Heathrow: CMA tells aviation regulator to look at price cap again as row rumbles on
The UK competition watchdog has ordered the aviation regulator to tweak its verdict on the amount Heathrow can charge airlines for using the hub, following a three-year long dispute.
The industry watchdog the Civil Aviation Authority (CAA), which sets fees for the use of Heathrow, determined in March that the amount paid by carriers would fall from £30.19 to £25.28 in 2026.
Heathrow meanwhile believes lowering the fees would hurt investment into the airport. The feud has roped in British Airways, Delta Air Lines and Virgin Atlantic, all of which are infuriated by the airport’s resistance to lowering the cap.
In its final determiniation today, the Competition and Markets Authority (CMA) said “the CAA’s Heathrow price control struck broadly the right balance” between both sides arguments, but that there were “a handful of smaller issues we have ordered the CAA to look at again and it has agreed to do this swiftly.”
The CMA noted there had been “minor” errors in the aviation watchdog’s cost of debt calculation, as well as elements of its passenger forecast – which is used to set the per passenger charge.
The ruling denies Heathrow and the airlines bragging rights in what has become one of the most heated disputes in UK aviation.
Responding to today’s announcement, both sides recommended a shake-up of the regulator’s approach to determining the fees in any future or related decision.
Luis Gallego, Chief Executive of British Airways’ owner the IAG, said “Heathrow’s charges remain among the highest in the world and are not competitive. We would like to work with the CAA to improve the regulatory framework for the future.”
A Virgin Atlantic spokesperson said: “Following more than three years of regulated consultation on Heathrow charges, it’s disappointing that the CMA has largely endorsed the CAA’s decision, which did not go far enough to protect consumers from excessive charges at Heathrow.”
“Heathrow Airport’s repeated attempts to impose excessive charges demonstrate how the regulatory framework, including the formula used to set charges at the world’s most expensive airport, is broken.”
Heathrow’s rigid stance against the cap has been led by its departing chief executive John Holland-Kaye, who will be replaced by Copenhagen Airport’s Thomas Woldbye this month.
A Heathrow spokesperson said: “We’re naturally disappointed, but it’s time to move on. We will do our best to deliver the outcomes that passengers told us they wanted within this tight framework.”
“Going forward, the CAA needs to take more account of the views of consumers so that the settlement delivers the Heathrow experience passengers are looking for and not just higher profits for airlines.”