Because of the Air Passenger Duty, which is levied on flights, the United Kingdom is the most costly country to fly from. This does not include individual airport taxes or passenger fees, which can be very high. As of 2022, many travellers will find it even more difficult to fly out of London Heathrow (the UK's busiest airport) as their fees increase significantly.
Huge LHR passenger charge hike coming
London Heathrow Airport (LHR), currently charges a 22-per-person passenger fee. This is to help pay for airport operations, runways, baggage system maintenance, security, and other costs.
Heathrow Airport executives stated earlier this year that they would like to increase the passenger fee to 43 in the coming years. Now, the Civil Aviation Authority (CAA), has told Heathrow Airport that it cannot raise passenger charges this much. But:
Over the next five-year period, 2022-2027, the Heathrow passenger fee can be increased to 34.40.
34.40 in the next five year, 2022-2027. In 2022, Heathrow passengers can pay 30. This is 37% more than pre-pandemic levels.
That's at least the current situation. However, there is still much lobbying to be done by the CAA until the final position is reached.
Heathrow Airport executives claim that the coronavirus epidemic has reduced demand for air travel. This reduces funding and places airport long-term projects in danger. In 2020, the airport suffered a loss of 2 billion dollars annually.
It is stated that while the CAA tried to keep charges as low-as possible, it recognizes the importance of Heathrow investing in and maintaining a high-quality airport.
Heathrow passengers are being charged more
This is why airline executives are not happy
It is not surprising that relations between airlines and airports can become strained. They must work together and provide a great experience for passengers. However, the airlines are responsible for adding the majority of taxes and fees to the price of a ticket. This can have an impact on demand.
Consumers are limited in what they will pay for weekend getaways. A one-way British Airways flight from London Heathrow (Frankfurt) costs $108.20. Only $50.90 is actually airfare and $57.20 is taxes & fees. These are not surcharges imposed by carriers.
Airport taxes may rise even more. However, this does not necessarily mean that the airline cannot raise the fare proportionally to meet demand.
The fact that Heathrow is privately held complicates matters even more. Shai Weiss, CEO of Virgin Atlantic, points out that airport owners have been exploiting their monopoly status, building up significant debt leading to the pandemic, and paying billions in dividends to shareholders. The airport is asking passengers and, by extension, airlines to pay for their services now that the economy is difficult.
This is not the first time we've seen Heathrow make such an attempt. The airport added an extraordinary regulatory surcharge to cover fewer passengers who have to pay the same fixed expenses during the pandemic.
This change is not a happy moment for airline executives
Bottom line
Heathrow Airport wants to increase its long-term passenger fee from 22 to 43. This is argued by Heathrow Airport as a result of losses from the pandemic and long-term investments. Although the Civil Aviation Authority didn't approve the request in its entirety, Heathrow was able to compromise and raise the passenger fee to 30 in 2022 and 34.40 for the next five years.
This development is causing airlines to be unhappy. It puts down pressure on fares and could cause a drop in demand.
It is amazing how costly it is to fly from Heathrow. This includes airport fees and the UK Air Passenger Duty which could be much higher.
What do you think about Heathrow Airport raising the passenger fee?
