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Heathrow wants to increase its passenger charges by more than 40 per cent over the next six years to help pay for its £3 billion investment plan.
The airport announced today (February 12) that it wants to increase charges from their current rate of £19.33 per passenger to £27.30 by 2018/19, with an average annual rise of around 5.9 per cent for the five years from 2014/15.
These increases, which have to be approved by the Civil Aviation Authority, are likely to lead to higher ticket prices for both business and leisure travellers. The CAA will make a final decision on the level of charges in January 2014.
Airlines were quick to protest about Heathrow’s proposed rises in charges between 2014 and 2019, which will help to pay for the completion of Terminal 2, the building of wider taxiways for larger aircraft such as the Airbus A380, and a new integrated baggage system.
British Airways said in a statement: “The charges must be reduced significantly over the coming years, especially when the airport is cutting investment by around 25 per cent from next year onwards. We hope the regulator will give a fair ruling in the months ahead, which doesn’t penalise customers and airlines.”
This view was echoed by Virgin Atlantic which said that charges at Heathrow were “triple the level they were ten years ago”.
“In the current economic climate other businesses, in private and public sectors and especially airlines, are making savings and delivering on less money,” added Virgin. “Airports should not be exempt from that and we call upon the CAA to use its regulatory powers to ensure there is a real terms reduction in charges applied to each passenger."
Heathrow’s chief executive Colin Matthews said of the continued investment: “Heathrow faces stiff competition from other European hubs and we must continue to improve the service we offer passengers and airlines.”
The airport has outlined a set of priorities for this new injection of investment, which include:
Heathrow has blamed a miscalculation in the estimated passenger numbers for the previous regulatory period from 2007-2014 for the increase in charges. This estimate forecast that Heathrow would reach 78 million passengers by this stage but the actual numbers have been 10 per cent or eight million lower, causing a shortfall of £650 million in anticipated income from passenger charges for the airport.
The new forecast sees a more modest rise in passenger numbers over the next five years, increasing from 69.5 million to 72.6 million by 2018/19.
Matthews confirmed that all of these proposals are geared towards improving the airport as a two runway hub, and that any decision by the Davies Commission regarding expansion would not effect this five-year period.
It was also confirmed that there will be practically no investment in Terminal 3 over the next regulatory period, as the airport focuses on its “resiliency and efficiency”.