Heathrow Airport is bracing for a massive surge in business rates, which could see an additional £900 million in costs from 2026. This change is not only significant for the airport but also potentially for the passengers.
The increase in costs will inevitably be passed down to the airlines and, ultimately, to the passengers. With the new rates, the cost per passenger could rise, leading to higher airfares for everyone flying through Heathrow.
Surge in Business Rates
Europe’s busiest airport, Heathrow, has been in secret talks with Whitehall officials. The discussions reveal an anticipated annual increase in business rates, jumping from £200 million to £300 million over three years starting in 2026.
Impacts on Airlines and Passengers
If passed on, the £300 million annual rate hike could add an estimated £3.75 per passenger. For a family of four, this might mean an additional £15 per flight.
Political Reactions
Despite Labour’s promise of a “fairer system,” they still intend to collect the same annual business rates revenue, according to business rates expert Paul Turner-Mitchell.
The Conservative Perspective
A Heathrow insider mentioned that the proposed rise in business rates would significantly increase operational costs, none of which can be reinvested in the airport.
Ownership Changes
The methodology for calculating Heathrow’s business rates shifted last year, now based on profitability assessments rather than land and building valuations.
Financial Performance
From 2026, rates will reflect Heathrow’s 2024 returns, which are expected to be much higher.
Heathrow’s Concerns
The spokesperson added that the sector needs more aligned thinking between government departments to avoid decisions that hinder competitiveness and the ability to meet consumer demands.
Heathrow Airport’s upcoming £900 million rise in business rates presents a significant challenge. The increased expenses could lead to higher costs for passengers. The future relationship between airports, airlines, and government policies remains uncertain. As changes loom, all eyes will be on how these adjustments impact travellers and the aviation industry.
