Passengers at Heathrow 'face £1bn fares hike'

Airlines yesterday warned that passengers at Heathrow would be hit by £1bn in extra fares over five years after the regulator ignored their demands for a 10 per cent cut in landing charges.

British Airways chief Willie Walsh led the outcry as the Civil Aviation Authority (CAA) gave Heathrow – the world's most-expensive airport for charges – permission to increase the average fee of £20.71 per passenger at the rate of inflation for the next five years.

Airlines said the CAA – which hinted earlier this year it would cap Heathrow's charges at inflation minus 1.3 per cent – had caved into pressure under intense lobbying from Heathrow.

Passengers at Gatwick face a hike in charges from £8.80 to £9.11 per flight in 2020 – a rise of inflation plus 0.5 per cent.

Mr Walsh said: "It is a bad day for our customers who have been let down by the CAA. With this settlement, Heathrow will continue to levy charges well above other major hub airports. As the only hub airport in the UK, Heathrow exerts monopoly power over its users."

Virgin Atlantic claimed Heathrow's charges had tripled over a decade and added it was "deeply disappointing to see the CAA has bowed to pressure from Heathrow and its shareholders".

The CAA said that Heathrow was granted a more generous deal due to higher costs of borrowing, but added that the airport could save cash by streamlining its business.

The airport's owners said the real-terms freeze deal was the "toughest Heathrow has ever faced" after lobbying for the right to increase flight charges by inflation plus 4.6 per cent.

The airport said such a deal would have hiked ticket prices by £1 per flight each year for five years, but passengers would have been happy to pay to fund better facilities.

Heathrow, whose major shareholders include Spanish firm Ferrovial and the Qatar sovereign wealth fund, said the CAA had failed to strike a balance between the interests of passengers and airport operators.

Chief executive Colin Matthews warned it might even put off potential investors if the airport is granted permission to build more runways.