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Heathrow airport has asked regulators to approve a 17 per cent increase in landing charges to pay for a £10bn investment programme that it promises will take the airport’s annual capacity to 92mn passengers.
Heathrow 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 per passenger. The airport said the proposed levy was lower in real terms than it was a decade ago.
The request is likely to be opposed fiercely by the airlines that use the airport, which has been accused of overcharging and exploiting its position as the premium London hub to charge too much.
The five-year plan, submitted to the Civil Aviation Authority on Friday, does not include proposals for a third runway. The Labour government has signalled it is minded to approve the expansion and Heathrow is preparing to submit a detailed proposal at the end of July. The third runway, if it goes ahead, is expected to be funded through a different mechanism.
The plan covers the period from 2027-2031. Heathrow said it will add 70,000 square metres of terminal space by converting areas currently not used by passengers, enabling it to add new lounges, shops and restaurants.
The plan will increase the airport’s annual passenger capacity by 10mn to 92mn at the end of the five-year period and cargo capacity by 20 per cent.
The airport wants to secure permission to demolish Terminal One, expand Terminal Two and build a new southern access tunnel to the central terminal area.
Heathrow shareholders — which include French private equity group Ardian — will contribute £2bn in new equity towards the investment programme, the airport said.
Heathrow chief executive Thomas Woldbye said the plan “boosts operational resilience, delivers the better service passengers expect and unlocks the growth capacity airlines want with stretching efficiency targets and a like-for-like lower airport charge than a decade ago”.
Under the current regulatory model, Heathrow is allowed to recoup spending on airport improvements through the landing fees it charges airlines, which are typically passed on to customers through ticket prices.
Airlines operating from the airport have fought previous attempts to increase landing charges. The airport was forced to cut its fees for 2024 after demand for flying recovered from the Covid-19 pandemic faster than expected and airlines successfully lobbied against a significant increase in charges.
Airlines led by British Airways owner IAG and Virgin Atlantic have recently launched a campaign to persuade the Civil Aviation Authority to review how Heathrow is funded, amid fears over the final costs of a third runway.
IAG said it welcomed Heathrow’s “intent to improve passenger experience” but said the initial business plan submitted by the airport “requires significant revision”.
It said the proposed increase in charges was “excessive, particularly given that Heathrow is already the most expensive airport in the world and this plan does not increase capacity”.
The suggested £10bn investment, the group added, “would be paid for by passengers and airlines, raising serious concerns about affordability and value for money”.
Virgin Atlantic similarly criticised the proposal, saying that “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”.
https://www.ft.com/content/2ee6ad8e-5c76-43e1-86e7-65d73ad2288d
