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Aviation History
1968
1968 - 0409.PDF
International, 21 March 1968 399 Heathrow Fees Protest I 0RE than 50 international airlines using Heathrow are pro- n| testing (individually) to the Prices and Incomes Board over i British Airport Authority's proposals to raise landing fees Heathrow following devaluation of "the pound (see Flight, ebruary 1, page 149). Landing fees will be raised on April 1 v I6f per cent for inter-continental flights, and by 12^ per centir other international flights. Domestic flights will not be [fected, and the increases apply only to Heathrow Airport, .ondon. _ The BAA gave two mam reasons for the rises: the need to onserve the authority's foreign currency income, which would ave been depleted to the extent of £1 million by devaluation, nd a "statutory duty" to maintain their income level. The lcreases have been applied only to Heathrow, partly because handles 85 par cent of the country's international traffic and artly because the authority wants to encourage airlines to use iatwick and Stansted by providing a cost differential. The toard of Trade also intend to increase charges at their airports y 12+ per cent, and navigation service charges are being raised y a similar amount, in both cases for international flights only. The Airport Operators' Committee, which represents airlines sing Heathrow, says: "The airlines cannot absorb such ncreased charges, other than by proportionate increases in ares, and these would not 'be in the public interest. Bearing in nind that the BAA made an operating profit of £5.4 million in 966-67, we cannot see any justification for these increased harges which will provide the authority with an estimated 1.25 million extra revenue—particularly as no immediate mproved services are being promised." The committee does not accept the BAA's argument that he increased charges are to offset loss of foreign currency araings arising from devaluation. It is feared that there will ie reciprocal action by foreign governments against British Mines by raising landing fees at foreign airports—thus losing |oreign currency for Britain. British airlines are hardest hit by the landing fees increase. have a direct cost increase of 16| per cent or 121 Per nt, whereas foreign airlines simply have their fees raised to • same level as they were before devaluation, or, in the latter «, slightly lower. In the case of BEA the increase in fees will e in the region of £200,000, while for BOAC the figure is tstimated at £236,000, over and above their landing costs in the last financial year, which came to £1.4 million. British Eagle estimate their increased costs at an annual £63,000. The new fees, as the BAA points out, are absorbed comfort- 'W in the fare increases which took effect almost immediately devaluation. The airlines point out that they had no under international agreement, but to alter fares, because sterling is an international reserve currency on which the fares of a large portion of the world are based. When the rate of exchange of such a currency alters, the ticket market would be in chaos if the sterling fares were not altered into line with the amount of devaluation—unless, of course, all the sterling countries reduced their fares to the devalued figure. Fares are determined by IATA at traffic conferences, when the airlines put forward their estimated costs for the routes involved and an equitable (to the carriers involved) arrange- ment of fares is agreed. Devaluation makes little or no difference to these basic costs, and therefore there can be no question of a reduction in fares in line with the amount of devaluation. On the other hand it is a strong part of the airline protest to the Prices and Incomes Board that by increasing landing fees for British airlines, these companies will have to go to the next traffic conference with revised cost estimates comparably higher than their foreign competitors; these higher estimates will inevitably result in higher fares. This is how the system works. But aside from the fare aspect, airlines are asking whether the British Airports Authority is not setting its profitability target too high, and whether the current return on capital (run- ring at ten per cent)—which is almost certain to be exceeded this year—is not far too high a figure for a monopoly concern, particularly in the airline industry, where, for instance, the top eight American carriers have a return in the region of nine per cent. It could be said, logically, that the BAA is making a profit for the taxpayer which is simply decreasing the profit made by other nationalised concerns. Another aspect which annoys the airlines is the way in which the increases were pushed through with little consultation. It is said that the Board of Trade and the BAA agreed the fee increases between them, thus leaving the corporations in par- ticular in an invidious position, for the only recourse which the corporations have in matters affecting the 'BAA is to the Board of Trade. The corporations themselves cannot write to the Prices and Incomes Board, they can only complain to the President of the BoT, who is himself involved, and has already agreed the increases with the BAA. When the Airports Autho- rity Bill was before Parliament, the airlines raised this very question of appeal against unilateral charges by a monopoly. This move was turned down on the grounds that the minister responsible for the general well-being of civil aviation would be concerned to see that justice would be done to the airlines as well as to the BAA. In this case the system does not seem to have worked. It would 'be fair in the first place to modify the fees charged to British airlines which arise from devaluation. If charges are first two French-built opponents for the pre- roouction Concorde 0/ "fed at Fihon, Bristol, " schedule during the wend of March 9-10 n(f were positioned in the "I assembly jig. They antref//iantre-fuse/oge/wine •ctions bUiit by Sud at »«?uenois ond Toulouse. y the» first com- s for 0/ is prototype ? in an PoncedI* °f sterns installa-
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