Likelihood of Heathrow’s 3rd runway even lower, after CAA charges…
The CAA has refused Heathrow’s demand for a big increase in the fees it charges airlines. It had wanted up to £43 per passenger. But its regulator, the CAA, allowed it £27.49 on average. The present charge is higher, which means that fees will have to come down over the next few years. Heathrow can appeal to the Competition and Markets Authority (CMA). It looks increasingly unlikely that Heathrow will be able to build a 3rd runway. There was little mention of it in the CAA’s recent analysis. The 242 page ruling on charges just says: “We [the CAA] have said we will deal with these matters separately and in a way consistent with our statutory duties if Heathrow were to reintroduce proposals for capacity expansion.” Heathrow will say only that the plan is under review. There is some evidence in the CAA’s prices ruling that the runway will be a long way off, if ever. The CAA said the charges they are allowing would give Heathrow sufficient financial headroom to pay investors £1.5 billion over the next few years, a rate of return in line with other utility investments. But Heathrow has a level of gearing – the ratio of borrowing to equity base — of over 82%, making even that rate of return unlikely. And the negative impact of the CO2 from an expanded Heathrow make the project ever more improbable. .Tweet Heathrow will need to mind the sliding doors in its runway plan By Dominic O’Connell March 11 2023, (The Times) Big companies are used to having their wishes thwarted by regulators and governments. It is one thing, though, to be told, “No”, and another to be told, “No, and what is more your arguments are dumb and you haven’t been paying attention for the past couple of years.” That is what happened to Heathrow this week when the Civil Aviation Authority (CAA) refused its demand for a big increase in the fees it charges airlines. The airport operator had wanted up to £43 per passenger. The aviation regulator, which to many experts’ surprise has found the stump of a backbone in this set of negotiations, gave it £27.49 on average. The present charge is higher, which means that fees will have to come down over the next few years. Heathrow can appeal to the Competition and Markets Authority but it should think seriously about the grounds. Its law firm, Towerhouse, and its financial adviser, KPMG, put a barrage of final arguments to the CAA but were given short shrift. They had made an “unjustif
