donder10
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Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 3:13 pm

Airline fury over rise in Heathrow landing charges
By Michael Harrison and Barrie Clement
07 March 2002 Copyright:Independent.co.uk news

Airlines reacted with fury yesterday after the industry regulator unveiled plans to scrap the system under which British Airports Authority (BBA) is forced to subsidise airport charges from the huge retail revenues that it earns.

The proposals announced by the Civil Aviation Authority will mean increases in landing charges of £2 per passenger at Heathrow, £1 at Gatwick and £1.70 at Stansted, which is the base for three low-cost airlines.

Charges at Manchester airport will not increase in real terms. BAA shares rose 5 per cent to 647p.

The increases could mean higher fares but airlines will be under pressure not to pass the extra costs on to passengers in light of the drastic fall in traffic levels following the 11 September terrorist attacks.

The CAA has recommended to the Competition Commission that charges rise in real terms by 6 per cent a year at Heathrow and Stansted and by 5 per cent at Gatwick.

But it has also called for the abolition of the "single till" system whereby profits from retail activities at the three London airports are used to reduce landing charges.

Last year the three London airports earned £548m from airport charges but £674m from other commercial activities. These included retailing and property development.

BMI British Midland, the second-biggest carrier at Heathrow, described the proposals as "the single most retrograde step the airline industry has faced for many, many years".

British Airways said it opposed the regulator's plans, and a spokesman added: "The proposed price increases are very generous to the airport operator and will result in higher charges to our passengers."

A spokesman for Virgin Atlantic said the airline was "surprised and dismayed" at the CAA's recommendations and served notice that it would attempt to get the "perverse decision" overturned by the Competition Commission.

The CAA defended its proposals by saying that the new charges, which start next April and run for five years, would increase the incentive for BAA to invest in its airports while lightening the regulatory load.

But the airlines argued that BAA's profits would be swollen still further with no guarantee that it would use the money to provide better facilities.

Steve Ridgway, the chief executive of Virgin, said: "This is an increase of almost 40 per cent over the period with no equivalent improvement in service from BAA to the airlines."

BMI British Midland said the single-till approach had been a compromise solution which at least ensured airlines and their passengers benefitted from the extensive retail development undertaken by BAA at its airports.

Now, said BMI, passengers would be paying twice for the privilege of using airports such as Heathrow.

"They will inevitably face increased air fares to accommodate the increase in charges to the airlines and the increase in the cost of goods in airport retail outlets, due to higher rental costs for tenants," a spokesman said.

Doug Andrew, the Civil Aviation Authority's director of economic regulation, said that airlines paid substantially less at Heathrow than they did at comparable airports such as Amsterdam, Frankfurt, Charles De Gaulle and New York-JFK.

Fees at Heathrow were less than a third of the level at Osaka – the world's most expensive major airport.

The CAA said airlines could absorb much of the extra costs at the three London airports through improved efficiency. The regulator acknowledged that it could not force BAA to spend its retail profits on airport improvements, but CAA sources argued that the company would be foolish to ignore its wishes.

IMO the timing of this proposal is very badly timed.
 
David_itl
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 7:27 pm


Quantifying this:

LHR: from £5.23 to £7.23
LGW: from £4.06 to £5.06
STN: from £4.36 to £6.06
MAN: remains about £6.60

I wonder if some airlines may want to restart services at MAN (once MAN management removes its head from cloud cuckoo land of denying problems - have you read that report?)

David/MAN
 
donder10
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 8:39 pm

I havent read much about MAN lately David.Have you got a link?
donder the inbound MAN dot spotter!
 
Guest

RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 8:41 pm

Crazy
 
David_itl
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 9:11 pm

Alex

It's in a ginormous Acrobat reader file on the caa website (some 2.2 Mb big!)

Link is: http://www.caa.co.uk/erg/ergdocs/macc.pdf

Pretty sure pages 41 to 70 deal with the pricing policy and operational policy, with all the MAN user comments (I'm at the wrong place again...got the report on my home PC!).

Amongst the comments, BA make reference to MAN owning EMA, and offering the no-frills airlines starting up their low charges, which hardly maintains the MAN objective of raising it's own passenger numbers to the 40 million mark by 2015!

David
 
BDRules
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 9:26 pm

The CAA must be mad to do this. Can people see any airlines dropping out of LHR due to this or will they stick it out and bang their prices up. will this change the price of sending cargo through the airport? if it does dont forget to come to EMA  Smile/happy/getting dizzy
 
vtual
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 9:44 pm

Why is Gatwick cheaper than Stansted ?!?!

