Heathrow boss John Holland-Kaye accuses airlines of artificially high prices

John Holland-Kaye – Yui Mok / PA

The Heathrow boss has accused airlines of keeping fares artificially high this summer to boost profits, as a long war of words continues between the airport and the airlines.

John Holland-Kaye said carriers like British Airways and Virgin Atlantic have capitalized on pent-up demand to travel overseas after two summers of Covid restrictions.

Asked if the carriers had kept their rates artificially high, he replied: “Completely. Airlines raised their prices during the summer. “

Holland-Kaye’s comments came when Heathrow confirmed that a limit on the number of passengers passing through the airport could be reintroduced this Christmas “if necessary”.

Heathrow’s decision to impose a ceiling of 100,000 passengers per day on airlines this summer has infuriated the airlines. The hood was designed to avoid a repeat of the travel chaos that had ruined air travel after Covid restrictions were loosened in the spring.

The Telegraph first revealed earlier this month that Heathrow was in talks with carriers to impose an ad hoc cap during peak periods this Christmas.

The revelations prompted Sir Tim Clark, president of Emirates, to demand the resignation of Holland-Kaye.

The Heathrow chief said the limit was only a “safety net if there is a risk of demand on peak days” this Christmas and ruled out that it was necessary next Easter.

The number of passengers reached 18 million during the summer months, making Heathrow the busiest airport in Europe for the first time since the start of the pandemic. The airport said it now expects to welcome between 60 and 62 million passengers this year, having predicted earlier this year that only 45 million people will pass through its terminals in 2022.

Heathrow Airport - Mike Hewitt / Getty Images Europe

Heathrow Airport – Mike Hewitt / Getty Images Europe

The forecast is in the middle of the row with the airlines. Carriers say airport bosses are underestimating passenger numbers in an effort to persuade regulators to raise airport fares per passenger.

An airline source said: “This is Heathrow which has convinced the Civil Aviation Authority (CAA) that there will not be a strong rebound in passenger numbers between 2022 and 2026, and therefore the CAA should use a forecast of low passenger which will result in a higher charge per passenger ”.

Mr. Holland-Kaye denied these allegations. “It’s not like that at all,” he said. “It took years to reach 81 million passengers in 2019. The circumstances at the time were a booming economy, the peak of globalization, a very peaceful world and low interest rates. It was the best. I think none of us expect the same circumstances to happen in the next couple of years.

“It is only realistic to say that we will not go back to those boom times next year, or probably the following year. That’s why 2025 or 2026 is more likely.”

He said airlines should look into their own fare policies and the impact they have had on demand before blaming the airport.

He said: “I’d like to be wrong. I would like us to return to a higher level of demand more quickly. Much depends on the airlines and their fare policies, whether they decide to fill seats or maximize their profits, [which is] what they tend to focus on at Heathrow, given how profitable the routes can be.

A recent analysis by Skyscanner found that airfares are currently 25% to 30% more expensive than before the pandemic.

Mr. Holland-Kaye continued: “If you look at airline strategies, which are perfectly legitimate, low cost carriers tend to try to fill every seat and evaluate accordingly. Network operators [such as British Airways] do not do it. They want to give passengers flexibility. They run their own connection program. They tend to have much lower load factors. So at Heathrow, typical load factors would be 75-80pc. This is a conscious part of the airline’s strategy.

A Virgin Atlantic spokesperson dismissed this characterization and said, “Heathrow is once again Europe’s busiest airport, surpassing its forecasts, but continues to belittle the strength of the resurgence of passenger demand to further its agenda. to guarantee higher rates.

Airlines have repeatedly warned of the need to use accurate forecasts to inform airport assets. By maintaining a deliberately pessimistic outlook, customers risk a worse airport experience. The airport artificially limited supply during the peak summer season to counter the lack of adequate preparation and to win an economic argument that would double passenger fares, despite being the most expensive airport in the world.

“We urge Heathrow to avoid passenger capacity constraints during the peak holiday season which would ruin customer plans.”

Mr. Holland-Kaye said hires from the airport and the companies working there now are doing well, supporting his belief that the passenger limit will not be in question beyond this Christmas.

“We are traveling alone with about 50,000 people at the airport this time last year [to] returning to full capacity, which is around 75,000. We have come a long way to close the gap, “she said.

“Coming summer, we were halfway there. We are currently at around 10-15% off at full capacity. So we are making good progress. But I just want to make sure that if you are traveling as a passenger, you don’t have to worry about whether you will have a smooth ride or not. And that’s what the cap did over the summer. And if we need any kind of mechanism equivalent to that, it will only be needed exceptionally.

“What I am doing is encouraging companies across the airport that, despite the economic headwinds we face, we need to continue to grow rather than wait and see what demand comes in.

“We don’t want to give up on any business. I hope this is the last time we need to talk about it [the cap]. “

British Airways has been contacted for comment.

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