Heathrow's Operator Attributes Half-Year Loss to CAA Pricing Decision

The operator of London Heathrow Airport blames the UK Civil Aviation Authority for the airport's continuing losses in the first half.

The blame on the UK Civil Aviation Authority comes even though the adjusted pretax deficit was lower than last year at PS139 million ($179 millions).

In March of this year, the Civil Aviation Authority published the price cap for 'H7" regulatory period (the five-year period from January 2022 until December 2026) and had implemented a temporary structure.

Heathrow insists on a price cap that "sets too low a revenue allowance...to produce enough cashflow" and says that the decision has been appealed.

The airport's revenue for the first half of the year reached PS1.74bn, as the passenger count increased to 37.1 million from 26.1 million in the previous interim.

Heathrow's operator claims its balance sheet is strong, with liquid assets of PS4 billion sufficient to cover commitments for 24 months.

Early May, the UK Competition regulator allowed British Airways, Virgin Atlantic, and Delta Air Lines to appeal against the Civil Aviation Authority pricing decision.

The competition regulator will make a decision in mid-October. Hearings continue through July.

"While the [CAA price cap] contains a new traffic risk sharing mechanism and other mechanisms to deal with asymmetric risk and cost uncertainty, they do not fully protect against lost cashflows and would lead to partial recovery of lost revenue over time," says Heathrow's operator.

Source: flightglobal.com