Heathrow is seeking to raise the landing fees it charges airlines by 17% as part of a plan to invest £10bn into Europe’s busiest airport, in a move airlines say will push up air fares for travellers.
The airport operator has made a submission to the Civil Aviation Authority (CAA) to increase the fees, saying the rise would fund a plan to increase annual passenger capacity to 92 million and expand terminal space for new lounges, shops and restaurants.
It said the average landing charge over the next five-year period would increase to about £33.26 per passenger, up from the current average of £28.46.
Thomas Woldbye, the chief executive of Heathrow, said that despite the increase in charges for its airline partners the levy was still lower in real terms than a decade ago.
“Our five-year plan will further boost operational resilience, deliver the service passengers expect and unlock the growth capacity airlines want, with stretching efficiency targets and a like-for-like lower airport charge than a decade ago,” he said.
However, International Airlines Group, the owner of British Airways, said the proposed increase in charges was “excessive” and that the £10bn investment would ultimately be “paid for by passengers and airlines, raising serious concerns about affordability and value for money”.
The group, which also owns Aer Lingus and Iberia, said Heathrow was already the most expensive airport in the world and that the proposal required “significant revision”.
Virgin Atlantic was also critical of the proposals, saying: “Only Heathrow, with its monopoly power as the UK’s only hub airport, would think that this £10bn investment plan represents value for money – and that’s before any third runway expansion costs are factored into the equation.”
Two years ago the UK competition regulator told Heathrow to cut landing charges by almost a fifth in 2024 after the airport lost appeal to raise them to fund baggage handling, security and other costs.
The plan submitted to the CAA covers the period from 2027 to 2031 and does not include a proposal for a third runway.
The Labour government has indicated it will approve the extra runway, with Heathrow set to submit a detailed proposal by the end of the month.
If the third runway does go ahead it will be funded through a different mechanism.
The plan submitted to the CAA would add 70,000 sq metres (753,470 sq ft) of existing terminal space by converting areas currently not used by passengers, and aims to increase capacity by 10 million at the end of the five-year period.
The airport says that by 2031 cargo capacity would also increase by a fifth.
Heathrow wants permission to demolish Terminal 1, expand Terminal 2 and build a new access tunnel to the central terminal area.
The airport’s shareholders, which include the French private equity group Ardian, will contribute £2bn in new equity towards the investment programme.
“We’re making good progress on our strategy to become an extraordinary airport – having become Europe’s most punctual major airport so far this year,” said Woldbye. “With Heathrow’s UK-based supply chain, this private investment will create jobs and drive national growth during this parliament.”
