momoflyingguy

this and this.

UKtravelbear

1. This applies to ALL airlines at LHR not just BA.

2. Airlines - including BA - have already included it in their fares as a specific line in the 'taxes, fees and surcharges' section of the fare breakdown. They are already passing it on to passengers

3. It was the airlines who wanted the fee dealt with in this particular way as a charge to passengers rather than via airline charges.

1. Airports are regulated in the UK by the CAA. It was UK regulators that insisted that BAA (as was) sold off Gatwick and other airports so there would be competion.

2. Government HAS NOT lent BA any money. It has guarenteed loans from private banks but that is not the same as a direct loan and they would be reimbursing the banks not BA if BA failed to repay the loans.

KARFA

It seems to be levied by other airlines at LHR, not just BA. LH from LHR-FRA includes the charge. So it�s really not clear which airlines are requesting or receiving the additional revenue from this charge.

Freddorick

Good points.
Agreed, but it affects airlines differently. BA doesnt just compete on LHR-XXX but also with, for example, AF on ZRH-JFK, or U2 on LON-GLA.

Yes but in competitive markets they will have to lower the basefare or YQ. People care about the total price not the taxes and fees. In less competitive markets they will pass this on to the passenger.

I�m sure airlines would have preferred for the fee not to be charged at all. I also don�t know if I would assign any weight to the LHR press release that �airlines wanted it this way�. Reminds me of Lufthansa cutting free catering in Euro economy due to customers demanding this change...


Regulation is always tricky. BA certainly carries a certain responsibility too. Nobody forced them to focus so heavily on one hub.

Hm, but surely you are subsidising a business if you guarantee with tax payer money? What is the rate BA is paying vs the market rate they would have payed without guarantee? I don�t know how the deal was actually structured. Maybe no actual money might have moved, but the state likely took some risk.

Raffles

Governments almost NEVER hand out money directly to businesses, they are simply not set up to do so (don't have the staff, don't have the IT). It is virtually always done via a guarantee of a loan provided by a commercial bank.

It IS the same as a direct loan if the Government guarantee is 100%.

To be fair, the loan given to BA is on export credit terms and is probably only 80% guaranteed.

oliver2002

Whenever an airport is built or expands they normally have a plan on how everything is paid for. The LHR concept rotates around charging the airlines and the shops for the cost of operating the terminal. Obviously in the pandemic this is not working... I wonder if they reduced the rent they charge the shops at LHR. Either way the customer pays for flying from LHR (or any other airport for that matter) sadly I think that this charge will stay so you get to navigate the mall that is LHR and pay for the pleasure

Nimrod1965

If it’s to pay for airport improvements or RW3, not a problem. I remember many years ago (1994) having to pay CDN$10 tax to fly out of Vancouver, when I asked what it was for, I was told it was to raise money for a new terminal. I’ve never been back to Vancouver (would like to go again at some point) but I hope they got a nice new terminal building.

southlondonphil

No airlines are receiving any revenue from this charge, the money goes to HAL.

The specifics appear to be encapsulated in this PDF document which includes the phrase

and sets the charge at �8.90 per departing passenger. Inbound sectors do not incur the charge.

Not having read through reams of Heathrow pricing notices I cannot be certain how this works exactly, but it seems that cost for Baggage systems, Electrical Ground Power to aircraft on stand, buggies and wheelchairs etc. for passengers requiring support and assorted other items are a combination of two elements - a per unit cost that is calculated and billed to the airlines monthly in arrears, and so-called 'annuities and allocated costs' which are a share of the overall budgeted operating costs apportioned at the start of the year based upon expected volumes. This new charge would appear to be a way of rolling up the 'annuities and allocated costs' portion of baggage, power, passenger assistance etc. into a single amount separate from the per-unit costs, but would also seem, per the text, to include an element related to the under-recovery of certain of these costs in 2020, and Covid is explicitly stated as (a) reason for this at certain points in the narrative.

Often1

This is an outgrowth of funding services essential to the operation of the economy through other than general tax revenue. No matter how one slices the costs of operating the airport, if it is not funded by general tax revenues, it is then funded through user fees. Whether those are imposed on the end user, e.g., passenger or service provider, e.g. air carrier (BA in this case) is a matter of how the total price is broken down, not the total price.

Putting aside the pandemic and its impact on passenger traffic, recent history suggests that government-imposed taxes do not appreciably impact total revenue because higher PRASM fare buckets are less affected and those are what make a profit.

IAN-UK

And it's worth noting that Heathrow (HAL) has asked for its regulatory asset base (RAB) to be adjusted upwards by �1.8 billion. This would ratchet up the RAB from 2022, the start of the next regulatory period.

RAB is one of the keys to calculating the aeronautical revenue the regulator allows HAL to collect, so that the 2022 increase would impact not only 2022 charges, but also those of subsequent years.

The other key in price regulation is the agreed forecast of passengers, and the dramatic adjustment downwards on these forecasts exacerbate an upwards swing in 2022 passenger charges at LHR.

CAA seems somewhat adither about how to approach the price review: the introduction of "R1", the subject of this thread, is largely in the territory of a targeted intervention prior to further intervention in the price review.


CAP 2098 explains it all. Maybe it's a bit dense, and there's lots of hand-wringing, but the initial summary paints the wider picture.

https://publicapps.caa.co.uk/docs/33...0(CAP2098).pdf

Dave_C

I emailed the CAA about this, and had a rather frustrating back and forth - they clearly don't want to get involved.
To which I replied with this...
They came back with an even briefer reply this time...
Make of that what you will.

Genius1

This charge has always been levied (on airlines) by Heathrow, so is not new - it's just that the charge has increased in 2021 to cover a higher cost incurred per passenger in 2020. The airlines have chosen to pass this cost on to passengers as a separate component of the ticket cost.

LCY8737

Just noticed on ITA matrix that this charge seems to no longer be collected from Jan 2022 onwards.