The UK Civil Aviation Authority confirmed today that charges for 2023 will remain fixed at the level set out in its interim decision issued earlier this year.
This is the final decision for the annual caps that will apply to the charges that Heathrow Airport Limited levies on airlines for using the airport until the end of 2026.
The average maximum price per passenger will then fall by about 20% from £31.57 per passenger in 2023 to £25.43 per passenger in 2024 and will remain broadly flat at that level until the end of 2026.
This means the average charge over the five years will be £27.49 compared to £28.39 for Final Proposals, a reduction of £0.90 (all in nominal prices).
This lower level of charges from 2024 recognizes that passenger volumes are expected to return to pre-pandemic levels and should benefit passengers in terms of lower costs, while also allowing Heathrow Airport Limited to continue investing in the airport for the benefit of consumers and supporting the airport’s ability to finance its operations.
The package includes a £3.6 billion capital investment program. Passengers will benefit from investments such as next generation security scanners and a new baggage system in Terminal 2, which are collectively expected to cost around £1.3 billion and should bring considerable passenger benefits, including an improved security experience and more resilient infrastructure.
The arrangements also incentivize Heathrow to provide a good quality service for passengers and include a suite of measures, targets, and incentives to capture the main aspects of airport operation services that are important to consumers. This includes retaining some current measures such as time waiting in security queues, but also now includes new measures such as helpfulness/attitude of security staff, wi-fi performance, availability of check-in infrastructure, as well as hygiene safety testing and more.
The Civil Aviation Authority’s updated analysis reflects a passenger forecast that has been revised upwards since Final Proposals were first published in June 2022, as recovery from the pandemic continues. The decision also reflects changes in the wider macro-economic environment, in particular updated forecasts of inflation and interest rates since the Final Proposals were published.
