Heathrow says CAA got it wrong by lowering landing charges

Heathrow says CAA got it wrong by lowering landing charges thumbnail

Heathrow has hit out at the regulator accusing it of “getting it wrong” on its pricing while its airline customers such as British Airways “charge what they like” and make “huge profits” on high fares.

Its chief executive, John Holland-Kaye, said the proposed landing charges at the airport, which are set by the Civil Aviation Authority (CAA), would be lower than before even though airport costs had risen. “That just makes no sense,” he said.

While passenger numbers trebled in 2022, Heathrow still made an adjusted loss of £684m, compared with a loss of about £1.3bn the previous year.

Holland-Kaye added: “We reported a huge loss and can’t pay dividends. I suspect that tomorrow IAG [International Airlines Group, which owns British Airways] will report a huge profit, they may even report dividends – and that that is a good indication that CAA has got things wrong.

“The airlines can charge what they like to and they’ve been able to increase their prices by over 40% and show no signs of bringing them down. In fact, they say they plan to keep them high.”

He said Heathrow would appeal if the CAA did not revise its opinion when it announces the final level of charges in March, and warned that investment would be at risk.

Holland-Kaye ruled out any further limits on passenger numbers flying in 2023, after labour shortages forced Heathrow to impose temporary capacity limits on airlines last summer.

Border closures and loss of skilled workers during the pandemic had “deeply scarred” the aviation sector, which experienced widespread travel chaos last year, resulting in part from staff shortages. Holland-Kaye conceded the airport was “not as polished” as it was, after recruiting new staff, but said: “By the end of the year we will be back to being fully resourced and fully experienced in all circumstances.”

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John Holland-Kaye, CEO of Heathrow. Photograph: Steve Parsons/PA

About 62 million passengers passed through the gates of the UK’s largest airport last year, following the reopening of borders after two years of disruption during the Covid outbreak. Heathrow expects that figure to rise to 67.2 million for 2023, thanks to stronger demand for travel and despite the cost of living pressures facing households.

It has already reported the busiest start to the year since before the pandemic, with more than 5.4 million passengers using the airport in January. But forecasts for 2023 mean it would only be hitting 83% of 2019 passenger levels, a further sign it may be some time before travel fully recovers from the effects of national lockdowns.

Investors will also have to remain patient for any payouts, with the operator stating it would pay no dividends in 2022, and none is planned for the current financial year.

Holland-Kaye, who this month revealed plans to step down, said he would potentially stay until the end of the year if an external successor was appointed. He said: “When I joined the business, Heathrow was one of the worst airports in the world. And now it’s one of the best.”