Heathrow and Airlines Lose Appeal Against CAA’s London Heathrow Price Cap Decision

Heathrow Airport Holdings, along with major airlines Virgin Atlantic, British Airways, and Delta Air Lines, has lost its appeal against the UK Civil Aviation Authority’s (CAA) decision to enforce a price cap at London Heathrow for the period 2022-2026. The decision, detailed in the Competition and Markets Authority’s (CMA) final ruling on October 17, upholds the CAA’s pricing structure, determining the charges Heathrow can impose on airlines per passenger for utilizing its services.

Virgin Atlantic, British Airways, and Delta Air Lines had appealed the CAA’s March 9, 2023, decision, seeking a more significant reduction in levies. They argued for a balance that would lower costs for passengers while allowing necessary infrastructure improvements at the airport. The CMA’s thorough consideration of the appeals concluded that the CAA’s pricing model achieved an appropriate equilibrium, ensuring reasonable prices for passengers and encouraging ongoing airport enhancements.

CMA Chairwoman Kirstin Baker stated, “There are a handful of smaller issues we have ordered the CAA to look at again, and it has agreed to do this swiftly.” While the airlines, particularly Virgin Atlantic, expressed disappointment, citing concerns about excessive charges at Heathrow, the CMA emphasized the need to protect consumers without inhibiting the airport’s ability to invest in improvements.

Heathrow Airport, despite its disappointment, acknowledged the need to move forward, pledging efforts to deliver passenger-centric outcomes within the established framework. Virgin Atlantic urged a fundamental review of the regulatory framework for setting charges, emphasizing collaboration between Heathrow and airlines for improved service and customer experience.

Luis Gallego, CEO of IAG International Airlines Group (parent company of British Airways), emphasized that Heathrow’s charges remained among the world’s highest and called for collaborative efforts with the CAA to enhance the regulatory framework. Delta Air Lines chose not to comment on the decision.

In March, the CAA capped Heathrow’s charges at a maximum of GBP 31.57 per passenger for 2023, with a subsequent 20% reduction to GBP 25.43 per passenger in 2024, maintaining this level until the end of 2026. The decision aims to balance the interests of passengers and investors while fostering competition and efficiency at the busy London airport.