New Heathrow boss seeks increase in landing fees

New Heathrow boss seeks increase in landing fees

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The new boss of Heathrow is looking to raise the landing fees it charges airlines, according to a report this morning.

New chief executive John Holland-Kaye told the Financial Times that Heathrow planned to raise the "aeronautical charge" from £20 per passenger to £24.

The increase by as much as 20% is intended to secure a return on a £17 billion investment in a third runway.

Heathrow is willing to explore ways to offset the impact of higher landing charges – for example, Air Passenger Duty could be cut on long-haul flights, the FT reported.

Landing fees – set by the Civil Aviation Authority – are the biggest source of income for Heathrow and were worth £1.5 billion last year. The fees are normally passed on by airlines to passengers.

But airlines are expected to resist such an increase in landing fees to help pay for Heathrow’s expansion, because the airport already has some of the highest aeronautical charges in the world.

Holland-Kaye, who starts in the new role today, stressed that the proposals were in a draft funding plan for a third runway that was submitted to the Airports Commission.

He voiced confidence that Heathrow could secure ministerial approval for a third runway opening in 2025, adding he could not rule out the case for a fourth one in the future.

Holland-Kaye told the FT that Heathrow was looking at a £4 increase in the aeronautical charge, adding: “It is a real-terms increase that we believe our passengers are prepared to pay in order to get to the global markets they need to get to.”

In a detailed submission about the third runway to the Airports Commission, Heathrow suggests an average aeronautical charge of almost £24 per passenger between 2019, when construction of the third runway could start, and 2048.

The charge could peak at more than £27 before falling to less than £20 after 2044.

The CAA this year insisted on a real-terms cut in the airport’s landing charges – just as the company was completing its £2 billion Terminal 2, which opened last month.

Speaking to the BBC this morning, Holland-Kaye apologised for the baggage system meltdown at T5 last week and said the problems had now been resolved.

He said the issue which started last Thursday was an IT problem which had now been solved but that it was taking longer than hoped to manually reunite passengers with bags.

In response to complaints from passengers still without their luggage, Holland-Kaye said the problem was very rare for Heathrow and that the airport, and in particular T5, was highly rated by customers.

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