--
Vincent
 
747firstclass
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 10:08 pm

A friend has an interesting theory. Could this perhaps be a back handed way of freeing slots at LHR, for an evantual US/UK openskies agreement. My friend thinks that many carriers will balk and pull their LHR services. This in turn will free slots for US carriers, however they too may balk and not start as many flights as they otherwise would have. Thus preserving the dominance of BA at LHR. However, my argument is that this flawed policy also affects BA. I dont agree with her thinking, but it does provide some interesting angles.
 
donder10
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 10:10 pm

I was thinking that but BA would be most affected ,having a vast % of the slots at LHR.
 
Guest

RE: Airline Fury Over Rise In Heathrow Landing Charges

Thu Mar 07, 2002 10:56 pm

First impressions are that this is a *good* thing.

Of course airlines will complain, but in the end, I honestly don't think pax will be deserting airlines in droves for upping fares a little-they are already relatively very low-and the downward trend appears to be continuing.

I don't think it makes sense, in LHR's case (but also LGW's) to subsidise landing charges etc. with the tax free retail revenue-why not put the money to much better use-i.e. helping with airport development projects (T5), renovation (perhaps even an extra R/W?)-in other words, use the money to pitch LHR and other UK airports to a level where they can continue to effectively rival CGG, FRA, AMS etc.

Basically, subsidising airport charges with retail revenue does nothing to sort out LHR/LGW's capacity problems...why not use the money to tackle them?

Regards

 
donder10
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 8:38 pm

'Basically, subsidising airport charges with retail revenue does nothing to sort out LHR/LGW's capacity problems...why not use the money to tackle them? '

How will this possibly sort out LHRs capacity problems?

 
ryanb741
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 9:06 pm

It's all about supply and demand. Surely, with LHR being so over-subscribed then putting up the charges is a good idea? If airlines don't want to pay, let them fly to STN, or even CDG,FRA. LHR will still be filled, and hopefully we might get rid of some of the less savoury airlines (e.g. the african ones) and free up space for US airlines who will contribute far more to the UK's Government.

Flame me if this seems elitist, but LHR is an elite airport.
I used to think the brain is the most fascinating part of my body. But, hey, who is telling me that?
 
Ikarus
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 9:16 pm

Hooray!

That should have happened a LONG time ago. The old system was a disgrace - subsidizing landing fees with duty free retail?!? Where's the logic in that? Hardly any other airports do that.

Supply and Demand should determine the prices. For me, that's the end of the story.

Besides - which passenger is going to balk at a fee increase of GBP2? Hell, even if the fees increased by GBP 10 or even 20, it wouldn't affect passenger numbers in the long term. And if it did have an impact, it might even benefit the airport and congestion by distributing the traffic a bit better between LHR, STN and LGW.

Good news.

Regards

Ikarus
 
donder10
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 9:23 pm

This may delay Easyjet plans to move to LHR  Smile
 
David_itl
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 9:46 pm


I'm hoping these plans distribute some more flights away from South East England!

This is what MAN offers:

1) Although that is the published charge, MAN has rarely actually charges at that rate, preferring to increase other charges instead.

2) Landing charges for this year are being frozen anyway.

3) Starting April 1st, there are apparently discounts on offer for using MAN during off-peak hours - it varies from £1 to £4 off.

4) New services attract 50% discounts.

5) Airlines get two hours free parking (4 hours if using aircraft weighing 120 tonnes or heavier and cargo users before 6am).

6) International flights get discounts between 6am and 7am.

7) Domestic services get discounts for using aircraft weighing less than 25 tonnes.

8) Cargo flights get charged less.

9) Noisy aircraft (i.e PIA and Virigin) pay more.

10) Charges vary between winter and summer, domestic and international passengers.

All of the above taken from the link mentioned.

What needs to happen now is that MAN start talking to airlines to convince them of the merits of flying here.

David/MAN
 
Airbus Lover
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 10:44 pm

#9 Why is Virgin noisier?
 
Guest

RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 10:45 pm

Donder;

I was just giving an example of how the money could be used more effectively-you cannot increase public spending (on, for example, new terminals, runways and renovations-and thus increase capacity) without increasing taxes....it's just a fact.

If you go to many other countries in Europe, you will notice that in general, airports and other public infrastructure is usually more efficient and modernized than it is here-that is a great deal to do with the fact that taxes are higher in those countries-no one likes paying more taxes, but you can't then complain that the infrastructure is poor....BAA, just like UK universities in fact, desperately needs more money to remain competitive at the international level.

Regards
 
David_itl
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 11:06 pm

Virgin were using old 747-200s and have regularly been fined by MAN for exceeding stated noise limits.

David/MAN
 
donder10
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RE: Airline Fury Over Rise In Heathrow Landing Charges

Fri Mar 08, 2002 11:55 pm

you cannot increase public spending (on, for example, new terminals, runways and renovations-and thus increase capacity) without increasing taxes....it's just a fact.


Unless you are William Hague  Big grin

I don't think BAA really care about the airlines.Airports are relatively service-elastic due to a number of factors.

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