Q&A: Airport landing fees

The Civil Aviation Authority (CAA) has said airports operator BAA can increase the fees it charges airlines to use Heathrow and Gatwick airports.

The move has been criticised by airlines who complain that it will boost ticket costs and hurt demand, while BAA has argued that it still does not go far enough.

What are airport landing charges?

They are the fees that airlines have to pay to use airports in the UK.

BAA has a monopoly of airports in London, and the regulator, the CAA, has to make sure its charges are not excessive for passengers and airlines.

Every five years and as part of its remit, the CAA sets the maximum amount BAA can demand from airlines in landing charges to use Heathrow and Gatwick.

Currently the maximum charge is £9.28 per passenger at Heathrow, and up to £4.91 at Gatwick.

From 2008, this will rise to a maximum of £12.80 per passenger at Heathrow, and £6.79 at Gatwick.

However, from next year the figures will include some charges that airlines currently pay to other organisations.

So on a comparable basis, the charges airlines pay will increase by 24% at Heathrow and 21% at Gatwick.

Will this lead to higher ticket prices?

Almost certainly yes.

With a £5bn investment project in the pipeline, BAA is expected to charge the airlines the maximum they are allowed to under the new CAA limits.

But it is up to individual airlines whether they pass on the full increase to passengers.

British Airways, the biggest airline at Heathrow, says it will pass on some of the increase to its customers.

Easyjet, which flies out of Gatwick, got together with Bmi, Ryanair and Virgin Atlantic to say the increased charges would "inevitably hurt consumers", but did not say by how much ticket prices might rise.

What will I get for my money?

In theory it should mean a better experience when you pass through Heathrow and Gatwick.

The idea of the increase in landing charges is to give BAA the necessary revenue to modernise the airports, improve customer service and reduce queues at security.

At Heathrow the extra money will be spent on operating the new Terminal 5 which opens in March, on constructing the Heathrow East Terminal, set to open in 2013, and improving existing facilities.

At Gatwick, it will be put towards the construction of a new pier, to extend the capacity of the airport, a new baggage system and the redevelopment of the South Terminal.

What are the guarantees?

To ensure passengers and airlines really do get value for money, the CAA has improved its incentive scheme so that if any targets are missed, BAA gets fined.

The regulator has also said that passengers must wait no longer than five minutes on average to get through security.

If not, BAA could be fined up to 7% of the total it gets from landing charges - that's £4.41m at Heathrow and £1.19m at Gatwick.

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