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The UK’s Civil Aviation Authority (CAA) has agreed to
increase its cap on passenger charges at Heathrow airport by just over 50 per
cent, meaning air fares at the nation’s main hub could increase.

The CAA has placed an interim price cap of £29.50 in 2020
prices, rising to £30.19 in 2021 prices due to high rates of inflation. That’s
an increase of nearly £10 on the current cap of £19.60.

This cap will apply from 1 January until the summer of
2022, when a new five-year price control period will take effect.

Heathrow had asked the regulator to allow it to increase
passenger charges by 90 per cent to recoup some of the losses it has experienced
during the pandemic, but the CAA said it wanted to protect the interests of
both consumers and shareholders.

A spokesperson for the airport said Heathrow is “extremely
disappointed” by the increase, saying it risked limiting the company’s ability
to invest in improving services for passengers.

On the other hand, airlines have condemned the price
increase, which comes at a time of renewed uncertainty in the face of the
Omicron variant of Covid-19.

International Airlines Group CEO Luis Gallego said: “The UK’s
economic recovery depends on its ability to compete on the global stage. A
cost-efficient Heathrow would benefit UK consumers, businesses and trade.
Global Britain needs a global and competitive hub.”

Tim Alderslade, CEO of trade association Airlines UK, commented:
“The CAA has a statutory responsibility to protect consumers and if it thinks a
50 per cent increase in passenger charges at the world’s most expensive airport
is the way to do this, then something has gone very wrong.”

Virgin Atlantic chief executive Shai Weiss said the airline
would “consider options to appeal to the Competition & Markets Authority so
that passengers are protected from these egregious proposals and ensure the CAA
fulfils its duties”.

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