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A mysterious £8.90 tax is being added to all Heathrow flights

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A mysterious new tax is being added to all flights booked from London Heathrow. It started on Friday.

You will see it on your taxes breakdown as R1. Here is an example on an Economy flight from London to Rome:

The description for the charge says:

“THE EXCEPTIONAL REGULATORY CHARGE IS COLLECTED TO MANAGE THE UNDER-RECOVERY OF OTHER REGULATED CHARGES”

It appears to be £8.90 irrespective of whether you are flying short-haul or long-haul.

It applies to all airlines flying from Heathrow, but only from Heathrow. It is not added to inbound flights.

It is not linked to the standard ‘Passenger Service Charge’ or ‘Air Passenger Duty’, which continue to be charged at standard rates as the screenshot above shows.

This may be linked to Heathrow’s demand to have its covid losses repaid by passengers (see our other story today) but it seems unlikely as this requires authorisation by the Civil Aviation Authority.

We will update this article when we get a proper answer. Whatever the answer is, your next flight just got £8.90 more expensive.

Whilst existing ticket holders will not be asked for any additional money, British Airways may ask you to pay it if you make a change to an existing booking.

PS. We now have the answer, which is on page 6 of this document.

Put simply, Heathrow’s agreement with the airlines guarantees that they, and not the airport, will pay 100% of certain airport costs. With sharply reduced passenger numbers, the fees paid by airlines have not been high enough to cover these costs.

The £8.90 surcharge covers the loss Heathrow made in 2020 on providing certain services, as well as its estimate of on-going losses. The surcharge will, in theory, disappear when passenger volumes return to normal and the backlog of underpayments has been cleared.

Heathrow told us in a statement:

“Heathrow provides key airport services like the baggage system, colleague car parks, airline check-in desks and utilities for our partners to use. The fee to use these services is calculated purely to cover the cost of providing them – Heathrow makes absolutely zero profit from these services. To ensure this remains the case, the fee is closely monitored by the CAA, as well as being scrutinised and agreed with airport users annually – as was the case with this year’s charge. The cost per passenger to cover these services naturally fluctuates depending on the number of passengers using the airport.”

Comments (71)

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  • Chrisasaurus says:

    Am I missing something in drawing a dotted line between this and the other Heathrow article of this morning?

    • Rob says:

      It seems not, oddly.

    • Bagoly says:

      It seems that the actions are not legally related.
      But somehow I think they probably came out of the same workstream, and were probably approved at the same executive meeting.

  • BJ says:

    SCANDAL!

    • Lux says:

      Maybe ‘exceptional’ as it could be removed at any point:

      ‘Airport Cost Recovery Charge

      This charge has been introduced at the request of the airlines as an alternative way to recover costs related to airline ORCs such as Baggage, PRS, FEGP and Common Use IT. The Airport Cost Recovery Charge includes the 2020 under recovery as well as certain 2021 cost such as annuities and allocated costs for these ORCs. The Airport Cost Recovery Charge reduces the unit rate of these ORCs, all of which are included in this General Notice. The consultation process for this fee began in 2020 and full details of the prices and costs have been agreed at ORCG.

      The Airport Cost Recovery Charge will apply from 1st January 2021, initially set at £8.90 per departing passenger, billed monthly in arrears.

      The recovery of these costs will be tracked monthly at ORCG and following normal consultaton may be adjusted during the year to achieve full cost recovery and removal of the fee by 31st December 2021.’

    • Dwb1873 says:

      Some of the those price rises, percentage wise, are astonishing. And they still plan on adding more… wow.

      • Lux says:

        And my interpretation is that this does not require CAA approval as it’s changing how an existing charge is billed, rather than changing the charge itself.

        I’m not a regulatory lawyer but I do remember when BAA charges used to be published as ‘junk mail’ inside Flight International…

    • Lux says:

      You can go down quite a hole on this, for example check-in automation charges were based on log-in times but have now switched to per-passenger fees. https://www.heathrow.com/content/dam/heathrow/web/common/documents/company/doing-business-with-heathrow/regulated-charges/Check-In-and-Automation-Price-Notification-2020.pdf

      Will leave other readers to do further research!

      • Dubious says:

        I suppose that makes some sense given the increased use of self-checking and online-check in versus having someone logged in at a manual check-in desk.

  • Phillip says:

    Well, the third runway got the green light again in December, and although not a lot will happen in the immediate future, they’ll want to expand the moment things get back to a pre-Covid state!

  • John says:

    Long haul is a bit more expensive now, but BA will lose the £8.90 on RFS flights and may partially absorb the charge on low fare short haul to remain competitive

  • ThinkSquare says:

    My next flight just got more expensive? Are you suggesting other airports are going to do this too?

    • Andrew says:

      Just Rob’s usual assumption that everyone flies from LHR

      • Chrisasaurus says:

        It at all, look at it economically- if LHR flights cost base increases then so can the other airports without being uncompetitive

        If you raise your prices, I can still raise mine and remain cheaper

      • Rob says:

        If this is rebased pricing due to falls in passenger numbers to ensure the Regulatory Asset Base minimum return is hit, then other airports which use the RAB method for charging will also be putting up prices.

  • Darren S says:

    Could this be used to fund lateral flow COVID-19 tests on people when they arrive back in Heathrow on their return journey before they are allowed to cross the border? Government concerned about fraudulent tests and insufficient checks by airline before boarding the plane.

    • insider says:

      no, it’s used to fund the costs incurred by Heathrow on things like electricity, baggage systems etc.

      • kitten says:

        What’s the Passenger Service Charge and the existing airport costs for then?

        If the UK Government and its agent the CAA haven’t got the b*lls to tell Heathrow to throw this back at their shareholders then the UK is a $h1t country that hasn’t got any business sense.

        • insider says:

          LHR operates under a single till. The operating costs, depreciation and ‘regulated profit’ = commercial shop revenue + aeronautical revenue. The aeronautical revenue is the balancing part, which LHR recover from airlines through PSC as you mention and landing fees. If they recover too much, they adjust their PSC / landing fees rate card 2 years later and vice versa.

          Other regulated charges are things like utilities, baggage services etc. that fall outside of the single till (i think)

    • John says:

      They’d charge you again for those separately

  • Matthew says:

    Both the flight from LHR I have been tracking for weeks have gone up by £9….

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