Heathrow Airport wants to add a new fee to all airline tickets originating the airport, in a bid to raise prices on passengers and squeeze already cash strapped airlines.
Despite being a symbol of the flying public in the UK, Heathrow Airport is a privately owned company, part of a large conglomerate mostly owned by the state of Qatar, China and Spain.
Its tremendously wealthy owners have paid billions in dividends to themselves in recent years, as the icing on the cake to a massively profitable business which benefits on everything from passenger marketing data, to duty free and airline fees.
But unlike a local pub, or any other private business making much less than it has in recent years, Heathrow isn’t asking, but rather demanding to be repaid, and it wants to dip into you, the air passenger’s pocket, and that of the airlines you fly with to do so.
It wants to do so to the tune of billions.
Heathrow Adds £8 Ticket Fee, Wants More
Heathrow wants to add a fee to every airline ticket sold departing from the airport, which would instantly raise the cost of flights by at least £8.90. In fact, it already has, and it wants more too.
Shockingly, the first such fee appears to already be live on bookings for new tickets, and appears as a new fee in a long list of Government charges which pin UK aviation in a tight corner. Travelers actively avoid flying into or out of the UK due to exorbitant fees already, and another one certainly won’t help.
Airlines agreed to add this first temporary fee (above) to cover bills put forth to airlines by the airport for its services, rather than paying separately out of depleted finances. The charge will apply to new tickets until Heathrow believes it’s made whole from what airlines using its facilities presently owe.
The airport also wishes to add a more permanent charge, which consumers and airlines will continue to suffer from, as a way of the cash rich airport ‘bailing itself out’. This would involve billions in additional charges paid by airlines and passengers on an ongoing basis to make the airport more profitable – not necessarily better in function.
In its best ever year of 2019, Heathrow made £3bn in revenue (not profit) and it now asks for £2.8 billion funded by passengers and airlines which already face rising costs from testing and other concerns.
Millions of businesses in the UK would undoubtedly love to demand that their lost customers pay them all they could’ve made from them in their best ever year, forever, but it’s an unlikely proposal for most.
Heathrow wants all airlines to kick the new extra charge right to them, to help the privately owned and insanely cash rich airport recover over £2bn in “lost” revenue, at our expense.
In a less dystopian universe, the proposal would immediately be blocked by regulators and government officials, but it appears it was instead rushed through under cloak and dagger. Airlines are furious, and passengers should be too.
British Airways parent company, IAG, also largely owned by Qatar Airways an the State of Qatar minced no words in its response to the demand from Heathrow, telling The Times…
“It’s not fair nor reasonable to ask consumers to bail out Heathrow. It’s a wealthy, privately owned company which should seek funds from its shareholders, as many other businesses in our industry have done to weather this pandemic.”IAG Spokesperson
Wealth is an understatement. Like all private businesses, shareholders in Heathrow have benefited from a decade of record profits, without any meaningful airport facility improvement for passengers. Now, rather than take a stagnant year, the owners wish to pick the public’s pocket, and airlines too.
To add clarity and avoid a pot calling the kettle black situation – let’s be clear here.
Airlines including British Airways have relied on government support to secure loan financing, but unlike Heathrow’s proposals to grab the cash and keep it, these loans to airlines must be repaid in full. If anything, UK airlines have slashed prices to keep their businesses afloat, rather than trying to float unjustifiable new fees to the public – like Heathrow.
If you invest in a stock today, just like investors chose to invest in Heathrow, and the investment fails, you lose your money. Heathrow shareholders are far better off, but still refuse that possibility.
Smart Money: Reduce Fees
Most of the remotely intelligent proposals regarding support for the UK airline industry involve the reduction of draconian government fees placed on all airline tickets, which currently make it harder for airlines to compete with others in Europe, and harder for passengers to get a great fare.
Heavy government imposed fees already put UK airlines at a disadvantage, and adding yet another line item to airline tickets for a company which paid billions in dividends in the last decade of boom times is nothing short of ludicrous.
Government Air Travel Fees Should Be Disappearing
Calls have been made to temporarily abolish the UK ‘Air Passenger Duty’, which add a hefty sum to every ticket sold.In fact, when an airline sells a £330 economy flight from Heathrow to New York, £131.02 is purely government surcharges including APD, which the airline gets nothing from.
That £131 doesn’t even include fees charged by the arriving country, and is only what the UK levies. It’s more for premium economy or business class passengers. A £260 round trip ticket to New York might see the airline only making £1 on base fare.
If these fees were to be temporarily quashed, airlines could benefit from a greater share of the purchase price, and perhaps even drop prices a smidge thanks to the wiggle room.
Dropping these fees could enable UK airlines to compete against others in the region with greater ease, while making air travel more attractive to consumers again as the health situation improves, and fares become more attainable.
For the first time in my professional career as the creator of GSTP, I had to ask myself, and now you, if Heathrow Airport is smoking crack? It would certainly help explain the desire to steal for money, to fund the habit. This may be the least ‘in touch’ and most egregious insult of a demand throughout travel during the pandemic, and US airlines set a massively high bar with multiple bailouts.
HT: Head For Points