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Heathrow Airport doubles dividends to £1.1bn on higher passenger charges
Heathrow is able to pay these large sums to investors because it continues to raise passenger charges under the pricing regime regulated by the Civil Aviation Authority. The perverse working of this regime means Heathrow Airport’s shareholders are incentivised to spend as much as possible. According to the Airports Commission, the cost of Heathrow Airport’s 3rd runway proposal would require passenger charges to rise from the current £20 to £28 - £30. IAG believes it could go higher to £40, and says they rose 8% last year on long haul routes.
A spokesman for Heathrow Hub, the independent proposal to expand Heathrow via an extended runway, said: “Heathrow Airport’s shareholders and its board vetoed our cheaper, simpler, quieter scheme in 2016 because they would make less money and not because of any technical objection. This plainly is against the public interest.
“As Willie Walsh, chief executive of British Airways owner IAG and other airline executives told the Transport Select Committee this week, Heathrow Airport’s plans for a 3rd Runway could cost billions more than the admitted budget of £14bn and are going to result in even higher charges for passengers. We should have zero confidence in Heathrow Airport’s vague commitments to hold costs down.
“Heathrow Airport’s 3rd Runway plans are another infrastructure project waiting to go wrong. We call on Lillian Greenwood, chair of the Transport Select Committee, to amend the National Policy Statement which she is reviewing so that our cheaper, simpler, quieter extended runway is taken forward instead. Our first phase is the cheapest option for expansion, at £3.8bn, and would have no impact on current passenger charges.”
The dividends paid by Heathrow (SP) Ltd are disclosed on pages 13-14 of the release on the investor page of Heathrow Airport’s website. Note 3.3.3 explains how the dividends were divided between shareholders and the repayment of debt and interest.