London, April 1, 2026, 15:13 BST
International Consolidated Airlines Group SA (IAG) stood to get a measure of cost relief after Britain’s aviation regulator proposed only a slim rise in Heathrow passenger charges for 2027-2031. For a group whose British Airways unit calls Heathrow home, that matters. 1
The proposal lands just over five weeks before IAG is due to report first-quarter results on May 8 and comes as airlines across Europe wrestle with higher fuel bills and network disruption linked to the Middle East conflict. Heathrow’s next price-control period — the regulatory review that sets what the airport can charge airlines from 2027 to 2031 — is one of the biggest cost disputes for carriers at the hub. 2
The Civil Aviation Authority said Heathrow should be allowed to charge between 27.20 pounds and 30.50 pounds per passenger, with a midpoint of 28.80 pounds, versus 28.40 pounds in the current period. The regulator said that midpoint was 16% below Heathrow’s forecast and 25% above the level airlines had argued for. CAA consumer and markets chief Selina Chadha said the draft sought to keep prices fair while still allowing investment, while Heathrow CEO Thomas Woldbye warned the cap could force trade-offs on service and slow delivery as the airport targets about 85 million passengers this year and pursues a 33 billion pound expansion plan outside this pricing review. 3
IAG goes into that debate with stronger recent earnings. The group said in February that 2025 operating profit before exceptional items rose 13% to 5.02 billion euros, helped by lower fuel costs and firm demand on core North Atlantic routes, and it pledged 1.5 billion euros of shareholder returns over 12 months. Chief Executive Luis Gallego said, “Since Q3 we have seen a rebound,” with premium and corporate demand performing well at British Airways. 4
Still, the near-term strain is elsewhere. Reuters reported this week that British Airways has extended cancellations to Amman, Bahrain, Dubai and Tel Aviv until May 31 and to Doha until April 30, while Abu Dhabi remains suspended until later this year; Iberia Express has cancelled Tel Aviv through May 31. 5
IAG said on March 10 it did not plan to raise ticket prices immediately because it had hedged, or locked in ahead of time, much of its fuel for the short to medium term. That buys time, not immunity: consultant Rigas Doganis said airlines face a “perfect storm” if weaker consumer demand collides with persistently higher fuel costs, while Barclays analyst Andrew Lobbenberg said “the only way to get prices up is to reduce capacity.” 6
Peers are sounding more blunt. Ryanair chief Michael O’Leary said on Wednesday that carriers may have to start considering cancellations if jet fuel supply is threatened in June, July or August, while J.P. Morgan estimates cited by Reuters showed a sustained 10% rise in jet fuel prices could cut operating profit by 3% to 10% across IAG, Air France-KLM, Lufthansa and Ryanair. 7
But the Heathrow relief is only provisional. The CAA will publish final proposals in November and make a final decision in April 2027, and the broader energy shock is still building: IEA chief Fatih Birol said on Wednesday that shortages of jet fuel and diesel already hitting Asia could reach Europe in April or May. For IAG, the draft cap eases one pressure point. It does not settle the summer. 3
