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Heathrow cuts domestic landing charges – but will fares follow?

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In a surprisingly low key move, Heathrow Airport reduced the Passenger Service Charge on domestic flights on 1st January.

The cut is a sharp one, although at the same time you might be surprised at how high the fees remain:

Point-to-point departing domestic passengers are now charged £19.13, a reduction of 35%

Passengers transferring to a domestic flight are now charged £14.35, a reduction of 35%

Heathrow Terminal 3 Virgin

The airport calculates that passengers flying to Edinburgh will gain the most, with £6.2m saved each year.

However …..

There is no guarantee that lower fees will result in lower fares.  Logically there is no reason why they should.  British Airways currently has a monopoly from Heathrow on domestic routes.  If it can fill those planes charging its current fares, why should it bother reducing them?  It makes more sense for the airline to pocket the extra £7.75 – £10.35 per passenger.

(BA would argue that it does face competition, from trains and from flights from other London airports.  My personal view is that for most passengers it would take more than £10 to persuade them to change their existing preferred routing.  I live 35 minutes from Heathrow on a quiet day so it would need to be one heck of a saving before I would head out to Luton or Stansted to get a domestic flight.  Similarly it would need to be a pretty chunky saving before I would want to spend hours on a train to Scotland compared to sitting in a BA lounge and then hopping onto a short flight.)

Things are likely to change in March when Flybe launches domestic services on the Heathrow to Edinburgh and Heathrow to Aberdeen routes (see the Flybe website here).  As I wrote here, these services will use the slots previously taken by Virgin Atlantic for its now defunct Little Red operation.  This is what is likely to spur BA to reduce fares, not a cut in the Passenger Service Charge.

Even if Flybe makes a success of these two routes, it has zero possibility of expansion at Heathrow.  With Oman Air paying $76m to Kenya Airways for a landing slot last year – with some additional sweeteners on top – Flybe certainly isn’t going to be picking up any additional routes in a hurry.

What we may see is British Airways moving some aircraft and landing slots from European flights to domestic.  The airline now has a cost base which is up to £10 per person lower when flying to, say, Birmingham instead of Amsterdam.  If it could get the same average fare per available seat, and if all other costs were the same (which obviously they aren’t), it would be generating an additional £1,000+ profit per flight.

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Comments (55)

  • Save East Coast Rewards says:

    I can’t see BA flying London – Birmingham. Look at the loads from Leeds. It’s just not attractive flying that short distance if you’re going from city centre to city centre.

    I think the cut in airport fees is more political than anything else. The airport showing that they’re doing what they can to ensure LHR works as a hub for the rest of the UK. One of the key benefits of their 3rd runway bid was improved connectivity to the rest of the UK.

    • the real harry says:

      Birmingham would be a bit pointless but how about Newquay? 🙂

      • mark2 says:

        That really depends whether you live near Birmingham or Newquay. I would not travel to BHX just to fly to Heathrow, but this join long haul might be different obviously depending on timing

      • xcalx says:

        Or even a Birmingham to Newquay service, Last time I was down there it was full of Brummies. LOL

        • the real harry says:

          Brummies not allowed in Cornwall – official – you’re banned

          I spent the worst 5 years of my life working there – now leave me alone 🙂

          • the real harry says:

            let’s put it this way – our place in Europe is wonderful, atmospheric, desirable place to go

            A year ago I was showing the kids around the city and met up with a coach of Brummies

            First thing I heard? ‘Lung woy ter cum fer not very much ter see.’

    • Stuart says:

      All Domestic flights under 90 minutes should be banned by the Government, freeing up capacity at the airports and reducing pollution.
      And the Governments should nationalise the railways at the same time.

      • Anon says:

        Hi Stuart – Didn’t realise it was April already… 🙂

        Have you tried driving or catching the train from ABZ to LTN?

        How long does it take?

        • Alan says:

          Haha even better I wonder how Stuart proposes on catching the train from NI or any of the Scottish Islands? 😀

      • Mike says:

        HI Stuart, Welcome to Head For Points. I take it you are new ?

