February 12 2013

Heathrow Terminal 5

The operator of Heathrow Airport has called on the regulator to allow it to significantly increase the charges it levies on airlines, calling in fact for a 5.9% annual increase in charges over the 5 year period commencing 2014.

The airport claims that the last time charges were set, predicted passenger numbers were greatly over estimated and that, as a result, the airport has missed out on over £600 million in expected revenue.

Having opened Terminal 5 in 2007, and with Terminal 2 set to re-open in 2014, the airport claims that it must significantly increase its revenue if it is to continue investing in the airport and compete not just with the likes of Paris, Frankfurt & Amsterdam but also fast growing hubs in Dubai, Abu Dhabi & Doha.

Once Terminal 2 does re-open, some have suggested that the airport will use the opportunity to close and knock down Terminal 1 before further expanding Terminal 2 into the available space.

Unfortunately for passengers, with airlines already operating at a loss or making minimal profits, any such increases in charges will invariably be passed on to the travelling public in the form of higher ticket prices. With some 50% of slots at the airport, British Airways is the airline most affected by these proposals and, not surprisingly, has called on the regulator to reject any such increases out-of-hand.

British Airways argues that with its 2 largest infrastructure projects out of the way, Heathrow simply doesn’t require the claimed for additional £3 billion and instead claims that the airport is more interested in rewarding investors than in improving the passenger experience. In this matter, British Airways does at least have the support of its traditional rival Virgin Atlantic.