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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 (69)

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  • 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….

  • Track says:

    Travel industry should be rightly worried.

    • Brian says:

      When things eventually open up, whenever that is, people will be desperate for a holiday abroad after spending a couple of summers in Bognor. £8 won’t make much of a difference.

    • Chrisasaurus says:

      While that is true, £9 is not their biggest headache right now. Nobody flying this or next quarter is the least bit price sensitive…

  • M Baldrick says:

    My flights for end of March were cancelled yesterday were cancelled so I was forced to change to end of April. I was told I had to pay and additional £10 something for each person and my card would be charged £20 and some pence. When i asked what it was for I wasn’t given an explanation just extra charges. I took as because it had gone into April it was something to do with new taxes. So if you think you won’t be charged for changing even though enforced you are wrong. I did!

    • Charlieface says:

      You should not have paid. If your flight is cancelled the airline need to cover the cost of a new ticket

    • TGLoyalty says:

      It’s your legal right to rebook for FREE if a £20 charge appears (I hope it doesn’t) I would phone back and demand a refund.

      I completely understand it’s only £20 but as a point of principle it should be free and you were lied to.

  • George says:

    Probably airlines preemptively adding to the charge to tickets from April in the assumption that the CAA will rule in Heathrow’s favour in March

    • JDB says:

      This charge is totally separate from the CAA’s decision to come in July (last consultations close in March). As its name implies, the £8.90 under recovery charge is clawing back regulated charges that were previously under collected owing to the unprecedented shortfall in passengers. It isn’t some windfall; it is simply how Heathrow’s regulatory structure, set by the CAA, works.

      • PhatGit says:

        How is it totally separate? If Heathrow are now seeking to cover turnover rather than just profit, won’t the payments that the airlines pay to cover services also be in that turnover? Sounds a bit like double bubble to me

        • Rob says:

          That is true. Heathrow’s £2.8 billion is just plucked out the air anyway. They have, for a start, fired so many people that their cost base is a fraction of what it was. They also have few day to day costs.

          • TGLoyalty says:

            Typical negotiation tactic when you have a monopoly start stupidly high then meet somewhere you think was actually reasonable.

            In my field we wouldn’t entertain funding anything but actual fixed costs not recovered. You can get lost if you ask for “lost profit”

  • insider says:

    Heathrow have been trying desperately hard to not lose out because of Covid and push all the losses onto the airlines and consumers. Whilst this is just a result of the formula that allows them to recover charges for things they haven’t managed to cut the cost of in 2020/21 (outside of the single till), they are still pushing hard to make sure the CAA cave in to their demands and allow them to increase the usage charge of Heathrow for the next 20 or so years

  • RajBad says:

    Flying will change for the better post COVID!

  • ChrisC says:

    “This charge had been introduced at the request of the airlines …”

    Page 6 of the linked document.

    More should be made of this fact,

    • Lux says:

      Can you imagine that meeting though!

    • kitten says:

      In other words their contracts aren’t structured to allow Heathrow to grab all the money they want from airlines, or regulation rightly caps what they can grab, or the airlines told Heathrow to S*d *ff ! and so here is little Heathrow that business whose monopoly profits are privatised, abusing consumers instead.

      Take aviation market supervision and consumer protection away from the.CAA if they too don’t tell Heathrow look to your own business resources available and No you may not use your monopoly position to abuse passengers.

      While they’re about it they can tell them to maintain the free bus service if they want to have any form of car access charge for any airport.

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