Heathrow Airport has warned that a proposed reduction in the amount of money it can charge airlines per passenger would result in a major reduction in investment.

In its final proposals revealed on Tuesday, the Civil Aviation Authority (CAA) said the average maximum charge – which is passed on to passengers in their air fare – should fall from its COVID crisis level of £30.19 to £26.31 in 2026.

The airport had sought a range between £32 to £43 – bitterly opposed by airlines including BA and Virgin Atlantic which argued that the west London hub airport was already the most expensive to operate from.

The CAA said the proposed pricing reflected “expected increases in passenger numbers as the recovery from the pandemic continues and the higher level of the price cap in 2022, which was put in place in 2021 to reflect the challenges from the pandemic at the time.”

It said that when the effects of inflation were removed, the proposed cap was equivalent to nearly a 6% reduction every year from today’s level up to 2026 and would be “affordable” for consumers amid the cost of living crisis.

CAA chief executive Richard Moriarty said: “Today’s announcement is about doing the right thing for consumers.

“We have listened very carefully to both Heathrow Airport and the airlines who have differing views to each other about the future level of charges.

Royal Mail strike moves closer as ballot papers are sent out in pay row

Cost of living: Petrol retailers accused of ‘rocket and feather’ pricing as unleaded hits new record

Four Seasons Health Care plots sale after parent’s three-year insolvency

“Our independent and impartial analysis balances affordable charges for consumers, while allowing Heathrow to make the investment needed for the future.”

Heathrow, which lost almost £4bn during the public health emergency that all but closed down global travel, is expected to remain loss-making this year as it tries to get back on its feet after the disruption.

The aviation industry has been plagued by staff shortages that have hampered the return of passengers, resulting in delays and cancellations during peak periods this year with Heathrow recently failing to get to grips with baggage volumes, resulting in mountains building up at arrival halls.

Please use Chrome browser for a more accessible video player

Its chief executive, John Holland-Kaye, said of the CAA’s proposals: “As the industry rebuilds, our focus is to work alongside airlines and their ground handlers to give passengers a reliable and consistent journey through Heathrow.

“The CAA continues to underestimate what it takes to deliver a good passenger service, both in terms of the level of investment and operating costs required and the fair incentive needed for private investors to finance it.

“Uncorrected, these elements of the CAA’s proposal will only result in passengers getting a worse experience at Heathrow as investment in service dries up.”

The CAA’s decision now goes out to industry consultation ahead of a final decision in the autumn.

Related posts:

NatWest posts pre-tax loss of £351m for the year, announcing exit from Ireland Providence leads race to buy £300m IT group Node4 Pound passes $1.40 for first time in nearly three years American father and son charged in Tokyo over Carlos Ghosn escape Greggs enjoys ‘sustained sales recovery’ despite pent-up demand easing Employers facing ‘perfect storm’ of hiring struggles as economy reopens – CBI FirstGroup boss heads for exit as largest shareholder demands resignation China gives first real reaction to Dimon gaffes but will there be a backlash? Jaguar Land Rover chalks up fresh £9m loss and sees chip shortages extending throughout 2022 ‘Deeply concerned’: Retail giant H&M becomes latest brand to pause Russia sales Agency workers could be called in to replace striking rail staff – report CBI warns of recession as it downgrades its economic growth outlook