AIR fares between Scotland and London will rise by more than £10 per passenger over the next five years after the decision to allow the operator of Britain's two biggest airports to increase fees charged to passengers on their tickets.
The rises mean a passenger who flies through Heathrow twice a month will pay an extra £240 a year simply for the privilege of walking through the world's busiest international airport.
The increases, given the go-ahead by the Civil Aviation Author
ity despite howls of protest from airlines and consumer groups, will draw attention to the quality of service provided by BAA, which also operates Scotland's three biggest airports.
In many cases, BAA will receive more money simply for allowing passengers through its airports than the airlines themselves make for operating the flight.
The CAA, which determines the fees the airports can charge airlines, announced earlier this month that passenger service charges (PSCs) at Heathrow could rise almost 24 per cent next year, while at Gatwick the charges will rise 21 per cent next year. In both cases, the PSCs will then be subject to above-inflation increases of about 10 per cent every year until 2013.
BAA had lobbied for bigger rises, saying it needed the money to fund improvements to Gatwick and Heathrow, which is running at nearly twice the capacity it was originally designed for.
Along with taxes, PSCs are in most cases passed on to passengers as a fixed cost – part of the notorious "taxes, fees and charges" which can turn a 1p bargain flight into a much less appealing £60 return. Although many airlines give a breakdown of their taxes, fees and charges on request, many others do not – leaving passengers unaware of how much of their money goes to airports, how much goes to the government and how much is kept by the airline.
PSCs are negotiated separately between airlines and airports and can vary between route and even the time of year. For example, the PSC for a flight between Glasgow and London Gatwick varies between £13.40 when travelling with British Airways and £12 when flying with Easyjet.
The Air Passenger Duty (APD) levied by the government is £10 for every departure – or £20 for a return. Other non-optional extras include fuel surcharges, which have risen by as much as 400 per cent in the past three years.
Those hit hardest by the PSC rises will be Scotland's business community, particularly the finance sector which supports busy shuttle services between Scotland and London. As an example, an £85 return economy return ticket between Edinburgh and Heathrow with British Airways sees £18.40 go to airport operator BAA – £10.30 for Heathrow and £8.10 for Edinburgh – and £20 in APD tax to the Treasury. The remaining sum – £22 in fares and £25 in fuel surcharges – goes to British Airways. Even if all other costs remain the same, the ticket price will rise to £95.50 as the PSCs increase. And although PSCs represent as much as a quarter of the cost of an air ticket, passengers have no means of obtaining a refund or securing compensation if airports fail to provide minimum standards of service. For example, passengers whose luggage goes missing because of a broken baggage delivery system at Heathrow cannot claim a refund of their PSC even though the airline will bear the cost of compensating customers.
"I think most passengers would be surprised to see how much they are paying to use an airport like Heathrow," said Roger Wiltshire, secretary-general of the British Air Transport Association. "Competition between airlines over headline prices means passengers often don't get a chance to see beyond headline prices. CAA has rewarded BAA for failure to perform in recent years and passengers now face having to pay for BAA's continued inefficiency."
He added that a review of APD, announced in the Budget by Alistair Darling, was likely to result in increased taxes as well. "It is not just the airport fees that will rise, but also the tax – with short-haul and domestic passengers bearing the brunt."
Virgin Atlantic, EasyJet, Ryanair and BMI all demanded that Ruth Kelly, the Transport Secretary, step in to prevent the PSC rises.
In a joint statement, they said: "These increases, which will inevitably hurt consumers, follow a substantial increase in charges at Heathrow and Gatwick in the past five years and a doubling of charges at Stansted in the last year. Stansted charges are also proposed to double in the coming five years."
BAA had hoped to be able to raise prices further to pay for better security and facilities at Heathrow and Gatwick. A spokesman said: "We remain committed to transforming Britain's airports, and will spend £4.8 billion in the next five years doing so. We believe, however, the (CAA] review does not recognise sufficiently the scale of the task we are embarked on, the pressures of handling such large infrastructure projects, the full cost of the increased security requirements, as well as the impact of the credit market turmoil."
Announcing the fee increases, Dr Harry Bush, the CAA economic regulation director, said passengers and airlines deserved better service from Heathrow and Gatwick.
"However, the resulting improvements in airport facilities and service standards – some £5 billion of investment over the next five years and a halving of security queuing times – have to be paid for in increased charges," he added.
The news came as it was disclosed a BAA director, believed to be the chief executive Stephen Nelson, was paid £2.6 million in 2007 – prompting anger among airlines and concern that BAA's Spanish parent company, Ferrovial, could be in too much debt.
