CAA consultation: Economic Regulation of Heathrow Airport Limited: setting a holding price cap for 2027
Consultation Summary
The UK Civil Aviation Authority (CAA) is consulting on proposals to introduce a holding price cap for Heathrow Airport Limited (HAL) for 2027. The proposed interim price control is intended to provide regulatory certainty while the CAA continues work on Heathrow's next full regulatory settlement.
The proposal would establish a temporary maximum charge that Heathrow can recover from airlines during 2027, ensuring that airport charges remain appropriately regulated while longer-term arrangements are developed.
Heathrow Airport is subject to economic regulation because of its significant market power. The CAA regulates the airport through a licence that limits the airport charges Heathrow can levy on airlines.
As work on the next regulatory framework continues, the CAA considers it necessary to implement an interim or "holding" price cap for 2027. This is designed to:
provide regulatory certainty for Heathrow and its airline customers;
protect consumers from inappropriate airport charges;
allow sufficient time for the development of the next regulatory settlement; and
maintain continuity within Heathrow's existing licence framework.
Key Proposals
The CAA is proposing that the 2027 holding price cap should include:
a reduction of £0.616 per passenger through the correction factor mechanism, reflecting differences between Heathrow's 2025 forecasts and actual 2025 outcomes;
a mechanism to true-up CPIH inflation during 2027;
implementation through an amendment to Heathrow Airport Limited's licence rather than a completely new regulatory framework.
Why This Matters
The level of Heathrow's airport charges directly affects:
airlines operating at Heathrow;
passengers through ticket prices;
airport investment decisions;
the financial resilience of Heathrow Airport; and
the balance between protecting consumers and allowing efficient airport investment.
Although the holding price cap is temporary, it will influence Heathrow's revenues during 2027 and provide the bridge to the next full regulatory settlement.
The CAA is seeking stakeholder views on:
the proposed methodology for the 2027 holding price cap;
the calculation of the correction factor;
the proposed CPIH inflation true-up mechanism;
the proposed licence modification; and
any other aspects of the proposed interim regulatory arrangements.
Who Should Respond?
The consultation will be of particular interest to:
airlines operating at Heathrow;
airline representative organisations;
passenger groups;
aviation industry stakeholders;
investors and financial institutions; and
other parties with an interest in Heathrow's economic regulation.
How to Respond
You should submit your responses to the Civil Aviation Authority before 5:00pm on 28 July 2026.
Consultation document - Economic Regulation of Heathrow Airport Limited: setting a holding price cap for 2027 Consultation and notice under section 22(2) of the Civil Aviation Act 2012 CAP3279
The CAA will review all consultation responses before confirming the holding price cap arrangements for 2027 and implementing any required changes to Heathrow's licence.
Consultation closes
28 July 2026 (5:00pm)