Heathrow tariffs provisionally backed by UK competition regulator

LONDON, Sept 8 (Reuters) – Britain’s competition regulator on Friday gave its provisional backing to most of aviation regulator CAA’s decisions on how much Heathrow can charge airlines over the 2024-2026 period, after airport and airline appeals.

The Competitions and Markets Authority (CMA) stepped in to review the CAA’s decision after its proposed job cuts over the next three years angered both sides.

Heathrow said lower fares would hit investment, but British Airways owner IAG (ICAG.L) and Virgin Atlantic said the cuts did not go far enough.

The airport operator argues that it needs higher fees to provide good service, pay returns to shareholders and finance investments. Meanwhile, airlines questioned the CAA’s calculations.

The airlines said the new price was based on overly pessimistic passenger forecasts and that even with the cut, Heathrow remained one of the most expensive airports in the world.

The CMA has until October 17 to decide whether to allow or dismiss the appeals, it said in a statement, adding that it would now consider comments on the provisional findings.

“Overall, we provisionally consider that the CAA did not err in the majority of the appealed decisions,” he said.

The CAA told Heathrow in March that fares would have to fall to about £25.43 ($31.75) per passenger in nominal terms over the 2024-2026 period, down from £31.57 per passenger this year. .

“We are carefully considering the CMA’s initial findings to understand what impact they may have on passengers and our ability to deliver our investment plans,” a Heathrow spokesperson said.

Virgin Atlantic and IAG said they were disappointed by the CMA’s statement.

“We would be disappointed if this were the final outcome of the CMA appeal… We will participate in the remainder of the appeal process,” IAG chief executive Luis Gallego said.

The CAA said it would review the findings and then issue a response.

“We remain confident that our decision on the fees Heathrow Airport Limited imposes on airlines represents good business for consumers while allowing the airport to invest in improving services for the future,” the statement said.

The CMA said it wanted the aviation regulator to reconsider elements of the charge where there had been errors in its calculations, adding that this was unlikely to result in major changes to the proposed level.

“We would expect such changes to have only a small net impact in relation to the CAA’s overall price control decision, particularly as they may work in opposite directions,” the competition watchdog said.

($1 = 0.8010 pounds)

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