      • Paul says:

        Stuart, Don’t know where you live but try getting to Scotland from anywhere west of LHR without flying. The issue is that LHR and airports generally in the southeast don’t have sufficient capacity to allow better air connections across the UK. The sooner LHR is closed and a modern full capacity facility is built, operating 24/7/365 backed by highs speed all the line of German railways or Japanese Shinkansen the better.

    • Nate1309 says:

      CWL-LHR would be great to please 😀

  • Nick says:

    Heathrow passenger service charge is nothing but a joke, even with this reduction. £31 to Europe or £44 further way to walk through what is essentially a shopping mall!

    • the real harry says:

      You are right (Analysis of Airport Charges – Airlines 4 Europe – A4E)

      Change in average per passenger charges
      2005 2014 % Change
      Spain € 5.67 € 20.11 255%
      Italy € 13.66 € 32.93 141%
      United Kingdom € 19.82 € 43.63 120%
      Ireland € 10.43 € 20.54 97%
      Belgium € 25.57 € 32.79 28%
      Germany € 28.12 € 35.72 27%
      Switzerland € 31.36 € 38.24 22%
      Denmark € 24.60 € 27.97 14%
      France € 15.91 € 17.92 13%
      Austria € 25.45 € 26.50 4%
      Netherlands € 34.02 € 32.96 -3%
      Norway € 23.83 € 22.00 -8%
      Sweden € 24.42 € 21.97 -10%
      Weighted Average € 19.28 € 34.63 80%

      • Anon says:

        Loving your work yesterday Harry.

        Totally epic reply to this that many viewers may have missed……

        PS Good Morning Peter M. if your reading this. 🙂

        • Genghis says:

          I was thinking of commenting but could never have said anything better than the real gary 🙂

        • Oli says:

          Well said Harry!

        • TGLoyalty says:

          Nothing annoys me more on a flight than people complaining about babies, young children crying etc.

          I have sympathy for the parent who doesn’t want to annoy other customers and for the child who is just being a child but grown adults who spend the whole flight complaining about it need a reality check.

          Worst was some old fart (won’t call him a gentleman) on a Y flight from Birmingham to Doha, My seat was great – as far forward as I could get, aisle seat, only empty middle row seat anywhere to be seen. Only issue was this moron moaning not the babies crying, shame his wife didn’t tell him to shut up.

          • Lady London says:

            OK I’ll ‘bite’.

            @TGLoyalty I am sure I would annoy you then.

            Everyone can tell the difference between a poor parent who has a child that is impossible to stop crying or whatever, I just get really annoyed about the 75% of parents that just don’t bother even to try and won’t accept their responsibility in a shared environment.

          • the real harry says:

            LL not sure it’s 75%

            I would never have gone down the Calpol route (& some put a bit of spirits in with the milk)

            We did our very best with planned activities such as colouring books & games

            Still they played up on occasion

            We have various worst ones but one of them was on a flight back to UK when I woke up my daughter as we were coming in to land – I guess she was 3 – and she decide to scream at highest volume possible for a 3YO for about 10 mins! Despite anything I could do.

            Actually I remember all my fellow passengers sort of shrugged & closed their ears, nice people

          • TGLoyalty says:

            @Lady London

            75% done my fair share in economy and not seen that at all but fair enough

            And on this plane the two were under 1 years old and would occasionally cry etc

            How helpful is it to have an idiot shout “wish those kids would pipe down from 4 rows back”

            Obviously he thought he could get something out of his consistent moaning but it just made him look a completely [email protected]

          • Anon says:

            Actually have fond memories of sitting next to a mum on a plane and being asked to look after their bairn whilst she had to address a call of nature 15mins before landing.

            Best bit of advice I ever heard for flying when there’s upset children nearby, (might be useful mindset for the likes of UKSIL/PeterM), take a few deep breaths and simply think that you’re glad they are not your direct responsibility. That then frees you up to make a postiuve contribution ti society by offerinf assstance/distraction where appropriate/appreciated by the parent.

