London Heathrow Airport Raising Passenger Charge

London Heathrow Airport Raising Passenger Charge

23

The United Kingdom is the most expensive country in the world to fly out of, thanks to the Air Passenger Duty that’s levied on flights. That doesn’t even account for individual airport taxes and passenger charges, which can also be steep. This is about to get even worse for many travelers as of 2022, as the fees for flying out of London Heathrow, the UK’s busiest airport, will be increasing significantly.

Huge LHR passenger charge hike coming

London Heathrow Airport (LHR) currently has a passenger charge of up to £22 per passenger, which contributes towards operating terminals, runways, baggage systems, and security.

Earlier this year, Heathrow Airport executives revealed that they wanted to raise the passenger charge to as much as £43 over the next several years. The Civil Aviation Authority (CAA) has now told the airport that it can’t raise passenger charges that much. However:

  • The Heathrow passenger charge can be raised to £34.40 over the next five years, between 2022 and 2027
  • In 2022, the Heathrow passenger charge can be raised to £30, which is an increase of 37% over pre-pandemic levels
  • At least that’s the position as of now, though there’s still some lobbying of the CAA that can be done, until this position is finalized

Heathrow Airport executives have argued that the coronavirus pandemic has severely decreased the demand for air travel, which reduces funding for the airport, and puts the airport’s long-term projects at risk. The airport had a £2 billion annual loss in 2020.

Meanwhile it’s stated that the CAA has tried to “keep the charges as low as possible, whilst recognising it’s really important for Heathrow to invest and maintain a high-quality airport.”

The Heathrow passenger charge is increasing again

Airline executives aren’t happy about this

Understandably, relations between airports and airlines can be contentious. On the one hand, they have to work together, and want to offer a good experience for passengers. On the other hand, airlines are responsible for adding a vast majority of taxes & fees to the cost of a ticket, and at some point that starts to impact demand.

There’s a limit to what consumers are willing to pay, especially for a quick weekend getaway. Take a one-way British Airways fare from London Heathrow to Frankfurt, which has a total price of $108.20. In reality, only $50.90 of that is actual airfare, while $57.20 of that is taxes & fees (and these are real fees, and not carrier imposed surcharges).

If airport taxes go up even more, that doesn’t necessarily mean the airline can just raise the fare proportionally without it adjusting demand.

What complicates things even further here is that Heathrow is privately owned. Virgin Atlantic CEO Shai Weiss points out that the airport’s owners have been abusing their “monopoly” position, building up substantial debt leading up to the pandemic, all while paying billions of dollars in dividends to shareholders. Now that times are tough, the airport wants passengers (and by connection, airlines) to pay.

This isn’t the first such attempt we’ve seen from Heathrow. During the pandemic, the airport has added an “exceptional regulatory surcharge,” essentially accounting for fewer travelers covering the same fixed costs.

Airline executives aren’t happy about this change

Bottom line

Heathrow Airport has wanted to raise its long-term passenger charge from £22 to £43. The airline argues that this should be allowed due to losses from the pandemic, as long-term investments are still needed. While the Civil Aviation Authority hasn’t quite approved the full request, a compromise was proposed — Heathrow can raise the passenger charge to £30 in 2022, and to £34.40 over the next five years.

Suffice to say that airlines aren’t happy about this development, given that this puts downward pressure on fares, and could lead to a drop in demand.

It really is incredible how expensive it is to fly out of Heathrow, between the airport fees and the UK Air Passenger Duty, which is potentially much bigger.

What do you make of Heathrow Airport hiking the passenger charge?

Conversations (23)
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  1. Florence Guest

    Heathrow doesn’t have a monopoly on air travel to and from London. Passengers can vote with their and use Stanstead and Gatwick, which is even more convenient to London.

  2. Christopher Peris Guest

    Please don't take the burden on passagers who work hard and save up for a holiday much needed a £5.00 or £10.00 is ok if 1 million pay £10.00 you get millions

  3. LT Guest

    This is probably a brilliant way to "Brexit" themselves from the rest of the world. But I don't care much if they increase the fee by 10X of £43 since I have been avoiding to fly our from that airport anyway. I would say the more they raise the fee the merrier for the airport.

  4. Marco Guest

    FYI, a one way ticket airport fee, MEX-IAH for instance, is US$61.65
    Yes, it is ridiculous and will get worse after the populist government cancelled the new airport at almost 40% done. ‍♂️

  5. Tim Dunn Gold

    The US does not do everything right but US federally funded airports have to keep all of the revenues on airport property, preventing exactly what Virgin complains about - paying shareholders while passengers pay the price with much higher fees.
    Airports are monopolies and the free market doesn't work.

