per cent more expensive than its European competitors. The reality is around 40 per cent of Heathrow passengers are connecting to other destinations and could easily travel via other European hubs.
‘After the worst crisis in aviation history we need to attract demand to stay competitive.
‘Hiking charges will have the opposite effect. Britain will become not more competitive, but less.
‘A cost-efficient Heathrow would benefit UK consumers, businesses and trade. Global Britain needs a global and competitive hub.’
Meanwhile, Willie Walsh, the former boss of BA, and Virgin Atlantic founder Sir Richard Branson joined forces to attack the ‘greed’ of Heathrow’s predominantly overseas shareholders.
Luis Gallego, chief executive of British Airways’ parent company IAG, said the firm is ‘disappointed that Heathrow charges will increase further’
The cap will move up or down depending on factors such as passenger numbers and commercial revenue.
It comes as Heathrow chiefs revealed in October the airport had lost £500million over the summer.
The figure means Britain’s busiest airport has now lost £3.4billion since the start of the Covid-19 pandemic.
Heathrow told investors in October that the losses mounted despite efforts to cut 30 per cent of operating outgoings during the Covid period.
However it reassured them of its ‘financial strength’ with £4.1billion of cash in reserve.
It also said there were signs of improvement but it did not expect passenger numbers to recover fully for five years.
Heathrow’s seven billionaire owners include the sovereign wealth funds of Qatar, Singapore and China.
It has paid out about £4 billion in dividends since 2012 and has said it could restart payouts next year, after pausing them over the pandemic, if its debts come under control.
Heathrow bases its charges on the numbers using the airport. It expects around 40 million passengers next year, compared to 80 million before the pandemic, and said this means each passenger must pay more to cover the shortfall.
Company documents show Heathrow would have raised around £1.6billion from airport charges next year – had it been able to charge the higher rate it had requested. But the new £30 charge is expected to only raise around £300million.
Heathrow last month introduced a new £5 drop-off charge outside its terminals.
The new charge applies to all vehicles – including taxis and private hire cars – entering the forecourt areas outside the airport’s terminals.
Heathrow last month introduced a new £5 drop-off charge outside its terminals. The new charge applies to all vehicles – including taxis and private hire cars – entering the forecourt areas outside the airport’s terminals
Christmas chaos at Heathrow: Fury as ‘thousands’ are forced to queue for passport control after ‘e-gates break’ AGAIN
Travellers have blasted Heathrow for huge queues snaking through the airport as festive flyers pile into Britain following the axing of the red list.
Passengers claimed that there were up to four thousand people backed up at passport control due to yet another e-gate crashing.
They said that they were waiting for hours to get to the immigration area when it would take around six minutes normally.
Their fury comes as other travellers vented at the ‘outrageous’ parking charges for those who have been quarantining at Heathrow.
They said that they were faced with another £350 on their bill on top of the £2,450 to isolate in a hotel at the airport.
But it comes amid positive travel news as hotel quarantine for passengers arriving in England was scrapped at 4am today.
Health Secretary Sajid Javid told the House of Commons yesterday the 11 countries on the red list were to be removed.
Yet hours after the relaxing of restrictions were announced, desperate travellers told of mounting chaos at Britain’s busiest airport.
John Grimshaw flew back to Britain from his home in Chicago for his mother’s funeral and got caught up in the disorder.
He said that there were thousands of passengers queuing to get to passport control and branded Heathrow ‘a joke’.
He told MailOnline: ‘Just arrived from Chicago. E-gates down again, thousands of people lined up for passport control.
‘What the f***. I paid thousands for a business class ticket and no difference. This place is a joke. I was just told the e-gates were down and were being worked on.
‘I’m where it’s normally six minutes walk to the immigration area and we are stood still. There are probably three to four thousand people here.
He added: ‘Ten plus wide body aircraft arrived with 300 plus on each. This is unacceptable for this country’s principal airport.’
The fee must be paid online or over the phone, with number plate reading cameras, instead of barriers, being used to enforce the charge.
Heathrow chiefs say the move, which brings the airport’s policy in line with the likes of Gatwick and Manchester, who also have £5 drop-off charges, is aimed at ‘improving air quality and reducing congestion’.
The move could bringing in as much as £100million-a-year for the airport.
It comes as Chancellor Rishi Sunak in October announced plans to cut air passenger duty (APD) on domestic flights by 50 per cent.
The tax cut, due to take effect from 2023, will result in 400,000 more airline passengers a year, according to estimates by one fiscal watchdog.
However aviation chiefs warned that the ‘fundamentally flawed’ tax increase on ultra-long haul flights will ‘penalise’ a global Britain and be a further blow to airlines recovering from the impact of Covid.
The Government plans to slap a £91 air passenger duty (APD) on flights to far flung destinations such as Australia, east Asia and large parts of South America from 2023.
Aviation bosses say the new ultra-long haul charge will unfairly punish long haul carriers who have faced major disruption and a huge drop in passenger numbers since March last year due the Covid pandemic.
The charge, which will be brought in from April 2023, is a new level on top of the current long distance charge.
Current long haul destinations, such as the US, Dubai and Brazil, will remain in the current long haul area for air passenger duty – which will rise from £82 to £87.
But even longer haul destinations will now be moved into a new area, the ultra-long haul zone, which will be charged at £91.
Luis Gallego, boss of British Airways owner IAG, said that increasing APD on long-haul flights ‘will penalise Global Britain’.
He also said the move will ‘limit the airlines’ ability to invest in green technologies’.
Meanwhile, Willie Walsh, Mr Gallego’s predecessor and now head of body Iata, told the Telegraph: ‘It is astounding that the Chancellor thinks now is the time to raise the cost of flying.
‘Masquerading this cash grab as a green tax the week before Cop26 is the height of political hypocrisy that people are fed up with.’
A Virgin Atlantic spokesperson added: ‘The announcement of a new ultra-long haul band for Air Passenger Duty (APD) is fundamentally flawed, as it will fail to reward increased efficiency or reduced carbon emissions.
‘Passengers will pay the same rate of APD whether flying with modern, fuel efficient airlines such as Virgin Atlantic, or those with a fleet of older, less efficient aircraft.
‘Increasing the highest long-haul taxes in the world will make the UK less competitive while hindering, rather than supporting, investment in sustainable aviation fuels, which are essential for decarbonising long haul aviation.
‘With economic recovery at stake, UK Government has missed a vital opportunity to lower the cost of long haul travel for UK businesses and consumers by reducing APD, at a crucial time when airlines are focussing on recovery from the Covid-19 pandemic.’
The decision to increase the tax on long haul flights was announced alongside a cut to domestic flight tax, which will drop from £12 to £6.50.
The move will mean a further 400,000 people taking domestic flights a year, according to estimates by the Office of Budget Responsibility (OBR).
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