* CAA proposes Heathrow charge of up to 34.40 pounds per
* Heathrow had wanted to charge up to 43 pounds
* Airlines say they will oppose the price rises
* Airport says regulator should safeguard investor return
* Proposals will be finalized next year
LONDON, Oct 19 (Reuters) - The UK aviation regulator said
Britain's biggest airport Heathrow will not be permitted to
raise passenger charges by as much as it had wanted, but
airlines opposed the scale of the hike as the hub and carriers
battle to recover pandemic-linked losses.
COVID-19 has restricted flying for more than 18 months,
placing huge financial strains on Heathrow and airlines like its
biggest user, British Airways, and putting airport charges at
the center of a bitter row.
Airlines on Tuesday criticized the UK's Civil Aviation
Authority's (CAA) initial proposals for Heathrow to be allowed
to charge as much as 50% more per passenger over the 2022-2027
Heathrow had wanted to almost double charges at the top end
of its request.
Airlines UK, the country's industry body, said it would
oppose the CAA's proposals "in the strongest terms."
"Its Heathrows shareholders and not our customers who
should be asked to foot the bill," the group said in a
Heathrow wants to be able to charge more to help recover
pandemic losses of $4 billion, but airlines, who have also lost
billions, don't want to have to raise ticket prices to cover
higher airport charges just as they are trying to stimulate
British Airways, owned by IAG, and UK-based
competitor Virgin Atlantic, say that Heathrow is already the
most expensive airport in the world and that they would oppose
the proposals in the coming consultations with the regulator.
"The disproportionate increase compared to other European
hubs will undermine its (Heathrow's) competitiveness even
further and UK consumers will be losing out," IAG boss Luis
The CAA said its proposals, which will be finalized next
year, struck the right balance between protecting consumers and
allowing the airport to continue to invest.
Heathrow is owned by investors including Spain's Ferrovial
, the Qatar Investment Authority and China Investment
Responding to the proposals, Heathrow said that the
regulator should safeguard a "fair return" for its investors.
"The settlement is not designed to shield airlines from
legitimate cost increases or the impacts of fewer people
traveling," an airport spokesman said.
Under the CAA proposals, Heathrow could raise its per
passenger charge to between 24.50 pounds and 34.40 pounds
($33.76-$47.41). Heathrow had requested that the cap be set at
32 to 43 pounds. In 2020, the charge was 22 pounds.
There would be no additional adjustment to Heathrow's
regulatory asset base, something which Heathrow had requested,
said the CAA, outlining plans for introducing a new risk sharing
mechanism to prevent either the airport or the consumer bearing
all the risk of future uncertainty.
($1 = 0.8587 euros)
($1 = 0.7256 pounds)
(Reporting by Sarah Young; editing by Kate Holton, Jason Neely
and Bernadette Baum)