Air passengers face fare risesAirline fees for using airports due to be unveiled

11 March 2008

Airport sign directing travellers to the terminal.

Passengers at the UK's two biggest airports could face fare rises after today's announcement of how much airlines can be charged for using Heathrow and Gatwick.

The Civil Aviation Authority (CAA) is expected to announce a big increase in the landing charges that airport operator BAA can impose for the five years from April 2008.

Some of the rise will inevitably be passed on to passengers by airlines, who have argued for the imposition of lower charges.

Heathrow

Despite the increase, Spanish-owned BAA is certain to be unhappy with the overall settlement as the CAA is expected to limit the rate of return BAA can make on its investments to 6.2% at Heathrow and to 6.5% at Gatwick.

BAA believes it needs a return of 7.75% so it can fund a huge investment programme at Heathrow, Gatwick and Stansted airports.

BAA has been under fire for months, with passengers and politicians highly critical of conditions at Heathrow where travellers have experienced long delays and missing luggage.

CAA proposals

There have been calls for BAA's near-monopoly of major airports in southern England to be broken up and the whole question of the company's ownership of airports is the subject of a Competition Commission inquiry.

The 6.2% and 6.5% figures were proposed by the CAA in November 2007, with the final price control regime, lasting until the end of March 2013, due to be announced today.

Announcing the proposals last November, CAA economic regulation director Dr Harry Bush said: 'Passengers and airlines deserve better than they have been provided with at Heathrow and Gatwick in recent years, but need to recognise that improvements have to be paid for.

'The CAA considers it only right that, as airlines and passengers face the prospect of paying more to use each airport (significantly so at Heathrow), there should be greater financial incentives on the airport operator to deliver the facilities and services that give rise to those price increases.'

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