Britain''s aviation regulator has proposed that Heathrow cap its landing charges so that they rise in line with inflation, but the country''s busiest airport has hit back and said the cap could have "serious and far-reaching consequences" for passengers.
Britain''s aviation regulator has proposed that Heathrow cap its landing charges so that they rise in line with inflation, but the country''s busiest airport said the cap could have "serious and far-reaching consequences" for passengers.
London''s Heathrow airport had submitted a plan to the UK''s Civil Aviation Authority (CAA) seeking to raise tariffs for airlines by 4.6pc above inflation, as measured by the retail prices index (RPI), for the five years from April 2014.
"Tackling the upward drift in Heathrow''s prices is essential to safeguard its globally competitive position," CAA chairman Deirdre Hutton said in a statement as the agency published its final proposals for consultation.
The regulator had initially proposed that the annual increase at Heathrow should be RPI minus 1.3pc, but said a key reason for today''s proposal inline with inflation was "due to an increase in the cost of capital driven by higher debt costs, offset to some degree by more challenging targets for operating efficiency".
Today''s announcement from the regulator was not welcomed by Colin Matthews, boss of Heathrow, who said the "proposal is the toughest Heathrow has ever faced" and warned that the group will "now carefully consider our investment plans".
He said the cap could have "serious and far-reaching consequences for passengers and airlines at Heathrow". Plus the proposals "risk not only Heathrow''s competitive position but the attractiveness of the UK as a centre of international investment".
If the proposals are accepted it will put an end to over a decade of prices rising faster than inflation at Heathrow.
Airlines at the UK''s busiest airport had asked for a 9.8pc a year cut over the five years and a statement from the Board of Airline Representatives in the UK (BAR UK) said the CAA''s decision for Heathrow was "bad news for the UK''s international competitiveness".
“Airline CEO’s will be reaching for their oxygen masks in the knowledge that they will be forced to pass on excessive airport charges to their customers for the next five years," said Dale Keller, chief executive of BAR UK.
"Following increases exceeding 300pc over the past 11 years, the latest settlement allowing further RPI [inflation] increases escalates costs to consumers and weakens the international competitiveness of the UK’s only hub airport."
Sir Richard Branson''s airline Virgin Atlantic issued a statement to say it was "deeply disappointing to see the CAA has bowed to pressure from Heathrow Airport Limited and its shareholders".
It added that the decision to increase charges was a "hammer blow for both UK consumers and overseas visitors wanting to travel to this country".
At Gatwick, the CAA said it was satisfied with London''s second biggest airport''s plans to to raise average prices by 0.5pc above RPI for seven years.
Gatwick said it "cautiously welcomes" the CAA''s endorsement of its proposed increase in charges.
“We will now re-double our efforts to work with our airlines partners to make this work in the best interests of all parties, and in particular for passengers," said Stewart Wingate, CEO of London Gatwick.
The price rises at Gatwick mean core airport charges will increase from £8.80 per passenger in April 2014 to £9.11 in 2020/21, Gatwick said.