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Interesting video - How Heathrow makes money

Interesting video - How Heathrow makes money

Old Jul 17, 18, 12:15 pm
  #1  
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Interesting video - How Heathrow makes money

Not strictly BA but obviously of interest to many here, so I hope it doesn't get booted to some obscure corner of FT!

Seems well researched and informative to me, but I'm sure people here will finds points to challenge... look forward to the comments!

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Old Jul 17, 18, 2:08 pm
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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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Old Jul 17, 18, 2:15 pm
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That was painful. Dreadful delivery
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Old Jul 17, 18, 2:15 pm
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As this concerns Heathrow generally, and really has little or no connection to BA, we have no option but to move it. The OP will doubtless be delighted to learn that other parts of FT exist, and the UK & Ireland forum is a very, very long way from obscurity.

Who knows, perhaps if more people posted in it it might grow even more ...

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