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
LHR Management and lobbyists for years now: END HUGE UK APD NOW ITS KILLING THE UK AVIATION SECTOR!
LHR Management and lobbyists now: WE DEMAND AN INCREASE IN FEES FOR EVERY PAX AND CASH STRAPPED AIRLINES WHILST TAKING HUGE GOV BAILOUTS! It is wholly unacceptable that we had to pay ourselves less this year.
I sincerely wish this was a less accurate portrayal haha.
Airlines should move out of Heathrow
To other London Airports and runaway expansion be refused
Hey Gilbet, perhaps best to create a petition, demanding that the Gov body responsible for this does its job properly, otherwise why shouldn’t TUI, having just announced a whopping loss, be able to have a levy charge on all package holidays! If you got together with the other bloggers, I reckon this could gain traction, and media coverage, and raise this issue, that Heathrow is no doubt hoping will go away quietly, allowing them to start stripping profits out of the UK in no time at all. I for one would rather that the £8.90 was spent on supporting all the tourism and business dependent businesses that are suffering so much just now, even an “oh so expensive” coffee in St Mark’s Square would be preferable! Come on, use your marketing power to take action.
Vote with your feet.
LHR, even if cheap, wouldn’t be the airport that I’d yearn to see. Chiangi, Dubai, etc. are at the front of a list upon which LHR doesn’t appear. So, definitely not worth the cost as a destination.
With Brexit, London’s relevance in finance has already been degraded.
So, land at AMS, CDG, DUB, FRA or MUC, and take a cheap short-hop to LGW, STN, LTN or LCY. It’s not like arriving to these airports is going to significantly change your slow, ponderous, and expensive trip into central London.
Loss of traffic and revenue will eventually impress upon the Brits. After bluster and bloviation about the “empire”, etc. maybe they’ll get around to fixing it.
Ray, the trouble is, it is not the Brits – you need to blame the Spaniards, Qataris, Canadians and Singaporeans, who between them own 57% of the business! After an additional 10% with China, the UK, via the Universities pension scheme, owns just 10%!
If I am travelling back home to UK, the last thing I am going to do is go to Gatwick, Luton, or Stansted! Heathrow is the best connected, for the vast majority of UK – hence no choice! I need to be back at work by lunchtime, not struggling into London, to get out of London and home again!
Lived in the UK, so I understand. The government was quite happy to cede control, and pocket the tax revenues from the owners…. Part of the Thatcher-era economic policies.
While sympathetic for your plight with getting to work, zero for other tourists, business travellers.
Better yet, why go to London at all? Zoom, Meet, etc.
Meh.
Shocking, but… This is just pure stakeholder greed, quite common in business. Stakeholders just want to squeeze out their profits, no matter what. It’s a sad reality of modern life. But I am surprise that UK government is allowing this in the current climate. Don’t they have any leverage here?
I remember when Heathrow was called “Thiefrow” because of high levels of baggage theft; the nickname seems appropriate in a different context now.
A scary illustration of the dangers of having major airports being privately owned.
I think there can be some benefits to privately owned and competitive enterprise here, but only when truly private. In other words, only if the government were to deny stupid bailouts like this, force them to dig into their own pockets and truly compete. As long as they feel too big, or too vital to fail, we lose.
As are the actions and policies of the once great BA in recent years. BUT with Appropriate regulation their greatest days were after privatisation and so I believe the issue is with the absence of effective regulation and competition rather than the private ownership per se.
When you add in surcharges for the Climate Fraud there certainly seems to be a NWO driven move to stop us travelling.
Shareholders should foot the bill not the passengers they spend enough on a ticket as it is disgusting shameful you should be completely embarrassing HEATHROW AIRPORT
Shareholders should be paying for this nit the passengers they pay enough already on there tickets plus taxes and now this it is disgusting shameful disgraceful HEATHROW AIRPORT public should look at other airports to fly out of ones that are not PRIVATELY OWNED
Good.
Flying is too cheap as it ruins the planet.
The less people in the air the better
How’s your range rover running?
Don’t understand why Heathrow is the only company being slagged.
Electricity companies are putting their prices up, Netflix council tax etc. Although people are losing jobs every day 😕
Well, this is a travel website, with a focus on air travel, and therefore we don’t focus on the eff ups of other industries with nearly as much focus. It’s like asking Paul Smith why he doesn’t do more running shoes.
Persolly as Airport go Heathrow is such a dreary boring facility compared to global airports around the world…. money being paid in dividends to shareholders is all well and just but asking people to pay more for the same old boring service, outdated facilities, immigration, security and hospitality is just outrageous… if anything airlines are the only companies provides assets and hospitality for passangers and are limited by what they can and can’t do….