UK competition watchdog backs aviation regulator in Heathrow price row

A plan by Britain's aviation regulator to cut charges for airlines at Heathrow was given the go-ahead by the competition authorities on Tuesday, despite the reduction angering both the airport and its customers. Heathrow warned lower fees would hit investment, while British Airways owner IAG, Virgin Atlantic and Delta Airlines said the cuts did not go far enough at one of the most expensive airports in the world.

A plan by Britain's aviation regulator to cut charges for airlines at Heathrow was given the go-ahead by the competition authorities on Tuesday, despite the reduction angering both the airport and its customers.

Heathrow warned lower fees would hit investment, while British Airways owner IAG, Virgin Atlantic and Delta Airlines said the cuts did not go far enough at one of the most expensive airports in the world. The Civil Aviation Authority (CAA) told Heathrow in March that fees would need to fall to about 25.43 pounds ($31.75) per passenger in nominal terms over the 2024-2026 period, compared with 31.57 pounds per passenger this year. The Competitions and Markets Authority (CMA) stepped in to review the CAA decision after both sides appealed.

"We found that the CAA’s Heathrow price control struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time," the CMA said in its final determination. While it "broadly" found in favour of the CAA, the CMA said the regulator did need to review a "handful of smaller issues" in its pricing decision.

Responding to the CMA ruling on Tuesday, IAG said it wanted to work with the CAA to improve the framework for the future, while Virgin Atlantic said the decision showed the regulatory framework was "broken". "Now's the time for a fundamental review of how these charges are set, ensuring that customers are protected ahead of shareholders," a spokesperson for Virgin said.

Heathrow Airport said it was disappointed. "Going forward, the CAA needs to take more account of the views of consumers so that the settlement delivers the Heathrow experience passengers are looking for and not just higher profits for airlines," it said.

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