Heathrow Facts and Figures
Today, Heathrow is the most expensive airport in the world, with a service that falls well short.
The regulatory model’s failure to constrain the monopoly has harmed consumers, led to squandered spending and diminished Heathrow’s hub status and competitiveness.
Below we outline just some of the evidence for why Heathrow needs to be reimagined.
Why is Heathrow airport so expensive?
Heathrow is a privately owned monopoly regulated by the Civil Aviation Authority (CAA), which, among other things, sets price controls that limit what Heathrow Airport Limited (HAL) can charge for airport services. Under the current regulatory model, Heathrow earns guaranteed returns on its Regulatory Asset Base (RAB), which means the more it spends, the more profit it makes, regardless of efficiency, passenger benefits or service quality.
The model incentivises Heathrow to over-invest in capital projects, known as “gold-plating”, driving up costs while service declines, leaving passengers paying more for less. The regulatory model designed to protect consumers now rewards inefficiency. That’s why Heathrow’s regulatory framework needs urgent and fundamental reform, to deliver a hub airport that is efficient, affordable and competitive for the future.
International Hub Airport Comparison
The cost of Heathrow’s investments are much higher than other major London airports, and at other international hub airports.
And Heathrow’s current regulatory model allows its owners to pass these costs on to customers and airlines for decades.
Without regulatory reform this will continue, leaving the UK with an unaffordable, inefficient hub airport that fails passengers, airlines and the UK economy.
Jacobs Airport Charges Index
Heathrow’s airport charges are by far the most expensive in the world, approximately twice as expensive as most other major hubs and Gatwick.
Heathrow’s users are paying c.£1.1 billion more per year on average than if Heathrow’s charges were in line with other European hubs. Heathrow was not always the world’s most expensive airport. Since the early 2000s, Heathrow has quickly risen up the rankings and took over the top spot in 2013.
Skytrax Passenger Experience Ratings
These high charges don’t match up with the user experience. Passengers’ perceptions of the experience at Heathrow are declining compared to other international hubs.
Heathrow does not even feature in the top 20 of international airports as ranked by Skytrax, despite nearly half of the top 20 being European peers for Heathrow.
Heathrow has a unique and critical role for UK consumers and the wider economy.
Airlines operating at Heathrow serve over 200 direct destinations worldwide.
Heathrow’s operating airlines deliver 76% of the UK’s long-haul connectivity and 70% of the UK’s air cargo.
Activities associated with Heathrow are estimated to contribute £12.5bn in GDP while supporting 133,000 jobs.
We have now reached the point where fundamental reform is unavoidable and time-critical.
Heathrow is vital national infrastructure for UK consumers and the UK economy. Reform is needed to ensure that over time, consumers and other users receive an efficient airport that provides good value for money, consistent with outcomes at many of Heathrow’s peers internationally.