Heathrow attacks airlines in multibillion-pound argument over charge increases

Heathrow describes airline-commissioned study as 'flawed' and 'embarrassing'

A Virgin plane on approach to Heathow. PA

Heathrow Airport criticised as “flawed” a report that says it will rake in billions of pounds in charges to airlines while attracting fewer passengers if fees are increased.

The airport is locked in an argument with British Airways and Virgin, two of the world's largest airlines, over plans to increase charges in the summer.

Heathrow also called the airline-commissioned study, which concluded that higher airport charges would result in fewer passengers, as "embarrassing".

The report, by consultancy WPI Economics, said Heathrow will receive an "unjustified" £5 billion ($6.11 billion) over the next four years if the proposed increase in charges is approved.

"This 'analysis' from airlines is so flawed it is embarrassing,” a Heathrow spokesman said.

"Airlines appear less interested in giving passengers a reliable journey at the airport, and more interested in protecting their own profits,” he said.

"Airlines set fares to what the market will bear, and consumers will have seen fares rise by up to 100 per cent already as airlines try to recover Covid losses.

"The increase in airport charges that guarantees a good service will reduce airline margins slightly, but have no impact on consumer prices."

Heathrow said it will use the fees to invest and ensure flights take off safely and on time.

The Civil Aviation Authority is expected this summer to announce a five-year cap on the airport's charges.

It has given Heathrow permission to raise fees by more than 50 per cent on January 1 as an interim measure. Charges are paid by airlines but are generally passed on to passengers in air fares.

Virgin Atlantic boss Shai Weiss said: "Already the most expensive airport in Europe, Heathrow is abusing its monopoly position to fleece passengers and undermine the competitiveness of global Britain, all to deliver excessive returns to its shareholders."

The WPI Economics report, led by former Treasury official Matthew Oakley, said Heathrow's proposal to increase fees by a "disproportionate 117 per cent" will lead to charges being "at least £5 billion more than needed".

The report said that raising fees will lead to significantly fewer passengers using the airport.

The report accused Heathrow of:

• Overestimating future operating costs by £750 million;
• Underestimating future commercial revenue by £1 billion;
• Underestimating passenger numbers, leading to a £200 million cost;
• Overstating the rate of return needed to raise investment, leading to increased costs of "as much as £3 billion".

The report was commissioned by British Airways, Virgin Atlantic and airline trade organisation Iata, the International Air Transport Association.