Heathrow Imposes Passenger Charges to Cover Pandemic Costs

(Bloomberg) --

London's Heathrow airport will charge departing passengers an extra 8.90 pounds ($12.40) in an effort to claw back costs as the coronavirus crisis depresses air travel.

The tariff is permitted by the U.K.'s aviation regulator under a protocol that allows the hub to cover costs for utilities, baggage and check-in services. Heathrow makes “zero profit” from such activities, with the fees covering operating and maintenance expenses, it said in a statement Sunday.

Heathrow has been hit particularly hard by the pandemic since it relies on long-haul markets that have been all-but wiped out. The airport last week posted a 2 billion-pound loss for 2020 after passenger numbers tumbled 73%, a decline it says has left it unable to cover the costs of providing some services.

The new per-passenger levy, or Airport Cost Recovery Charge, is due to be imposed for the rest of this year and was agreed with airlines as the preferred way for Heathrow to recover its costs, according to the so-called general notice dated Feb. 4 that details the price increases.

Heathrow, controlled by interests including Spanish builder Ferrovial SA, the Qatar Investment Authority, private-equity firm Alinda Capital Partners and China Investment Corp., will also charge a 4.44-pound tariff for each item of passenger luggage.

That sum is lower than one flagged on Dec. 16 as a result of some baggage-related costs having been included in the passenger levy, according to the general notice.

The Civil Aviation Authority is separately considering whether Heathrow should be allowed to raise the fees it charges airlines on a limited basis prior to a longer-term regulatory settlement that starts next year. Heathrow has been seeking an adjustment it says would lift fares by 1.20 pounds per passenger.

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