British Airways owner International Consolidated Airlines Group SA (LSE:IAG) and other major airlines will be disappointed this morning amid confirmation that Heathrow Airport has been told by the UK air regulator that it must charge slightly more per passenger under a new temporary price cap.
The Civil Aviation Authority today published its final decision for the annual charges Heathrow levies on airlines using the airport until the end of 2026, following a dispute with airlines over the cap as the airport had reportedly calling for the cap to range from £32 to £43 per passenger.
The average maximum price per passenger will remain fixed at £31.57 per passenger in nominal prices, which it set out in its disputed interim decision issued earlier this year, up from £30.19 last summer.
Then it will then fall around 20% to £25.43 per passenger in 2024 and will remain broadly flat at that level until the end of 2026.
BA is the airline most affected by the news as it is the west London airport's biggest customer, with more than 50% of aeroplane slots.
In the consultation, Heathrow, BA, airline trade bodies and some other transatlantic carriers supported the proposal for a holding price cap for 2023 but "expressed reservations around the level of the proposed holding price cap and disappointment on the general delay"
Analysts at broker Peel Hunt noted that the decisions will save the circa 80mln passengers using Heathrow around £6.23 on ticket prices per outbound or inbound journey.
"Of this of which just over 50% fly with IAG. This will help mitigate increases in UK APD (air passenger duty), which are already the highest in the world and rises by RPI, which was 12.6%."