  • Polly says:

    Qatar have Sophia Bulgaria to Bangkok for €968 March to June 2017…if anyone wants last minute trip to Asia. On Secret flyer ATM. Lots of availability.

    • Genghis says:

      Regardless of fancy lounges and seats etc, would you actually get any sleep on such a journey ex-UK?

      • Yuff says:

        Transit at the airport hotel, in Doha, and you’ll get a great nights sleep plus if you are in J a nice breakfast in the business lounge 😉

      • John says:

        I tried it, and the answer is no, unless you spend a night at the starting point.

      • Polly says:

        Yes, no need to sleep first leg, but def once fed, can sleep almost as soon as take off second leg. Def worth it, plus a nice day night in Sophia. Really oretty…and a fab price to jump off from…

  • Alan says:

    I think a lot of it also depends on where you want to be in each city – I know my folks prefer the train as it takes them only a few minutes to get to Haymarket and then they’re heading to Central London anyway so the train gets them within easy striking distance of lots of places. When they also take into account the saving on a taxi to the airport in Edinburgh and HEX in LHR (I know Tube is an option) plus being able to arrive just a few minutes before departure I don’t think it’s a totally unreasonable proposition to favour the train. Personally as I tend to fly last thing at night after work and also am more willing to cut things fine re arriving at the airport (and am often parking there) I find the plane is more likely to edge it for me.

    • James67 says:

      City centre to city centre my partner and I both much prefer the train, we are normally travelling for leisure and can take advantage of the First Advance fares or promotions. We can be in either station in 10 minutes, even by bus. If the choice is between sprawled out on the train with newspapers, ipads or whatever while eating breakfast versus all that airport drama, shoehorned between even normal-sized passengers anc drinking two or three mouthful of coffee and consuming one biscuit it is a no brainer. On a perfect day the plane might save up to 50 minutes maximum only as far as Paddington but perfect days in the air, particularly to LHR, are almost nonexistent.

      • Genghis says:

        I like trains but have never done the London-Edinburgh trek all in one go (it’s enough going to the North East). I’ve always flown in recent times, doing home in SE London to Edinburgh office of the co where I used to work (near Haymarket) in just under 3 hours via LCY. Would take 5.5 hours or so on the train.

  • Owen Rudge says:

    So if I have an existing BA booking including domestic flights, do you think there’s any chance of being able to reclaim the extra service charge? It still grates that I had to pay £45 of PSC for an infant!

    I guess their argument would be “we don’t charge extra if the charge increases, so no refunds”…

  • Flyoff says:

    With the implementation of BoB and this reduction in fees at LHR BA domestic should become more profitable. I am of the view BoB was a cost saving initiative and flight prices won’t be reduced. I am sure the fee reduction won’t be mentioned when BA celebrate the profitable success of BoB – if they can retain customers against the low cost airlines.

  • MoNkEyMaN says:

    British Airways doesn’t have a monopoly from Heathrow on domestic routes. EI flies to BHD.

    • Rob says:

      True, although as IAG owns both ….

      • Will says:

        Has anyone run the maths on what % of LHR slots are either IAG, AA, Qatar or Finnair (the later 3 being IAG revenue share partners from LHR)?

        Surely it constitutes something approaching a monopoly?

      • Daftboy says:

        For the moment I’m finding EI remains more keenly priced than BA on many of the LHR services to both DUB and BHD, although I will go on BA for TPs etc if it’s an immaterial difference (although not at any cost, so I’m on EI a fair bit!)

  • Jovanna says:

    I travel on a domestic about once per month with BA. I’ve done this for about 6 years. Up until a couple of years ago, before all this HBO and seat selection nonsense, booking well in advance, I’d pay about £90 for a return. On Thursday, I booked my latest return for travel next month. Same price as last month, and the month before, and the month before that, but rather than the £90 that I’d pay once-upon-a-time, it’s £129. I’ve seen nothing but increases in the last few years – and certainly no reduction this month for any reduction in airport fees.

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