Passengers are prepared to pay for improvements, says Heathrow

Passengers are prepared to pay for improvements, says Heathrow

Passengers are willing to pay more than Heathrow is proposing for investment to further improve the airport, according to the results of a survey out today.

Heathrow’s Alternative Business Plan, which has been submitted to the Civil Aviation Authority, makes efficiency savings of £427 million, putting the increase in charges at less than a pound a year per ticket.

At this level backers would invest £3 billion to further improve the airport, according to the airport owners.

The poll forms part of the Heathrow’s work on its business plan for the regulatory period which covers 2014-2019.

It asked airport passengers about their willingness to pay extra charges in return for further improvements.

The survey found that the average passenger at Heathrow is willing to see charges rise by £23 over the five-year period to secure the improvements on offer.

Heathrow is proposing a total increase in charges of £5.01, meaning airport charges make up just 5% of the average ticket price.

A spokesman said: “The airport has moved from the bottom to the top quartile of EU airports for passenger satisfaction and Terminal 5 has been voted the world’s best airport terminal for the last two years.

"We want to maintain this momentum and give the UK a hub airport it can be truly proud of. Under the CAA’s current proposals that won’t be possible.”

The regulator scrutinises the airport’s capital expenditure plans, operating costs and commercial revenues every five years to set the maximum amount the airport is permitted to charge airlines over the coming period.

The CAA’s initial proposals in April set the increase in charges at a level which the airport says would not allow Heathrow to compete on the global stage to attract investment.

Under those proposals there would be “no choice” but to cut planned investment from £3 billion to £2 billion.

However, Heathrow has re-examined its original case and reduced its proposed annual increase in passenger charges from RPI+5.9% to RPI+4.6%.

This has been made possible by increasing operational savings from £248 million to £427 million and by proposing a lower rate of return for shareholders. It now means the proposed increases are just £1 a year per ticket.

Chief executive Colin Matthews said: “Investors can choose to put their money anywhere in the global marketplace.

“The CAA’s current proposals will make it impossible to persuade them to put anything other than the bare minimum of capital into Heathrow.

“We know airlines want the improvements that we’re proposing and we have done everything possible to keep the cost of those improvements to an absolute minimum.

“The CAA has a duty to act in passengers’ interests – today we’re making clear that passengers want these improvements and are prepared to pay for them.”

The authority will publish final proposals in October for consultation before coming to a decision in January.

“We believe Heathrow’s plans represent good value for passengers, airlines and the UK as a whole.

"Our investment will deliver a better journey for passengers, more efficient and reliable infrastructure for airlines, and additional jobs, trade and economic activity for the UK,” a spokesman said.

British Airways, Lufthansa and Virgin Atlantic yesterday branded Heathrow’s proposal for its aeronautical charges to increase by inflation plus 4.6% from next year as unacceptable.


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