    The UK is what the US will be in a few years given the current leadership we both have.

  6. iamhere Guest

    Choose a different airport. There are an increase of flights that operate to/from the other airports. Heathrow is not very passenger friendly or convenient.

  7. JP Guest

    I'm ok with price hikes if the service actually reflects that. LHR to me has it's pro's and con's:

    Pros:
    - The service by the ground staff are actually pretty decent, they're helpful and often just there to do their job, most travellers forget that.
    - The basic facilities are pretty decent, and most of the time the facilities are clean, which is a must during these times
    - E-Gates (when working)...

    I'm ok with price hikes if the service actually reflects that. LHR to me has it's pro's and con's:

    Pros:
    - The service by the ground staff are actually pretty decent, they're helpful and often just there to do their job, most travellers forget that.
    - The basic facilities are pretty decent, and most of the time the facilities are clean, which is a must during these times
    - E-Gates (when working) are probably the quickest immigration facilities I've been to in some time, and close to Asia in some cases

    Cons:
    - The idea of priority baggage seems to be lost to the luggage staff, there has been many many times where I've cleared immigration only to wait for my luggage to come way later than the non-priority baggage to come through
    - Overall, there's nothing "special" about the airport itself, unlike Singapore/HKG, and HND where there's often something unique about them. That applies to the shops as well, shops are just any other shops you can get globally
    - E-gates when they don't work....horror...

    1. Donato Guest

      Problems with priority baggage usually trace back to the originating airport staff. They should load the priority baggage in the last in baggage container. If this was not done NEVER will the unloading staff prioritize rather than dump everything.

  8. Adam Simmons Guest

    To say that the UK is the most expensive country to depart is nonsense, once the fare itself is included. By contrast, MAD and BCN are expensive for C class fares to the Far East, which is why I generally use the cheaper AMS hub.

    1. stogieguy7 Gold

      As far as confiscatory taxes are concerned, the UK has you beaten. Average fares are another matter, but it's to the point where only the wealthy are using the UK as a gateway to Europe from North America anymore. Transiting via another hub (BEL, CDG, AMS, MAD, LIS, FRA, WAW, etc) can be a LOT cheaper.

    2. miamiorbust Guest

      I'm not certain the relative pricing argument holds across fare classes for cash rates - BA business class fares are often relatively cheap but you will be flying BA - but even if true is that necessarily bad in terms of economic development model for the London region? As one of the largest airports in Europe it would be reasonable to compete on schedule, frequency and routes rather than price.

  9. David Guest

    Knock yourself out. I already avoid LHR as it's cheaper to go through FRA or other cities, and they don't charge tax on award upgrades.

  10. Christian Guest

    Another illustration of why privately owned airports are a terrible idea.

    1. Adam Simmons Guest

      Yes, because CDG, MAD and EWR are all superb examples of public ownership LOL

    2. Christian Guest

      Do your examples soak you for more money because their profits aren't fat as usual during a pandemic? Nope. Try again. LHR is a textbook example of what's wrong with private ownership of a major airport.

    3. Sam Guest

      Yup. It's egregious that the airport pays billions in dividends to foreign investors, including Qatari and Chinese sovereign wealth funds.

    4. miamiorbust Guest

      Actually, no. It would egregious to expect private capital to invest into what is essentially a regional economic development project without paying a return. The alternative is to finance through the public sector and issue asset-backed bonds. Bondholders expect to get paid regardless of economic performance. Choice "C" is paying for capital projects out of current taxes from citizens - a really bad idea that doesn't match timing of costs and economic inflows. Regardless of...

      Actually, no. It would egregious to expect private capital to invest into what is essentially a regional economic development project without paying a return. The alternative is to finance through the public sector and issue asset-backed bonds. Bondholders expect to get paid regardless of economic performance. Choice "C" is paying for capital projects out of current taxes from citizens - a really bad idea that doesn't match timing of costs and economic inflows. Regardless of whether you prefer private or public ownership, there's no free lunch.

    5. Tim Dunn Gold

      how about a novel idea? The government at some level - local, regional or national - recognizes the value of airports and ensures that airports have access to capital.
      US airports are generally not subsidized but they are also non-profit

      The notion that good, large airports need to have private capital is complete nonsense

  11. James S Guest

    Airports are incredibly expensive to build and maintain. And yes, the passenger fees should reflect that.

