[Anonymous]

[AnthonyDunn]

Repeated from the Torygraph, dated 21 October 2013

http://www.telegraph.co.uk/finance/newsbysector/transport/10394900/Heathrow-we-are-not-ripping-off-airlines-and-passengers.html

Heathrow has insisted it is “not trying to rip anybody off” as it announced a near 11pc increase in revenue in the wake of controversy over its landing charges.

Britain’s biggest airport said revenue jumped 10.7pc to £1.8 billion in the nine months to September 30 while pre-tax profit more than doubled to £266m from £112m the year before. The number of passengers to have passed through its doors during the period rose 3.6 per cent to 54.8m.

The sharp rise in revenue and profits comes amid a fierce row between the airport and airlines over how much it will be able to increase landing charges over the five years from April 2014. Britain’s airports regulator, the Civil Aviation Authority, said earlier this month that increases in charges should be in line with inflation – a ruling Heathrow warned would drive investors towards other infrastructure projects which allow fairer returns on capital. Airlines, including Heathrow’s biggest customer British Airways, slammed the price rises as “excessive”.

José Leo, chief financial officer of Heathrow, on Monday defended the airport’s position, arguing that it is currently spending £4 million a day to ensure passengers have a better experience but investors would not keep up that level of commitment if they are not allowed to make returns “commensurate with the cost of equity”.

“We are not trying to rip anybody off, what we need to make sure is that investment plan carries on and we are not taken by surprise with dramatic changes in the returns allowed,” he said. Mr Leo said Heathrow’s investors, who include Spanish infrastructure group Ferrovial plus Qatari, Singaporean and Chinese sovereign wealth funds, were “disappointed” by the CAA’s ruling. Heathrow had asked to raise landing charges by 4.6pc above inflation to help fund further improvements.

“They [investors] believe that this is like changing the rules of the game [overnight],” said Mr Leo. “If they have [investment] alternatives which are better both for the same level of risk or offer a similar return for better risk, they will move.” Heathrow has the option to appeal the CAA’s proposals but Mr Leo said no decision had yet been made. ENDS

Clearly butter wouldn’t melt in Senor Leo’s mouth. And I am just about to pass the hat around for all of those potentially impoverished overseas investors resulting from the CAA’s decision on airport charges. Life is just so damnably unfair sometimes.

[GlynWilliams5]

Really?! Ive just amended a flight for next year. Instead of Sydney to London return my self and my wife are now flying into Dublin and out of Rome in Business class on Cathay/BA/Emirates mix and Im getting a credit of AU$600 per seat.

[canucklad]

Hi GlynWiliams5
A quick question for you. You mentioned you are now flying to Dublin, thus saving some of you’re your hard earned cash.

Without prying too much, I would be interested in the breakdown of the specific differentials that swayed you?

And, are you planning on taking advantage of your stop overs in Rome and Dublin ?

The reason I ask, is I’m now in the habit of investigating long haul from DUB & AMS to avoid the APD, and if my schedule and finances allow, some of that saving is spent locally!

Poor LHR, they’ll soon be bust !

[AMcWhirter]

I guess the saving made by GlynWiliams5 almost entirely reflects the lack of APD ex-Dublin.

In the case of a flight to Australia out of London, APD is levied at the highest rate. Right now APD on a J class ticket to Australia is £188. It will rise to £194 on April 1, 2014.

[DontTurnRight]

Certainly Rome appears to offer some good deals. We saved by Flying EK to Auckland return in Business Class at a price of Euro 3200 per person, plus A380s all the way.

[GlynWilliams5]

We are still going the countries we wanted to but in a different order. we intended to be in Ireland for a week but it turned out to be cheaper to fly via Dubai ( Qantas/Emirates) direct to London. Will fly economy from Belfast to London city (preferred) or Gatwick but in economy avoiding the additional impost. We will make our way to Barcelona and then drive into Italy and out of Rome.

[NameRemoved-18/12/14]

Top itin Glyn.

Oops, it will have to be LGW as there are no flights to LCY from Belfast 🙁

[Tim2soza]

How much to change a light bulb? (Terminal 5)

[BigDog.]

Have no idea what caused the volte face by the CAA over LHR charges as it now appears to be ruling for below inflation increases. BA in particular will be celebrating – along with shareholders who saw a boost to IAGs share price in recent days.

http://www.businesstraveller.com/news/100125/caa-heathrow-must-cap-charges-at-1.5-percent-be

As long as the saving is reflected in lower ticket charges am sure this will also be welcomed by most LHR travellers and no doubt BT posters.

Personally though, am sceptical about the move for 4 reasons :-

a) A more expensive Heathrow would encourage use of the lower cost other London Airports and help distribute traffic/loads.

b) This type of intervention is against the free market and may well impact the standards & quality of any LHR expansion following the Davies commission as there is greater risk to investor returns.

c) It unduly protects BA’s position/revenues at LHR rather than encourages competition and improves standards.

d) The passenger will not see the benefit.

As an aside Stansted has been removed from regulatory control.

edit Graham – any particular reason behind exchanging the initial BBC link with the BT article link? Alex usually added a post with an appropriate BT link. Links to BBC, DT and others are to frequently updated items so may be more current.

[SwissExPat]

I love this competition between countries.

PAX choosing to route via DUB so as to avoid the excessive oppression in the UK of unacceptable levels of APD.

It always amazes me that governments will talk about how important it is to have strong competition etc except when it comes to countries competing against each other!

Take the Irish corporation tax rate! 12.5% and all the big guns in Europe calling “foul”. There in nothing to stop them doing the same but…… That would require some hard work!

[stevescoots]

utter bol*****!

“arguing that it is currently spending £4 million a day to ensure passengers have a better experience”

Does he think no-one knows how a P&L reads? This is what happens when there is no real competition in the market and a quasii monopoly is created. You only have to look at energy sector in the UK to see similar statements for price rise justification in industries that are essential to a nations economic performance. In both cases succesive governments are solely to blame

[stevescoots]

utter bol*****!

“arguing that it is currently spending £4 million a day to ensure passengers have a better experience”

Does he think no-one knows how a P&L reads? This is what happens when there is no real competition in the market and a quasii monopoly is created. You only have to look at energy sector in the UK to see similar statements for price rise justification in industries that are essential to a nations economic performance. In both cases succesive governments are solely to blame

[FormerlyDoS]

Now Heathrow is sorted, I presume we will see Willie Walsh announce that BA will be lowering their fees?

[theworldtraveller]

Heathrow charges are not being reduced, they are being increased but just not going up as fast as inflation.

Now, as most people don’t get anywhere near inflationary pay rises at the moment, HEATHROW has still got more expensive.

Is is overly congested and spends too much money on management salaries, including Mr Matthews.its just a shame they have a captive market and until we all decide to fly via DUB,AMS and other hubs, things won’t change

[Author]

Posts