The UK’s aviation regulator has today ruled that Heathrow’s bid to raise passenger charges to repair the damage of the coronavirus pandemic was “not in the interest of consumers”.
The airport had asked the Civil Aviation Authority (CAA) to increase its regulatory asset base to £2.6bn in order to recover its losses.
But the watchdog today said that it would only allow Heathrow to raise an extra £300m through higher charges.
Heathrow has warned that it is on track to lose £3bn as a result of the pandemic, which has sent passenger numbers down over 80 per cent in recent months.
Paul Smith, director at the CAA, said: “Following Heathrow’s request for a RAB adjustment we have taken the decision that an early intervention on the scale of its request is disproportionate and not in the interests of consumers.
“We do, however, recognise that these are exceptional circumstances for the airport and there are potential risks to consumers if we take no action in the short term.
“The decision we have announced today will incentivise and allow Heathrow to maintain investment, service quality and be proactive in supporting any potential surge in consumer demand later this year.”
A spokesperson for the airport said: “The CAA accepted the need for it to act in order to meet its duties to consumers and to Heathrow’s financeability – but today it has failed to deliver.
“At a minimum it needed to immediately restore regulatory depreciation in line with UK regulatory principles – the interim adjustment falls far short. This undermines investor confidence in UK regulated businesses, and puts at risk the Government’s infrastructure agenda.
“The CAA will need to address all the issues related to adjustment fully in the upcoming H7 regulatory settlement to attract the investment needed to maintain service, keep prices lower than they would otherwise be and protect resilience through the recovery.”