    In the US, we dont charge enough, so massive amounts of tax funding is used to cover the deficit. Meanwhile, we complain about public transit running at a loss.

    I was just reviewing plans for expansion at FAT (Fresno), and the expansion will cost $100 million. Only $6 million is coming from passenger fees. Everything else is grants,...

    Airports are incredibly expensive to build and maintain. And yes, the passenger fees should reflect that.

    In the US, we dont charge enough, so massive amounts of tax funding is used to cover the deficit. Meanwhile, we complain about public transit running at a loss.

    I was just reviewing plans for expansion at FAT (Fresno), and the expansion will cost $100 million. Only $6 million is coming from passenger fees. Everything else is grants, which is a fancy way of saying tax money.

    In a climate emergency, tax money should be used for sustainable transit, not airports. If you want to use the airport, great. Pay for it.

    1. Biz Traveler Guest

      “Climate emergency” - lol

    2. Franklin Guest

      What a remarkably myopic position. Cities benefit enormously from the money spent by visintg travelers. Do you realize how much money is spent by travelers to London, all of which is taxed? The money they spend benefits the entire city. Thus, it is not only logical, but strategic, for tax dollars to be spent building and maintaining airports. Its an investment that ensures a stream of revenue far higher than whatever an airport tax would...

      What a remarkably myopic position. Cities benefit enormously from the money spent by visintg travelers. Do you realize how much money is spent by travelers to London, all of which is taxed? The money they spend benefits the entire city. Thus, it is not only logical, but strategic, for tax dollars to be spent building and maintaining airports. Its an investment that ensures a stream of revenue far higher than whatever an airport tax would net.

      That all said, this policy will clearly contribute to the financial disincentives to visit London. The more a ticket costs, the fewer people who are likely to do it. I often transit Heathrow, but I only rarely build in stopovers becuase the fees that would trigger are too prohibitive.

    3. miamiorbust Guest

      @Franklin, +1. I do think Heathrow has it wrong. The tax is weighted toward O&D travel, which is exactly the travel that boosts regional economic activity. I do find James' rationale reasonable in the context of connecting passengers that benefit from airport infrastructure with relatively modest surcharges. BA and Virgin benefit from passenger volumes relating to connecting passengers that far outstrips the route network that could be supported from domestic UK market. Adding surcharges on...

      @Franklin, +1. I do think Heathrow has it wrong. The tax is weighted toward O&D travel, which is exactly the travel that boosts regional economic activity. I do find James' rationale reasonable in the context of connecting passengers that benefit from airport infrastructure with relatively modest surcharges. BA and Virgin benefit from passenger volumes relating to connecting passengers that far outstrips the route network that could be supported from domestic UK market. Adding surcharges on connections would align use and revenue with limited impact on regional economic development.

    4. Tim Dunn Gold

      you do realize that US airports send billions of dollars to Washington?

      those grants aren't gifts but repackaged money which was collected by FAT passengers and airlines.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

JP Guest

I'm ok with price hikes if the service actually reflects that. LHR to me has it's pro's and con's: Pros: - The service by the ground staff are actually pretty decent, they're helpful and often just there to do their job, most travellers forget that. - The basic facilities are pretty decent, and most of the time the facilities are clean, which is a must during these times - E-Gates (when working) are probably the quickest immigration facilities I've been to in some time, and close to Asia in some cases Cons: - The idea of priority baggage seems to be lost to the luggage staff, there has been many many times where I've cleared immigration only to wait for my luggage to come way later than the non-priority baggage to come through - Overall, there's nothing "special" about the airport itself, unlike Singapore/HKG, and HND where there's often something unique about them. That applies to the shops as well, shops are just any other shops you can get globally - E-gates when they don't work....horror...

2
Franklin Guest

What a remarkably myopic position. Cities benefit enormously from the money spent by visintg travelers. Do you realize how much money is spent by travelers to London, all of which is taxed? The money they spend benefits the entire city. Thus, it is not only logical, but strategic, for tax dollars to be spent building and maintaining airports. Its an investment that ensures a stream of revenue far higher than whatever an airport tax would net. That all said, this policy will clearly contribute to the financial disincentives to visit London. The more a ticket costs, the fewer people who are likely to do it. I often transit Heathrow, but I only rarely build in stopovers becuase the fees that would trigger are too prohibitive.

2
Biz Traveler Guest

“Climate emergency” - lol

2
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