Old Jul 17, 18, 2:08 pm
Join Date: Jul 2012
Location: London
Posts: 388
Whilst interesting, it's not quite correct. Heathrow is actually an odd example being regulated with a single till mechanism. Roughly every 5 years the regulator agrees a set of forecasts for passenger numbers, retail revenue, operational expenditure, capex etc. Anything spent on capex goes into a regulated asset base (RAB) and Heathrow earn a return on that, which is currently 5.35%. The balancing figure to allow them to get to their regulated return is the aeronautical charges (which are around 20 per passenger journey, or 40 for a return - very high compared to most airports around the world!) You'll see part of this on a ticket charge as 'Heathrow passenger service charge'

Once the forecast is set, then if Heathrow beats any of those forecasts, it keeps the benefit, and equally the downside if it doesn't. Over the past 4 or so years, Heathrow have consistently beaten the forecasts (mainly through exceeding the passenger forecasts) and so have been profiting substantially
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