Heathrow price cap based on “undercooked and self-serving passenger forecasts” – Business Traveller


Virgin Atlantic’s CEO Shai Weiss has called the Civil Aviation Authority’s proposed cap on Heathrow passenger charges for next year “unacceptable”, warning that the authority is “putting the interests of a monopolistic airport and its shareholders ahead of passengers”.

The CAA has proposed an interim price cap per passenger of £31.57 for 2023, with a consultation on the proposals running until December 22.

But Weiss said that the cap had been based on “Heathrow’s undercooked and self-serving passenger forecasts, using airport projections that have proven to be completely flawed this year and are designed to achieve excess returns for its shareholders”.

Heathrow has forecast passenger numbers of around 65.2 million for 2023, but Virgin said this was a “pessimistic” figure, equating to just over 80 per cent of 2019 levels.

The carrier added that the airport “has a poor track record of forecasting, having projected just 45 million annual passengers for 2022 when the reality will top 62 million”, and said that Heathrow had been “forced to make three re-forecasts this year”.

“Strong and growing demand for travel means that the UK’s only hub airport, which is already Europe’s most expensive, is materially outperforming its own forecasts,” said Weiss.

“By maintaining a pessimistic outlook for 2023 passenger forecasts, not only do customers face excessive charges but potentially also a poorer airport experience.

“We expect the CAA to use its powers to course correct, so that accurate and realistic forecasts inform both the 2023 cap and the final determination for the regulatory control period ending December 2026.”

The CAA’s proposed interim cap is designed to replace current “holding price control arrangements” in place this year as a result of the Covid-19 pandemic.

The authority said there had been a “strong recovery in the aviation industry” since the easing of travel restrictions earlier this year, but added that “the strength and continuation of this recovery is still uncertain, in the context of increased economic uncertainty in the UK and wider global markets”.

The interim price cap has therefore been proposed to allow it to conduct additional analysis before making a final decision on longer term price control.

Heathrow Airport Limited (HAL) had requested a higher interim cap of £36 per passenger, but the CAA rejected this proposal.

The authority added that “Certainty over HAL’s charges for 2023 also enables airlines to set ticket prices and organise their services, which ultimately provides benefits for consumers”.

heathrow.com, caa.co.uk


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