Heathrow Airport has been compelled to reduce the landing fees it charges airlines following intervention by the competition regulator.
The Civil Aviation Authority (CAA) announced that the cap for landing charges will be set at an estimated £23.73 per passenger next year and £23.71 in 2026, approximately 6% lower than initially anticipated.
In March last year, the CAA had proposed capping prices at £25.24 in 2025 and £25.28 in 2026. However, after the Competition and Markets Authority (CMA) stepped into the prolonged dispute between Heathrow and the airlines, the CAA made slight adjustments to its price cap calculations. While the CMA largely supported the CAA’s approach, it recommended re-examining a few minor issues.
The CAA’s final decision on the price cap concludes the debate over whether Heathrow should increase its landing fees during the 2022-2026 regulatory period to aid its pandemic recovery. Initially, Heathrow sought to charge as much as £40 per passenger, a proposal airlines claimed was based on an underestimation of the airport’s recovery speed to justify higher fees. Before the pandemic, the fee was set at about £19 per passenger.
The tension between Heathrow and the airlines arose from the significant decline in air travel during the pandemic. However, the industry has rebounded swiftly. On June 30, Heathrow experienced its busiest day ever, with 268,000 passengers passing through its terminals. In June, the airport handled 7.4 million passengers, a 5.6% increase from the same month last year. Over the 12 months ending in June, 81.9 million passengers used the airport, marking a 13% rise compared to the previous year.
Last month, Heathrow’s ownership changed hands after Ferrovial, the Spanish construction company that led the 2006 acquisition of the then-privatised BAA, sold most of its stake. The deal was made with Ardian, a former co-owner of Luton Airport, and PIF, the sovereign wealth fund of Saudi Arabia, which also holds interests in Newcastle United and Aston Martin. The original acquisition valued Heathrow at £9.5 billion, while the revised settlement comes at a price of £8.3 billion, a 13% discount.