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31 JANUARY 2022

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Article from BTNews 31 JANUARY 2022

COMMENT: Airport charges *

How much do airports (and airlines as their agents) charge the passengers? 

Over the years it has been common knowledge that certain airports were discounting passenger charges and handling fees, not just to attract airlines but also to support the local community.  

The opposite is true.  Airlines shied away from some airports due to the high prices.  

From the beginning of January the departing passenger charge at Heathrow Airport (LHR) has been raised to £30.19 per person.  This cost is on all tickets as ‘taxes and charges’.  

Put this on a much greater scale.  Will the LHR charges put off carriers and for that matter travellers too?  And not just that airport.  The UK!

LHR believes that, since its income is effectively capped by the Civil Aviation Authority (CAA) at below the market rate, it deserves some retrospective protection for the drop in income last year.  That said, it still reportedly paid out a £106m dividend to its shareholders in 2020 and did not need to raise new equity.

The airlines say that LHR has a de facto monopoly on premium air travel in London and should be constrained appropriately, for the benefit of passengers and the wider economy.
 
The CAA is currently preparing a new charging formula to cover the period from mid-2022 to 2027 with suggested fees on long-haul flights at £67.86 per person from summer 2022, with a lower figure for short-haul and domestic flights.

At present, because LHR’s agreed profits are based on what it invests in the airport, there is an incentive to – literally – gold plate the toilets.  The more it spends, the more it can earn. The CAA says: “We consider that stronger incentives are needed to protect the interests of consumers from the increased costs that they would otherwise face were LHR to make inefficient capital expenditure investments”.

For comparison, the LHR £30.19 charge for 2022 is up from the current average of £22. The addition to your ticket is likely to be different as the airport is thought to allocate charges between long-haul, short-haul and domestic flights as it wishes to reach the £30.19 average.

LHR is far from happy that it can only charge £30.19 per passenger for the first half of 2022. It 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.

“As an example, the CAA’s flawed analysis assumes that operating costs at Heathrow next year will be £173m 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.

“The decision by the CAA differs materially from the forecast assumed in our Investor Report published last week. We will analyse the impact and consider whether issuing an update in January is necessary. We are making a detailed submission to the CAA, and expect a more considered outcome when it makes its final decision in Spring 2022”.

The CAA comment is worth highlighting: “We are conscious of the challenges that the level of the holding price cap [£30.19] will create in the short term for consumers and, in the context above, the airlines that serve them”.

The fees charged by LHR appear to top anywhere else in Europe.  Whether these very high charges will stop airlines developing their services at the airport remains to be seen.  The knock-on effect for London and the UK could be disastrous. On the plus side London, in normal times, whatever the cost, is the biggest attraction in Europe.


THE PASSENGER FEE

The charges are average and should be considered in conjunction with the tariffs all airports have to legally publish. The charges are also dependent on the security levy and landing and parking fees, aircraft handling, plus items such as staff passes and office space rental.

The following charges are taken from the published figures and is not necessarily what is paid. Typically a new airline might have a special rate.

£11.34        Gatwick

£22.18         London City
£15.00         Luton
£13.39          Manchester summer £7.80 plus £6.38 security charge
£19.77 Manchester winter
£13.18  Stansted 



€27.00 Amsterdam 
€  8.00approx Berlin          depending on the destination
€20.00 Frankfurt
€20.00 Munich
€10.75 Paris CDG     EU including the UK
€24.76        Paris CDG    long-haul (French overseas territories are counted as EU)

www.heathrowairport.com

www.caa.co.uk

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OUR READERS' FINEST WORDS (All times and dates are GMT)

All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum


Bob Schumacher, London

Oh yes, and while it's equally applied across UK airports, there is the (not so small) 'add-on' of Air Passenger Duty. 'Global Britain' trying extremely hard to be uncompetitive in an industry in which we were once world-beaters.


John Haffenden, Uk

Gatwick is my preferred airport, however following Brexit and CV19 services to the USA are almost non existent , with Heathrow being my only option. Norwegian used to offer a great service to Denver and Florida from Gatwick , both destinations that are ideal for uk residents to visit the USA . Letís hope the new Norse operation gets the message and sets up flights that offer the users a choice !!!


John Haffenden, Uk

Gatwick is my preferred airport, however following Brexit and CV19 services to the USA are almost non existent , with Heathrow being my only option. Norwegian used to offer a great service to Denver and Florida from Gatwick , both destinations that are ideal for uk residents to visit the USA . Letís hope the new Norse operation gets the message and sets up flights that offer the users a choice !!!


John Jones, West Ham

Heathrow, and hence the UK, is being priced out of the air travellers market.


James Smith, London

I donít know where the spokesman got his Ďonly an increase of 2% on ticket pricesí from. He must only fly first class!


Julian Creagor, Lambeth

Sad to say that whilst I prefer Gatwick to Heathrow I shall continue to use Europeís number one airport rather than the cheaper Gatwick. Itís a matter of convenience.


A Heathrow spokesman, London

ďPassengers want quick, easy and reliable journeys. Our plan for the next five years will deliver that value that consumers want set against a small 2% increase to ticket prices.No one wants higher airport charges, but airports across the world are grappling with covering the costs of operating the same terminals and runways with far fewer passengers in the short term. To keep prices as low as possible, we have designed a plan that invests in only the critical service elements our passenger and airlines expect, while including stretching efficiency targets and realistic opportunities for the regulator to use policy levers like delaying depreciation to keep the charge as close to the current level as possible.The alternative is to cut back which will only result in longer queues and delays for both passengers and cargo at Heathrow - all while Amsterdam, Frankfurt and Paris strengthen their lead over the UK.Ē


Sir Brian Donohoe, United Kingdom

I just know that as a Scot and having to connect to a 'hub' airport Heathrow is the most expensive of ALL the alternatives and this is worsened by our 'National Carrier' BA that makes it an no brainer to connect long haul to another 'hub' airport and you have lots of choices


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